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2016 (12) TMI 1847 - ITAT HYDERABAD
Addition on account of estimation of profit @ 6% of sales - HELD THAT:- As relying on own case [2015 (6) TMI 1157 - ITAT HYDERABAD] we set aside the order of the CIT(A) and delete the addition made on this count. Accordingly, ground are allowed.
Disallowance of deduction claimed u/s 80U - HELD THAT:- Considered the rival submissions and perused the material facts on record. As the assessee himself withdrawn the claim before the AO, the CIT (A) was right in rejecting the assessee’s claim and hence, we uphold the order of the CIT(A) on this issue and dismiss the grounds raised in this regard.
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2016 (12) TMI 1846 - ITAT AHMEDABAD
Addition u/s. 2(22)(e) - assessee was the major share holder/director of the company and also had entered into financial transaction with Kadam Exports (P) Ltd - non deduction of TDS - ITAT cancelling the order passed u/s 201(1) and 201(A) - HELD THAT:- As decided in SCHUTZ DISHMAN BIO-TECH PVT. LTD.[2016 (1) TMI 84 - GUJARAT HIGH COURT] Commissioner as a matter of fact found that the payments were not in the nature of current adjustment. There was movement of fund both ways on need basis. The transactions in the nature of loans and advances are usually very few in number whereas in the present case, such transactions are in the form of current accommodation adjustment entries. Commissioner therefore, held that the transactions were not in the nature of loans and advances. The Revenue carried the matter in appeal. The Tribunal concurred with the view of the CIT (Appeals) and held that the amounts were not in the nature of Inter Corporate Deposits and were therefore, not to be treated as loans or advances as contemplated in section 2(22)(e) of the Act.
The issue is substantially one of appreciation of facts. When the CIT(Appeals) as well as Tribunal concurrently held that looking to large number of adjustment entries in the accounts between two entities, the amounts were not in the nature of loan or deposit, but merely adjustments, application of section 2(22)(e) of the Act would not arise - Decided against revenue
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2016 (12) TMI 1845 - ITAT CHENNAI
Changing of status of the assessee while processing return under Section 143(1) - As in the course of processing the returns, the Assessing Officer changed the status of the assessee as AOP and levied tax under Section 164(1) of the Act at maximum marginal rate - HELD THAT:- The assessee admittedly filed their returns of income electronically and the same were processed under Section 143(1) of the Act. Section 143(1) of the Act enables the Assessing Officer to make prima facie adjustment on the basis of the material available on record. Changing of status is something outside the purview of the prima facie adjustment under Section 143(1) of the Act. Therefore, this Tribunal is of the considered opinion that changing of status of the assessees cannot be made while processing return under Section 143(1) of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the same are set aside. However, it is made clear that it is open to the Assessing Officer to take up the matter for scrutiny as provided under the provisions of the Income-tax Act. Appeals of the assessees stand allowed.
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2016 (12) TMI 1844 - BOMBAY HIGH COURT
Maintainability of petition - HELD THAT:- Considering the nature of the question raised in the petition, both the sides agree that the petition is required to be disposed of finally at the stage of admission. The respondents seek time of three weeks to file replies.
Stand over to 9th January, 2017.
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2016 (12) TMI 1843 - KERALA HIGH COURT
Establishment of NCLT Bench in the State of Kerala - suitable place for establishing an independent NCLT bench - Seeking direction to the respondents to continue hearing of Company Cases having jurisdiction in State of Kerala by the Hon'ble High Court till NCLT Bench is established at Ernakulam for hearing of Company Cases - establish NCLT Bench at Ernakulam on a time bound basis in the interest of justice - According to the petitioners, since a large number of cases under the Companies Act such as, company claims, company petitions, company applications, company suits, company cases, adjudication appeals, connected criminal complaints, miscellaneous company applications etc. are pending consideration before this Court, establishment of independent and separate NCLT bench for the State of Kerala at Kochi is absolutely necessary and if Tribunals are not established in each State, the basic objective with which, NCLTs are being established, that is, to speed up the company cases, will not be fulfilled - HELD THAT:- Though the aforementioned submissions appear to be attractive at the first instance, they cannot be accepted for giving a direction to the respondents to establish NCLT bench in any particular State. It is for the authorities concerned to take a decision in the matter. This Court cannot frame guidelines or sit as an appellate authority to direct the policy makers to frame policy in a particular manner. It is for the authorities concerned to take a decision in respect of establishment of benches at a particular place or State.
Since it is for the respondent authorities to take a decision in the matter and as this Court will not normally interfere with the policy decision of the State, we decline to entertain the writ petition. The writ petition fails and the same stands dismissed. It is open for the petitioners or the affected persons to make representations before the appropriate Government for establishment of NCLT bench in the State of Kerala, if they so choose.
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2016 (12) TMI 1842 - DELHI HIGH COURT
Revenue recognition - interest on the mobilization amount claimed by the assessee - hybrid method of accounting adopted over the years, the interest amount had to be treated as income - HELD THAT:- The entire matter is contentious in the sense that the third party - RPCL - which was awarded the contract claimed that it had performed it in accordance with the agreement with the parties. The assessee, however, felt otherwise and terminated the contract. There could be several likely outcomes in these proceedings – many of them possibility impinging upon the rights of the assessee to receive advance amount itself along with interest either in whole or in part. In these circumstances, the ITAT’s conclusions that there was no crystallized right to receive any particular amount or amounts, cannot be faulted.
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2016 (12) TMI 1841 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Transfer of shares - Reference of CP to arbitration for the parties - dispute resolution scheme - sum and substance of the petition is that the petitioner needs reinstatement of her as director of the company and for setting aside the impugned sale of the property - role of petitioner - in the company after execution of the SPA dated 2nd November, 2015 - termination of the SPA by the petitioner - applicability of section 8 of Arbitration Act - scope of section 241 of the Companies Act, 2013 - HELD THAT:- On perusal of the SPA, it is evident that there is a clause for shifting of the registered office, accordingly the registered office has been shifted, the petitioner also resigned from the company on 2nd May, 2015. There is also a clause 4.3 of the SPA with an undertaking that the petitioner is no longer associated with day-to-day business of the company, she shall not be responsible to any business decision except to the liability due to her shareholding.
The petitioner is bound by the SPA reciting that she would not be associated with the day-to-day business of the company from 1st October, 2015 and she is not responsible to any of the decisions of the company since 1st October, 2015 except to the extent of the liability due to her shareholding. The respondents already tendered to make payment towards first tranche of payment and for transfer of first tranche of sale shares before first transaction closing date, i.e., 1st October, 2016, through the letter dated 26th September, 2016 along with Xerox copy of DD for an amount towards "first tranche purchase on price" - For the petitioner herself agreed to be away from the affairs of the company on execution of SPA, then, she could not now ask for her re-entering into the company on the ground that the SPA between them has been terminated. When the termination clause has been envisaging to be invoked on mutual consent, the petitioner would not get any occasion to terminate the agreement unless default has been committed by the respondents side as mentioned in the agreement. Therefore, it cannot be said that the petitioner could have been permitted to have participatory role in R1-company after 2nd November, 2015 basing on the shareholding of her. Accordingly, there could not be any merit in the argument that the petitioner was left in dark in relation to the affairs of the company.
It appears that the petitioner felt that she is aggrieved for the Bank loan has not been paid and financial statements not provided. Other aspects of allegation of scrap agreement, they are nowhere present in the SPA, therefore, this allegation of understanding in regard to the scrap can't be said as part of the SPA, and, hence, it could not become a cause for termination of the SPA. As to payment of 37 crore, it is no where covenanted that R2 shall pay off the loan before first tranche of payment, no collateral asset security has been given by the petitioner to the loan pending, moreover some loan liability brought over along with the company remaining loan liability has been accrued upon the company in the tenure of the petitioner in the management from 19th January, 2012 - 25th May, 2015, thereafter the petitioner brother continued as nominee director until November 2015 - Since the respondents timely sent a letter for transfer of her first tranche of transfer of shares along with the photo copy of DD towards first payment of consideration, she on her own could not have terminated the agreement, therefore, termination of agreement by petitioner herself is not valid.
It is a fact that the company already laden with debt burden, therefore, to clear the same, the company transferred the property to the third party long before execution of share purchase agreement, therefore, the acts of the respondents could not be considered, which the petitioner painted as conduct oppressive to the interest of the petitioner. If at all such alienation is invalid for short of any compliance, this forum is not the place to decide the issue that is on face not indicative of any conduct falling within the ambit of section 241 of the Companies Act, 2013 - If the petitioner has any grievance over proposal of transfer of shareholding basing on share purchase agreement, a remedy is carved out in the same agreement under arbitration clause, therefore, the petitioner has to go before arbitration but not come before this Bench by inventing pleadings and reliefs not supported by the facts existing in the case. Assuming the termination made by the petitioner is valid, then also she is bound by the arbitration clause because the proposition is well settled that arbitration clause will remain in force even if the agreement constituting arbitration is terminated for any reason. Therefore, the arbitration clause in such agreement is still binding upon the party.
This Bench is of the view that this dispute is covered by section 8 Arbitration and Conciliation Act, 1996, because the company, the petitioner and R2 being parties to the SPA, and the issues in it being decided not falling within the ambit of section 241 of the Companies Act, 2013, it has to be construed that this dispute has to be referred to arbitration not to be decided before this Bench - Petition dismissed.
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2016 (12) TMI 1840 - ITAT CHENNAI
Status of assessee - period of stay in India - Not Ordinarily Resident in India - adjustments u/s. 143(1) - error in Form-16 - perquisites taxable under the Income-tax Act - stock options income accrued and received outside India - assessee was employed in USA during the period August 2000 to October 2008 - exemption claimed by the assessee towards receipt said to be sale of stock options granted in the U.S.A while he was working in Google Inc. USA.- HELD THAT:- If any incorrect claim, if such incorrect claim is apparent from any information in the return, he should correct the same while processing the return u/s.143(1) of the Act. In the instant case, the assessee claimed exemption of substantial amount which was in the form of sale of stock option in USA.
The Form No.16 annexed to the return of income issued by the present employee of the assessee shows that the stock option received by the assessee was liable for tax and it was subject to TDS by Google India Pvt Ltd., Bangalore and they have deducted the TDS on the same. This is being so, the AO while processing the return u/s. 143(1) of the Act included the income from sale of stock option as income of the assessee. Now the assessee claimed that it could not have been done by the AO at the stage of prima facie adjustments u/s. 143(1) of the Act. In our opinion, when the information is available on record by way of Form No.16 annexed to the return of income the AO cannot keep quiet without making corrections while processing return u/s.143(1) of the Act. In our opinion, the AO is within his jurisdiction in considering the income from sale of stock options as income of assessee which is evident from the Form No.16 attached with the return of income. Being so, we do not find any infirmity in the order of lower authorities.
CIT(A) failed to adjudicate certain issue relating to the status of the assessee and also relating to the taxability of the stock option - These are debatable issue cannot be dealt u/s.143(1) of the Act and what cannot be done directly, the same thing cannot be done indirectly. Further, the reading of the whole order of the CIT(A) gives the impression that the CIT(A) has considered the entire facts and circumstances of the case on the basis of the written submissions filed before him, though the assessee was non-cooperative. It is to be mentioned herein that the order of the lower authorities has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by CIT(A) or whether some incidental fact has not been noticed by the CIT(A) in his order. If the Tribunal on a fair reading of the Order of the CIT(A), finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing his conclusions, the decision of the CIT(A) is not liable to be interfered with, unless, of course, the conclusions reached at by the CIT(A) are perverse. - Appeal of assessee dismissed.
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2016 (12) TMI 1839 - ITAT MUMBAI
Disallowance u/s 43B - disallowance of interest claimed on OD/CC Account u/s 43B(d)/(e) r.w. Explanation 3D - CIT-A deleted the addition - HELD THAT:- Tribunal repelled the said plea by interpreting Section 43B and held that overdraft/cash credit accounts are not similar to loan accounts. Tribunal further observed that the interest amount has been actually paid by the assessee through Overdraft/Cash Credit account and, therefore, set aside the disallowance made u/s 43B.
A bare reading of Explanations 3C and 3D to Section 43B provides an answer to the problem by making it clear that where interest amount has not been converted into loan or borrowing (or) loan or advance, as the case may be, there is no question of denying the benefit of deduction. In the case on hand, the interest amount has been actually paid by the assessee through Overdraft/Cash Credit account and the same has not been converted into loan or borrowing (or) loan or advance, as the case may be.
These appeals are dismissed by answering the question of law against the Revenue and in favour of the assessee
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2016 (12) TMI 1838 - ITAT MUMBAI
Deduction u/s 80P in respect of interest received from the schedule bank - HELD THAT:- As decided in own case , [2016 (5) TMI 1545 - ITAT MUMBAI] as relying on QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [2015 (6) TMI 573 - BOMBAY HIGH COURT] where assessee-cooperative society could not be regarded as “Cooperative Bank‟ on, mere fact that an insignificant proposition of revenue was coming from non-members, and thus, was entitled for deduction under section 80P(2)(a)(i) - Decided against revenue.
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2016 (12) TMI 1837 - SUPREME COURT
Deemed registration of an application u/s 12AA - High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision - appellants, has raised an apprehension that in the case of the respondent, since the date of application was of 24.02.2003, at the worst, the same would operate only after six months from the date of the application.
HELD THAT:- We see no basis for such an apprehension since that is the only logical sense in which the Judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under Section 12AA of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003.
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2016 (12) TMI 1836 - CALCUTTA HIGH COURT
Sanction of proposed scheme of amalgamation - Ministry of Corporate of Affairs appears to have fowarded a copy of the scheme to the Income Tax Department on 6/14.10.2016 with a request to forward their comments/observations/objections, if any, on the proposed scheme of amalgamation within 15 days, but till date no objection has been received from the said authority. Under such circumstances, it is presumed that the Income Tax Department has no objection to the sanction of the scheme.
HELD THAT:- In the event, the petitioners supply a legible computerized printout of the scheme and the Schedule of assets in acceptable form to the department, the department will append such computerized printout, upon verification, to the certified copy of the order without insisting on a handwritten copy thereof - Petition disposed off.
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2016 (12) TMI 1835 - BOMBAY HIGH COURT
Transfer of cumulative redeemable preference shares in favour of Respondent No.1 - rectification in register of members - HELD THAT:- There is nothing to suggest that the compromise amounts to redemption of the preference shares or conversion of the amount due thereon (or any other reduced amount) into a corporate debt. Respondent No.2, even after the sanction of the scheme, continues to be a preference shareholder with agreement to accept 70% of the face value of the redeemable preference shares over a period of 10 years without any dividend. There is no question of any redemption of shares or conversion into a corporate debt or extinguishment of transferability of the preference shares as a result.
Appellant submits that Respondent No.2 has transferred the subject shares to Respondent No.1 in contravention of law including breach of RBI guidelines. Nothing is pointed out as to what particular contravention is committed by Respondent No.2 in transferring the shares. There is no merit in this contention accordingly.
Appellant further submits that the shares of the face value of ₹ 100/ of 5,00,000 preference shares of the Appellantcompany have been transferred by Respondent No.2 to Respondent No.1 at a price of ₹ 5,000/ and that the value of the shares has thereby been severely undermined by Respondent No.2. The value of the shares is a matter between the transferor and transferee. The Company can hardly be concerned with the same. In any event, such value is not binding on the Company. There is, accordingly, no merit in this contention also.
Appeal dismissed.
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2016 (12) TMI 1834 - ITAT CHANDIGARH
Rejection of the books of account u/s 145(3) - application of net profit rate of 12% - HELD THAT:- Identical issue have been considered by ITAT Chandigarh Bench in the case of the assessee, in preceding assessment years 2005-06, 2006-07 and 2008-09. The Assessing Officer has recorded several reasons for rejection of the books of account in the assessment years which have not been disputed by ld. counsel for the assessee. The ld. counsel for the assessee did not challenge rejection of the books of account under section 145(3) of the Act, therefore, findings of authorities below to that extent are confirmed.
Following history of the assessee, it would be reasonable and appropriate to direct the Assessing Officer to apply NP rate @ 6% as against 12% adopted by the authorities below.
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2016 (12) TMI 1833 - ITAT AHMEDABAD
Disallowance of interest expenses - interest @ 15% p.a. on advances given to various parties on which no interest has been charged - HELD THAT:- Interest-free own funds available at the disposal of the assessee stands at ₹ 352.91 lakhs as on 31/03/2008 and ₹ 507.94 lakhs as on 31/03/2009. The corresponding interest-free advance as on 31/03/2009 stands at ₹ 21.10 lakhs. In such a situation, where interest-free own funds available to the assessee are far in excess of the interest-free advance, the presumption would arise in favour of assessee that the advances were made from interest-free funds available with the assessee.
On this issue, we find guidance from the judgement of Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] - In view of the huge funds available with the assessee without any interest liability - Thus, the disallowance of interest towards interest-free advance is uncalled for - Decided in favour of assessee.
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2016 (12) TMI 1832 - DELHI HIGH COURT
Decree of specific performance of an agreement of sale of immovable property - HELD THAT:- This Court in this matter is exercising power as an Executing Court and orders as sought cannot be granted - The counsel for the decree holder then states that the decree holder be refunded the amounts paid by the decree holder but states that the said refund be as per the value of the built up area agreed to be sold - That is again not part of the decree.
List on 22nd August, 2017.
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2016 (12) TMI 1831 - ITAT CHENNAI
Disallowance of interest paid on loans - Assessee claimed interest on accrual basis - Right to claim deduction on the basis of earlier assessment - Whether said interest was accrued on the loans borrowed in earlier years and there is no actual payment of this interest to the parties? - as per AO assessee has not shown the parties for which the loans were borrowed and the interest was disallowed - HELD THAT:- Assessee has borrowed the amount for the purpose of investment in other firms as capital of the assessee - when the assessee borrowed funds for the purpose of investment in other partner firms, it cannot be allowed as deduction as income earned from firm is not feasible while computing the income of the assessee.
This view is fortified by the judgment of Popular Vehicles and Services Ltd.[2009 (10) TMI 574 - KERALA HIGH COURT] - in earlier assessment years, there was no assessment u/s.143(3) and the return was accepted only u/s.143(1) of the Act without any scrutiny. It cannot be said that the right is vested with the assessee to claim such deduction on the basis of earlier assessment. Accordingly, the grounds raised by the assessee are dismissed.
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2016 (12) TMI 1830 - ITAT CHENNAI
Carry forward of additional depreciation - Additional depreciation of 10% on plant and machinery as purchased and put to use in the previous year u/s 32(1)(iia) - HELD THAT:- In so far as claim of carry forward of additional depreciation to the extent it could not be allowed in earlier year due to use lesser than 180 days, no doubt there are decisions of Co-ordinate Bench which are for and against the assessee. In our opinion the issue is no more res integra due to the judgment in the case of Rittal India Pvt. Ltd [2016 (1) TMI 81 - KARNATAKA HIGH COURT].
Intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. Tribunal, in our view, has rightly held, that additional depreciation allowed under section 32(1)(iia) of the Act is a one-time benefit to encourage industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. - Decided against revenue.
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2016 (12) TMI 1829 - ITAT JAIPUR
Treatment of the interest received prior to commencement of commercial operations of the specified mega road projects - Income from other sources or capital gain - As per the assessee, it is in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources.”- HELD THAT:- Respectfully following the decision of Coordinate Bench in assessee’s own case [2016 (9) TMI 957 - ITAT JAIPUR] we hold that the interest received prior to commencement of commercial operations of the specified mega road projects will be in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources”. - Decided in favour of assessee.
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2016 (12) TMI 1828 - BOMBAY HIGH COURT
Addition u/s 14A r/w Rule 8D - Tribunal held that no investment is made by the assessee in shares and securities (Mutual funds) out of interest bearing funds - HELD THAT:- By an order [2014 (7) TMI 1328 - BOMBAY HIGH COURT] this Court refused to entertain the Revenue's two appeals on an identical issue as not giving rise to any substantial question of law. The Revenue has not been able to point out any distinguishing features in the present appeal visa-vis the facts and law involved/existing in the Assessment Years 2006-07 and 2007-08, which would warrant a different view. No substantial question of law.
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