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2016 (12) TMI 1827 - BOMBAY HIGH COURT
TP Adjustment - comparability - whether Tribunal was justified in accepting the comparables merely on the basis that they have been considered comparable in earlier years? - HELD THAT:- So far as ICRA Management Consulting Services Ltd. is concerned, the impugned order on examination of the functional profile held that it was comparable to the respondent-assessee for the subject Assessment Year. This was further supported by the fact that for the immediately preceding Assessment Year the parties had accepted ICRA Management Consulting Services Ltd. to be a comparable for the purpose of determination of arms length price. Therefore, as far as ICRA Management Consulting Services Ltd. is concerned no interference is called for.
In the above view the appeal is admitted on the following re-framed substantial question of law:
“Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in accepting EDCIL as comparable to determine the arms length price in the face of rule 10B(4) of the Act only on the basis that for the earlier Assessment Year , the same were also used as comparable.”
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2016 (12) TMI 1826 - SUPREME COURT
Infringement of patent vested in the respondents - jurisdiction of the English Court - Executability of order/decree of English Court - Explanation 2 of Section 44A (3) of CPC.
Whether the order passed by the Foreign Court falls within the Exceptions to Section 13 of the CPC? - HELD THAT:- The order passed by the English Court is an order on merits. The appellant who has submitted itself to the jurisdiction of the Court and on its own requested the Court to assess the costs summarily. While passing a reasoned order by dismissing the application filed by the appellant, English Court granted the costs against the appellant. Had it been the case where appellant’s application was allowed and costs were awarded to it, it would have as well filed a petition for the execution of the order - It cannot be permitted to blow hot and cold at the same time. In our opinion, it is a pure abuse of process of law and the Courts should be very cautious in entertaining such petitions.
The principles of comity of nation demand us to respect the order of English Court. Even in regard to an interlocutory order, Indian Courts have to give due weight to such order unless it falls under any of the exceptions under Section 13 of the CPC. Hence we feel that the order in the present case passed by the English Court does not fall under any of the exceptions to Section 13 of the CPC and it is a conclusive one. The contention of the appellant that the order is the one not on merits deserves no consideration and therefore liable to be rejected.
Whether the order passed by the Foreign Court amounts to a “decree” and the same is executable? - HELD THAT:- As per the plain reading of the definition ‘Judgment’ means the statement given by the Judge on the grounds of decree or order and order is a formal expression of a Court. Thus “decree” includes judgment and “judgment” includes “order”. On conjoint reading of ‘decree’, ‘judgment’ and ‘order’ from any angle, the order passed by the English Court falls within the definition of ‘Order’ and therefore, it is a judgment and thus becomes a “decree” as per Explanation to Section 44A(3) of CPC. In this case, the Court at England, after following the principles of natural justice, by recording reasons and very importantly basing on the application of the appellant itself, has conclusively decided the issue with regard to jurisdiction and passed the order coupled with costs - the order passed by the Foreign Court is conclusive in that respect and on merits. Hence executable as a decree and accordingly the issue is answered.
Whether the decree for costs would fall within the ambit of Explanation 2 of Section 44A (3) of CPC and makes it inexecutable? - Whether interest on costs would fall within the ambit of Explanation 2 of Section 44A of CPC? - HELD THAT:- The appellant has advanced an argument that as per Section 35A of the CPC, no Court should pass any order for the payment of compensatory costs exceeding ₹ 3,000/- or exceeding the limits of its pecuniary jurisdiction of the said Court whichever amount is less. It is thus argued by the appellant that in the present case, since the costs imposed exceed the bar imposed by Section 35A, therefore, the order of the English Court is not executable in the present case - In the present case, no claim has been advanced by the appellant that the claim filed by the respondents is false or vexatious, therefore, the bar in Section 35A is not applicable. Accordingly the issue is answered. In re Issue No. 5 - It is the case of the appellant that the claim for interest on costs is not recognized in the Indian law. It is to be noted that matters of procedure are to be governed by the lex fori, whereas the matters of the substance are governed by lex causae. In this case, the question whether the interest on sum of decree of costs to be executed in India is a matter of substance as the interest on decree is a substantive right of the decree holder and does not concern itself with the procedural law of the forum.
Whether the interest on costs can be executed in India in view of deletion of Section 35(3) of CPC? - HELD THAT:- It is to the reciprocal advantage of the Courts of all nations to enforce foreign rights as far as practicable. To this end, broad recognition of substantive rights should not be defeated by some vague assumed limitations of the Court. When substantive rights are so bound up in a foreign remedy, the refusal to adopt the remedy would substantially deprive parties of their rights. The necessity of maintaining the foreign rights outweighs the practical difficulties involved in applying the foreign remedy. In India, although the interest on costs are not available due to exclusion of Section 35(3), the same does not mean that Indian Courts are powerless to execute the decree for interest on costs. Indian Courts are very much entitled to address the issue for execution of the interest amount.
The Execution Petition filed by the Respondents for execution of the order dated 19th October, 2006 passed by the English Court is maintainable under the relevant provisions - Appeal dismissed.
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2016 (12) TMI 1825 - ITAT MUMBAI
Penalty u/s 271(1)(c) -Tribunal has held that the commission should be taken at 0.15% and the expenditure claimed should be restricted and allowed to the extent of 50% from such income - HELD THAT:- We find that the co-ordinate Bench of the Tribunal has directed the AO to take commission at the rate of 0.15% and allow the expenses to the tune of 50% of the said commission and bring to tax the amount so worked out. Further, we find that on the identical facts the penalty has been deleted by the co-ordinate Bench of the Tribunal in M/S. GOLDSTAR FINVEST PVT. LTD. VERSUS THE DCIT- CENTRAL CIRCLE -46, MUMBAI2016 (8) TMI 1502 - ITAT MUMBAI]. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete the penalty. Appeal of the assessee is allowed.
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2016 (12) TMI 1824 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Oppression and MIsmanagement - misdeeds and dishonesty in the maintenance of minutes of the company - HELD THAT:- On the directions of this Appellant Tribunal the Appellant Company also produced the originals of the relevant minutes of meeting. The 1st Respondent also produced the Photostat copies of the minutes of meeting of the same period which were forwarded to the 1st Respondent for confirmation.
The basic principle of justice delivery system involving offence resulting punishment is that if any-allegation is made by any person before a court of law or Tribunal such person is required to support the allegation by bringing on record some evidence to suggest that a prima facie case is made out and there are good reasons for seeking an order. Therefore, the sentence "Supported by such evidence as may be necessary for the purpose of showing that applicants have good reasons for seeking an order for the conducting an investigation into the affairs of the company", as mentioned below clause (a) of Section 213 is applicable in all cases and the applicant(s), whoever prefers application under Section 213, whether they belong to category as mentioned in clause (a) or clause (b), such evidence is required to be relied upon not only to justify the allegations, but also to Show that there is a good reason for seeking an order, to enable the TribunaI to form its opinion - The other basic principle of justice delivery system that a court or a Tribunal while passing an order is not only required to give good reason based on record/evidence but also required to show that after being satisfied itself the Court/ Tribunal has passed such order.
The sentence “if it is satisfied that there are circumstances suggest" mentioned in clause (b) of Section 213 is applicable to all cases, irrespective of the category to which the applicant(s) belong i.e. clause (a) or clause(b) of Section 213 of the Act - The Tribunal is not expected to refer all the evidence to form opinion about the malpractice or for fraud mentioned in sub-clause (i), (ii) and (iii). It is the-job of the Inspecting Authority (Inspector) to go through the evidence before coming to a conclusion and forming opinion that malpractice or fraud mentioned under sub clause (i) or (ii) or (iii) has been committed by one or other member or director(s) or person(s) or the company.
In the present case, the Tribunal has relied on certain record/evidence, applied it mind, satisfied itself and given good grounds to Order investigation, there are no reason to interfere with the impugned order. For the reason aforesaid and in absence of any merit, appeal is dismissed.
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2016 (12) TMI 1823 - MADRAS HIGH COURT
Election of the Office Bearers of the Church of South India - Amendment to the Constitution of the Church of South India - mode and manner of election of the office bearers - Whether the procedure prescribed for election in the bye-laws so framed can be said to be in derogation of the Constitution in any manner?
HELD THAT:- The Constitution is the governing book to facilitate the functioning of the Churches and provides a democratic process for elections to various office bearers. The Constitution itself provides the procedure for amendments and the documents placed before the learned Single Judge show that such amendment was made by following the procedure at least prima facie - Similarly, the enacting of the bye-laws is also something which is enshrined in Rule 3 of Chapter XIII and there also prima facie view has been found that it has been made as per the procedure. In fact, both have received overwhelming mandate of 16 out of the 22 Diocesan Councils.
The answer to the question raised would be in the negative - The bye-laws do refer to the principle of nomination by the Bishops from among themselves of the person who has to be elected as the Moderator and the Deputy Moderator. Similarly, for the General Secretary and the Treasurer also a Committee is constituted which would make the nomination, instead of Bishops nominating from amongst themselves. The Committee formed for nomination, in fact, is of a wider spectrum, including apart from Bishop, one Clergy and three lay persons, who bring the names before the Synod for the said posts and the vote is however with the Synod to elect the person. Thus, what is envisaged is a check before the elections.
Whether this check would defeat the principle of secret ballot or franchise principle of majority in any manner? - HELD THAT:- Once again the answer would be in the negative for the reason that the final say is with the Synod. The election has to take place from among the Bishops, who in a religious hierarchy are at the highest level. They from amongst them would find a suitable person and that too by unanimity or a overwhelming majority of two-third. The matter does not end at this since the Synod would have to ratify the same by a simple majority. Thus, if a member of the Synod is not happy with the nomination, they have a right of rejection - The final say thus remains with the Synod, but the collective wisdom of the Bishops as to who among them should be the Moderator has been given weightage. This cannot ipso facto be called a derogation of the Constitution, especially when the bye-laws have been approved, as also the amendment to the Constitution. The position would be the same in case of Deputy Moderator and the only difference for the posts of General Secretary and Treasurer would be that the nomination would be of the Committee which is, in fact, a more representative body as constituted.
Prima facie the bye-laws cannot be said to be in derogation of the Constitution and thus for the coming election process both the amended constitution and the bye-laws as framed would apply.
Appeal dismissed.
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2016 (12) TMI 1822 - BOMBAY HIGH COURT
TP Adjustment - Tribunal restricting the adjustment only on International Transactions where the assessee has selected TNMM and applied the same on entity level - HELD THAT:- Transfer Pricing Adjustment has to be done only in respect of the transaction entered into with the Associated Enterprises and not in respect of all transactions of the entity. See The Commissioner of Income Tax1, Mumbai v/s. Hindustan Unilever Ltd. [2016 (7) TMI 1245 - BOMBAY HIGH COURT] AND CIT v/s. Alstom Projects India Ltd [2016 (12) TMI 1408 - BOMBAY HIGH COURT]
Delhi High Court has also in CIT v/s. Keihin Panalfa Ltd [2016 (5) TMI 203 - DELHI HIGH COURT] has also independently taken the same view. - Decided against revenue
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2016 (12) TMI 1821 - SUPREME COURT
Doctrine of strict construction - commission of the offence by the company punishable Under Section 292 Indian Penal Code - vicarious liability - whether the Appellant who has been discharged Under Section 67 of the IT Act could be proceeded Under Section 292 Indian Penal Code?
HELD THAT:- Section 69 of the IT Act provides for power to issue directions for interception or monitoring or decryption of any information through any computer resource. It also carries a penal facet inasmuch as it states that the subscriber or intermediary who fails to comply with the directions issued under Sub-section (3) shall be punished with imprisonment for a term which may extend to seven years and shall also be liable to fine - Section 67 clearly stipulates punishment for publishing, transmitting obscene materials in electronic form. The said provision read with Section 67A and 67B is a complete code relating to the offences that are covered under the IT Act. Section 79, as has been interpreted, is an exemption provision conferring protection to the individuals.
The special and specific purpose which motivated the enactment of Section 14-A and Chapter III-A of the Delhi Rent Act would be wholly frustrated if the provisions of the Slum Clearance Act requiring permission of the competent authority were to prevail over them. Therefore, the newly introduced provisions of the Delhi Rent Act must hold the field and be given full effect despite anything to the contrary contained in the Slum Clearance Act.
If legislative intendment is discernible that a latter enactment shall prevail, the same is to be interpreted in accord with the said intention. We have already referred to the scheme of the IT Act and how obscenity pertaining to electronic record falls under the scheme of the Act. We have also referred to Sections 79 and 81 of the IT Act. Once the special provisions having the overriding effect do cover a criminal act and the offender, he gets out of the net of the Indian Penal Code and in this case, Section 292. It is apt to note here that electronic forms of transmission is covered by the IT Act, which is a special law. It is settled position in law that a special law shall prevail over the general and prior laws. When the Act in various provisions deals with obscenity in electronic form, it covers the offence Under Section 292 Indian Penal Code.
The High Court has fallen into error that though charge has not been made out Under Section 67 of the IT Act, yet the Appellant could be proceeded Under Section 292 Indian Penal Code - the orders passed by the High Court and the trial court are set aside - Appeal allowed.
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2016 (12) TMI 1820 - NATIONAL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, NEW DELHI
Oppression and mismanagement - Disposal of immovable property of company - HELD THAT:- The parties have acted in tandem till the passing of the Board resolution dated 30.07.2010 wherein the parties, namely petitioners 1and 2 and respondents 2 and 3 have made efforts to fortify the C & F business carried at Jharkhand and Bihar probably from the clutches of liabilities which they were well aware was looming on the horizon, particularly after the storm on 29.05.2010 which it is claimed had inflicted severe damage to the manufacturing facilities and thereby crippled production of the 1st respondent company and which had also made them approach the bankers jointly as evident from the letter dated 15.06.2010 sent to SBI wherein the co-operation of the bank had been solicited claiming that the disputes amongst them have been resolved.
Since the main thrust of the challenge of the petitioners seems to be in relation to and concerning the disposal of the immovable property of the company, as an instance oppression of course in addition to their to other instances as well of oppression and mismanagement, the above list of dates has been extracted from the pleadings of the parties for our convenience to understand the events in the correct perspective and as to how the transactions have been perpetrated - in the present case, as notice of EOGM seems to have deliberately been sent to an address where the petitioners were not residing to the knowledge of the respondents thereby clearly showing the intent of the respondents being in majority to exclude the petitioners.
We are forced to come to a conclusion that the acts of the respondents in excluding the petitioners from the affairs of the company had been deliberate and willful and in the absence of notice or any evidence produced before us to sustain the plea of the participation of the petitioners or for that matter the petitioners were put on notice we are constrained to declare the Board Meeting held on 2.11.2010 and 10.12.2010 as well as the Extra-Ordinary General Meeting on 17.03.2011 were not held in accordance with law and as a consequence the agreement to sell is also required to be held as non-est in the eyes of law, however without prejudice to the rights of the third party, namely the 4th respondent from seeking appropriate remedy before the civil court as may be legally available to it.
The meeting of the Board of Directors held on 02.11.2010 and the resolutions passed there at appointing two executive directors were bad in law and the same are declared null and void - Application disposed off.
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2016 (12) TMI 1819 - ITAT CHENNAI
Transfer Pricing adjustments - engineering services rendered by the assessee to its Associated Enterprises abroad - imputing of interest on alleged delay in collection of receivables from Associated Enterprises. - Disallowances of employee’s contribution to Provident Fund - Disallowance u/s.14A - working capital adjustment - HELD THAT:- In so far as imputing interest on delayed payment from Associated Enterprise was concerned, observation of the ld. DRP was that the extended payment terms given to Associated Enterprise without charging interest was exigible to a transfer pricing adjustment, even if commercial expediency was shown by the assessee. As for assessee’s claim for depreciation on goodwill, observation of the ld. DRP was that no such disallowance made by the ld. Assessing Officer and no claim was preferred by the assessee during the assessment proceedings.
Coming to the disallowance for delayed remittance of employee’s contribution of Provident Fund, observation of the ld. DRP was that judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. Madras Radiators and Pressing Ltd [2002 (12) TMI 36 - MADRAS HIGH COURT] went in favour of the Revenue and it was rightly disallowed by the ld. Assessing Officer. In so far as disallowance u/s.14A of the Act was concerned, ld. DRP held that such disallowance was justified even though assessee had not earned any exempted income.
DRP had disposed off the grounds taken by the assessee in a summary manner without properly considering the objections raised by the assessee. As for the comparables sought to be excluded/included by the assessee, the ld. DRP had not compared the functional profile of those companies with that of the assessee before deciding on the desirability of their exclusion /inclusion.
Working capital adjustment sought by the assessee was concerned, ld. DRP had not considered the present position of law as laid by a plethora of decisions of this Tribunal which mandated such adjustment as a necessary one while computing profit level indicator. As for interest on delayed receivables, ld. DRP had not dealt with the objections of the assessee against comparing the receivables with pure loans, without considering the commercial expediency factor. On the claim of depreciation of goodwill, ld. DRP had not given any finding why the claim made for the first time before it could not be considered. As for the remittances to employer contribution to Provident Fund, ld. Departmental Representative had not considered the effect of Section 43B on such claim, where remittances of the deducted amount were made before the due date of filing the return. Coming to the disallowance made u/sec. 14A of the Act, the ld. DRP had not adjudicated as to how such disallowance could be made where the claim of the assessee was that it had not earned any exempt income.
We are of the opinion that all the issues raised by the assessee requires a fresh look by the ld. DRP. We therefore set aside the orders of the ld. DRP as well as ld. Assessing Officer and remit all the issues raised by the assessee to the ld. DPR for consideration afresh in accordance with law. Thereafter, ld. Assessing Officer shall reframe the assessment for the impugned assessment year considering such directions.
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2016 (12) TMI 1818 - GAUHATI HIGH COURT
Refund claim - the Assistant Commissioner of Central Excise is personally present in court and he submits that under the refund order(s) passed by the him, due relief is granted to the manufacturer, in pursuant to the direction given by the Commissioner, Custom and Central Excise (Appeals) on 24.11.2014 and 25.03.2015, respectively - HELD THAT:- After noticing the facts from the Court’s order recorded on 24.11.2016, we find that the departmental authorizes has now discharged the responsibility under Section 11(BB) of the Central Excise Act. Thus, we order closure of the cases by ordering that the 02.12.2016 refund order be placed in the records of the concerned case.
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2016 (12) TMI 1817 - DELHI HIGH COURT
Maintainability of petition - territorial jurisdiction - Murder - petitioner had been accused of killing 5 persons at Village Cher, Baikunthpur District, Chhattisgarh - petitioner/ non-applicant contends that this court is vested with jurisdiction concurrent to that of the High Court of Chhattisgarh - concept and place of 'cause of action'.
Nature of the power exercised by the President while deciding clemency of any convict - concept of cause of action - HELD THAT:- No doubt the protection of personal life and liberty as enshrined in Article 21 of the Constitution is paramount in any civilized society. All the limbs of the State must act to protect the same from any infraction.
The concept of cause of action was inserted as Article 226 (1A) by the 15th Amendment and later renumbered as Article 226 (2) by the 42nd Amendment. The said concept was comprehensively discussed in Alchemist Ltd. [2007 (3) TMI 382 - SUPREME COURT]. Further the Full Bench of this Court in M/S. STERLING AGRO INDUSTRIES LTD. VERSUS UNION OF INDIA & ORS., JAN CHETNA … VERSUS MINISTRY OF ENVIRONMENT AND FORESTS & ORS., MANU JAIN VERSUS SMT. NEERJA SHAH & ORS., M/S BAFNA HEALTHCARE PVT. LTD. & ORS. VERSUS COMMISSIONER OF CENTRAL EXCISE DELHI-IV & ORS., THE COMMISSIONER OF TRADE TAX & ANR. VERSUS M/S. RICOH INDIA LTD. & ORS. [2012 (6) TMI 76 - DELHI HIGH COURT - LB] had concluded that "[e]ven if a miniscule part of cause of action arises within the jurisdiction of this court, a writ petition would be maintainable before this court." At the same time, the full court had cautioned that the term “cause of action‟ should be understood as per Alchemist Ltd.
As to what amounts to “cause of action‟ is well-settled, simply put, it is the bundle of facts which the plaintiff must prove in order to succeed - For every action, there has to be a cause of action. If there is no cause of action, the plaint or petition has to be dismissed.
Whether cause of action can be said to have arisen in Delhi? - HELD THAT:- The argument of the learned counsel for the applicant is twofold; first, that cause of action is linked with crime and second, that rejection of mercy petition does not give rise to any cause of action. We are unable to accept both the contentions of the applicant - The concept of cause of action in respect of criminal proceedings cannot apply sensu stricto to the present proceedings as the same are not a continuation of the judicial proceedings but premised upon executive orders.
Learned counsel for the applicant had next contended that the rejection of mercy petition does not give rise to any cause of action. As an alternative, Mr. Jha had submitted it is the communication to the convict which may give rise to a cause of action. Again, we are unable to agree with the argument of learned counsel for the applicant. The mercy petition is the last thread between the convict and the gallows; the rejection of which leads to issuance of warrants of execution. It cannot be said that the same does not give rise to any cause of action to the convict as it closes the last hope upon which his very life is reliant. Therefore, in our view, the rejection of mercy petition does give rise to a cause of action at Delhi.
Principle of forum non conveniens - applicant has argued that the convenient forum would be Chhattisgarh High Court and not this court - HELD THAT:- It is clear that the courts should generally decide disputes upon which they have jurisdiction. They may decline to exercise such jurisdiction only if there are compelling reasons for not doing so. In doing so, the courts must apply a balancing test and reject to exercise jurisdiction only if there are compelling reasons keeping the Latin maxim Judex tenetur impertiri judicium suum in mind - In the present case, the learned counsel for the applicant has resisted the jurisdiction of this court stating that the records of the supervening circumstances are maintained in Chhattisgarh and that the convict is also in Chhattisgarh. On the contrary the counsel for the petitioner has contended that the material which is to be looked into is in the possession of the respondent no. 1, the seat of which is also in Delhi.
The material to be examined is the advice tendered by the cabinet and all the documents and records pertaining to the same are in Delhi and the decision has also been taken in Delhi. Further the location of the convict also makes no difference, as the convict being the dominus litis is free to invoke the jurisdiction of this court. Accordingly, the said contention of the applicant must also be rejected.
This Court is vested with the jurisdiction to entertain the present writ petition - Application dismissed.
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2016 (12) TMI 1816 - ITAT DELHI
Reopening of assessment - Addition u/s 68 - non independent application of mind - HELD THAT:- AO had issued notice u/s 148 of the Act only on the basis of information received from CIT, Central-1, New Delhi and not on the basis of reasons recorded by him by applying his own mind.
Therefore notice issued u/s 148 of the Act was not valid and the reassessment framed deserves to be quashed. As regards to the merit of the case is concerned, it is not in dispute that the assessee furnished the confirmation from the share applicants to whom shares were allotted, the amount was received by the assessee through banking channels.
The addition was made simply on this basis that the notice issued u/s 133(6) were received back and the assessee was unable to produce principal officer/director of the investor companies. However, the explanation of the assessee that the shares earlier allotted to the companies M/s MARRASS Industries Pvt. Ltd. and M/s BSA Fincap Pvt. Ltd. were already sold to other parties and those companies were not the shareholders of the assessee at the time of date of inquiry, was brushed aside.
In the instant case, the assessee furnished documentary evidences in support of the receipt of the share application money which was through banking channels from the companies and also stated that those corporate entities were duly assessed to tax. But the AO held that even when the share capital had been received through banking channels and from corporate entities who were duly assessed to tax was not enough to accept the claim of the assessee. However, it was not brought on record to substantiate that the share application money was in fact the money of the assessee which rotated through banking channels. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted. In the result, the appeal filed by the assessee is allowed.
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2016 (12) TMI 1815 - ITAT CHENNAI
Nature of loss - Loss arising swap currency forex derivative - swap currency forex derivative entered into with Axis Bank Ltd. relating to principal amount of loan of ₹.10 crores - speculative loss or business loss - HELD THAT:- In this case, the value of loan was taken into consideration at exchange rate of ₹.43.1200 for US Dollar, US Dollar to Swiss Franc 1.2206 and from Swiss Franc to Indian rupees at 35.3269. The term loan was converted as a forex derivative for operation of the forex derivatives and while converting for operation of currency swap, the assessee has claimed loss of ₹.1,95,56,190/-. The assessee has also earned interest of ₹.10,39,561/- and had to pay as a settlement for currency swap amount of ₹.1,32,90,556/- and on account of currency option i.e., against US Dollar ₹.73,05,194/- to Axis Bank. Being so, the expenditure incurred on issue of debentures/equity shares, whether convertible or non-convertible is an allowable deduction as revenue expenditure in view of the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. First Leasing Co. of India Ltd. [2007 (7) TMI 222 - MADRAS HIGH COURT] . Further, in the case of CIT v. Secure Meters Ltd. [2008 (11) TMI 66 - HIGH COURT RAJASTHAN] has also held that the debentures when issued were a loan and, therefore, whether they were convertible or non-convertible did not militate against the nature of the debenture, being loan and, therefore, the expenditure incurred would be admissible as revenue expenditure.
In this case, it is not clear from the orders of authorities below for which purpose; the assessee has entered into currency swap forex derivatives. If the assessee has entered into forex derivatives contract for the purpose of issue of debentures/equity shares, then the loss claimed by it would be admissible as revenue expenditure and otherwise not. The Assessing Officer is directed to verify the same and decide in accordance with law. Thus, the ground raised by the assessee is allowed for statistical purposes.
Interest receipts as income of the assessee - assessee credited the interest receipts to Capital Work in Progress - HELD THAT:- Under the terms of loan, the funds availed/drawn and brought into India had to be utilized immediately for the units and were not available for other purposes. Accordingly, the loan funds were withdrawn in tranches. The unutilized amounts were held by the lending bankers as short term deposits on which interest has been received by the assessee company for the period it was so held. On the other hand for the loan amounts so involved, the assessee was charged interest by the lending Banks. Interest on ECB loan paid during the year was ₹.10,01,57,046/- which has been capitalized and included in the capital work in progress as required under Accounting Standard 16. The interest received on the unutilized funds parked outside has also been taken to the same account. The gross interest of ₹.1,95,02,045/- so received from short term deposits were credited to capital work in progress. However, the Assessing Officer treated the same as income of the assessee and brought to tax. The ld. CIT(A) confirmed the order of the Assessing Officer. As relying on ARASAN ALUMINIUM INDUSTRIES PRIVATE LIMITED [1995 (9) TMI 25 - MADRAS HIGH COURT] we confirm the order of the ld. CIT(A) on this issue and dismiss the ground raised by the assessee.
Admission of additional ground of appeal raised for the first time before the Tribunal - amount realized by transferring Carbon Credits – Certified Emission Reductions [CER], which is not liable to be included in the total income of the assessee was inadvertently credited in the profit and loss account as income in Co-Generation Division and added to the total income of the assessee - HELD THAT:-The additional ground raised by the assessee for the first time before the Tribunal is entertained. However, the matter is remitted back to the file of the Assessing Officer to examine and decide the issue in accordance with law after allowing opportunity of hearing to the assessee.
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2016 (12) TMI 1814 - BOMBAY HIGH COURT
Recovery proceedings - Notices of Motion - communication received by the Income Tax Recovery Officer from the original petitioner (Stock Exchange) - Stock Exchange to prohibitory and attachment orders issued by the Revenue in regard to membership card licensed to Mr. Bharat S. Khona and Mr. Akhil Dalal - Auction proceeds of their membership rights and the Stock Exchange is in the process of releasing these surplus amounts to the two defaulting members - HELD THAT:- This Court followed the decision of the Apex Court in Bombay Stock Exchange vs. V.S.Kandalgaonkar & Ors.[ 2014 (10) TMI 368 - SUPREME COURT] wherein it is held that the member has no right to Stock Exchange membership card as it is only a personal privilege. Consequent to the disposal of the petitions by this Court it is a settled position in law that this Court becomes Functus Officio. Therefore an application relating the disposed of petition cannot be entertained.
In any case, the cause of action of the Revenue, if any, in respect of the communication dated 4th May, 2016 arises post disposal of the Writ Petitions by Order dated 15th October, 2015. Consequently the cause of action on the basis of which this application is filed is a separate and distinct cause of action. Therefore the Revenue is free to adopt such proceedings as they deem fit in respect of letter dated 4th May, 2016. However, the present applications seeking to modify the order dated 15th October, 2015 by taking out this Notice of Motion cannot be entertained by us in a disposed of petition. Moreover it appears the communication dated 4th May, 2016 is separate cause of action and the present application filed by the Revenue is inappropriate.
Learned Counsel appearing for the original Petitioner– Stock Exchange on instruction states that for a period of eight weeks from today, the original petitioner – Stock Exchange will not part with the surplus amount of ₹ 1,57,06,642.26 and ₹ 11,09,849.93 or any part thereof received on sale of the membership card to the defaulting members Mr. Bharat Khona and Mr. Akhil K. Dalal. This should give more than sufficient time to the Revenue to consider its position in law and take appropriate proceedings, in law if so advised. Both the Notices of Motion are dismissed.
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2016 (12) TMI 1813 - ITAT AHMEDABAD
TP Adjustment - rejection of CUP as the most appropriate method - Comparable selection - selection of Petronet LNG Limited and Gas Authority of India Ltd. as comparables for RPM - HELD THAT:- In consideration of the criteria prescribed by the Rules, nature, class of the services rendered and the availability, coverage and reliability of data necessary, and guidelines issued by the OECD in this regard, inter alia, RPM is considered was being the “most appropriate method” to determine the arm’s length value of the transaction pertaining to purchase of LNG.
The assessee and Indian Oil, Bharat Petroleum, ONGC and GAIL, or, for that purpose, any other public sector undertaking, cannot be said to be associated enterprises. In the cases of public sector companies, even as all or majority of shareholdings may be by the Union or State Governments, these companies, for that reason alone, cannot be said to be associated enterprises for the purposes of Section 92A. In view of this finding, the issue regarding related party transactions ceases to hold good in law.
Nothing on record to substantiate the claim of the learned Departmental Representative that the PLL was charging separate fees for regasification. In our considered view, regasification is an integral part of assessee’s trading activity as unpacking of a consignment to put the same in a saleable state and fit for transportation by the available mode. The process of regasification cannot be seen in isolation with the main activity carried on by the assessee. What has been sold by the assessee is regasified LNG (R-LNG) as is evident from the financial statements of the assessee. The business models of HLPL and PLL are similar in the sense that the entire cost, whether it is a long term or a short term contract, is passed on to the customer in India as no trader will keep the cost to itself including the foreign exchange fluctuation. To that extent, leaned Departmental Representative indeed seems to have erred in observing that in the case of PLL, the entire fuel cost including the exchange rate fluctuation is passed on to the customers, whereas the same is not the case of HLPL as it is a full risk distributor. In any case, as a plain look at the financial statements of PLL would show the PLL has booked, in its profit and loss account, foreign loss exchange loss separately to the tune of ₹ 33 crores approximately, and thus it cannot be said that the PLL had passed on entire foreign exchange fluctuation risk to its customers. It has also been noted that sale to customers in India by both PLL as also the assesse is foreign currency (USD) denominated and, therefore, the foreign currency risk is a pass through costs for both HLPL and PLL to that extent.
We agree that the mere fact that PLL also has long term arrangements for purchases of LNG, it does not cease to be a valid comparable for this reason alone.
As regards GAIL as a comparable As for the point that the GAIL is selling natural gas on administered prices, this objection is found to be incorrect inasmuch asin response to the RTI application dated June 24, 2013, it has been clarified that Government that it does not regulate / fix / control the prices of imported LNG. In any event, even if GAIL is to be excluded from comparables, it does not make any difference to the conclusion that the margin earned by the assessee are well within the comparable margin earned by PLL. As for the point that the GAIL is selling natural gas on administered prices, this objection is found to be incorrect inasmuch asin response to the RTI application dated June 24, 2013, it has been clarified that Government that it does not regulate / fix / control the prices of imported LNG. In any event, even if GAIL is to be excluded from comparables, it does not make any difference to the conclusion that the margin earned by the assessee are well within the comparable margin earned by PLL.
We hold that the comparables adopted by the assessee are appropriate.
There is a specific finding in the order of the Dispute Resolution Panel that in the light of this Tribunal’s decision in the case of Liberty Agri Products [2011 (8) TMI 737 - ITAT, CHENNAI] even for the purposes of CUP, the prices prevailing on the day of transaction can only be compared with the comparable uncontrolled prices prevailing on that day only and not on some other dates, and that in none of the cases the TPO has used the prices prevailing on that particular day. This finding remains unchallenged and this principle has not been called into question by the appellant. Therefore, even if CUP method is to be applied, the impugned adjustment will have to be deleted anyway. Viewed thus, the grievances raised in this appeal may be viewed as somewhat academic and of no practical consequence. However, without any offence or prejudice to this line of reasoning, we have dealt with the issue on merits and given our categorical findings on the same.
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2016 (12) TMI 1812 - ITAT MUMBAI
Depreciation on assets leased - Whether such transactions to be finance transactions instead of lease transactions? - HELD THAT:- As decided in own case [2015 (4) TMI 725 - ITAT MUMBAI] in the absence of any proper material and record to come to such a finding, we are of the opinion that this matter needs to be restored back to the file of the Assessing Officer to examine it afresh. Thus the claim of depreciation on the assets pertaining to the aforesaid three sale and leaseback transactions which have been entered into this year is set aside to the file of the Assessing Officer to decide the issue afresh - Decided partly in favour of assessee for statistical purposes.
Addition of remission of loan both under the normal provision and also u/s.115JB - HELD THAT:- Neither the provisions of Section 41(1) is applicable nor assessee’s income was liable to tax u/s.28(iv) of the IT Act. The CIT(A) has also called remand report and after considering the same and applying various proposition of the law, reached to the conclusion that remission of loan would not be chargeable to tax either u/s.41(1) or u/s.28(iv) of the IT Act. The detailed finding so recorded by CIT(A) has not been controverted by DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the CIT(A) deleting the addition made on account of remission of loan.
MAT computation for remission of loan - We found that there was a remission of principal amount of loan - As decided in NILGIRI TEA ESTATES LTD. [2012 (2) TMI 553 - ITAT COCHIN] profit from sale of agricultural land, which is not a “Capital Asset”, cannot be included for the purpose of computing book profit u/s 115JB - we restore the matter back to the file of the AO for deciding afresh
Charging of interest u/s.234B where income is assessed u/s.115JB - HELD THAT:- As relying on KWALITY BISCUITS LIMITED [2006 (4) TMI 121 - SC ORDER] we direct the AO to delete the interest charged u/s.234B
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2016 (12) TMI 1811 - ITAT CHANDIGARH
Penalty levied u/s 271CA - default in collection of tax at source - ITAT concurred with the findings of the CIT(A) and held that the belief of the assessee that the goods sold by it were not covered in the definition of scrap though not accepted by the CIT(Appeals) on merit, constituted reasonable cause for failure to comply with the provisions of law - HELD THAT:- Where as a matter of fact it has not been categorically established that the goods were scrap and waste as such which could not be used further, the facts narrated by the assessee, which we find had not been controverted by the revenue, reveal that the assessee harboured an honest belief based on reasonable grounds that the goods sold were not scrap. The same constituted reasonable cause for not collecting tax at source even though the Ld. CIT(appeal) did not accept this content ion of the assessee on merit.
We agree with the Ld. CIT(A) that the assessee had reasonable cause for not collecting tax at source, the absence of which is essential for levying penalty as held in the case of Wood ward governor [2001 (4) TMI 34 - DELHI HIGH COURT] . We therefore uphold the order of the CIT(Appeals) deleting the levy of penalty under section 271CA of the Act. The appeal of the revenue is accordingly dismissed.
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2016 (12) TMI 1810 - CESTAT CHENNAI
CENVAT Credit - input services - C & F Agent service was availed to make clearance of final product - Revenue denies credit on the ground that service availed was up to the place of delivery - HELD THAT:- There is no provision in law to deny the credit where the service of C&F agent is availed for clearance of the goods irrespective of destination of delivery. The place from which clearance is to be made and place up to which clearance is to be made not being the stipulation of the law, denial of Cenvat credit is uncalled for.
Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1809 - ITAT VISAKHAPATNAM
Penalty u/s 271(1)(c) - excess depreciation claim - assessee engaged in development of integrated Textile Park in the Special Economic Zone Visakhapatnam, installed water supply and treatment plant for the benefit of users and claimed 100% depreciation on such water treatment plant and equipments - HELD THAT:- Whether the assessee is developing exclusive infrastructure facility of water treatment plants is eligible for 100% depreciation or providing in house water supply project or water treatment plant in a integrated infrastructure facility being Textile park in Special Economic Zone is a debatable issue which involves two possible views. The assessee had taken one of the possible view which was supported by sound legal contention and also certified by the tax auditor cannot be considered as furnishing of inaccurate particulars of income within the meaning explanation 1 to sec. 271(1)(c) of the Act. Moreover, even after disallowance of excess depreciation, the returned loss continued to be in loss and which does not results into taxable income, so as to claim that the assessee has claimed excess depreciation to evade payment of tax.
Excess depreciation claim made by the assessee is a bonafied claim without any fraudulent intention to evade tax, which does not tantamount to furnishing inaccurate particulars of income warrants levy of penalty u/s 271(1)(c) of the Act. The CIT(A), after considering relevant facts, rightly deleted penalty levied by the A.O. We do not see any reasons to interfere with order of the CIT(A). Therefore, we upheld the CIT(A) order and dismissed appeal filed by the revenue.
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2016 (12) TMI 1808 - CALCUTTA HIGH COURT
Whether the Company Law Board lacked authority in receiving the petition under Section 58 of the Companies Act, 2013 beyond the period prescribed in sub-section 4 thereof?
HELD THAT:- Under the provisions of Companies Act, 1956, the Company Law Board (CLB) is a Court in a restricted sense. Under Section 10E (4C) of the Companies Act, 1956, the CLB would have powers under the Code of Civil Procedure, 1908 (5 of 1908) only in respect of the matters specified in Section 10E (4C) (a) to (f) of the Companies Act. The Company Law Board is a quasi-judicial authority to be guided by the principles of natural justice in exercise of its power and discharge its functions under the Companies Act, 1956 and it shall act in its discretion - There cannot be any doubt that the provisions of Section 5 of the Limitation Act would only be applicable to the Courts and not to any Tribunal, Quasi-Judicial bodies including CLB unless such authorities are vested with the power of enlargement.
The very fact that an appeal is a continuation of proceedings and the order of CLB is subject to appeal and has not reached finality, therefore, no right appears to have been vested in the appellant in order to attract the mischief of affecting vested right, if there be any.
Application dismissed.
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