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Showing 1 to 20 of 1975 Records
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2018 (4) TMI 1979
Disallowance of warranty provision - assessee could not explain to scientific basis on which the warranty provision was paid - assessee explained that the assessee gives post sales warranty against the performance of its product and manufacturing defects therein and this can be observed in the terms of delivery and payment mentioned in the sample copies of the order confirmation document - HELD THAT:- This provision for warranty is estimated by the assessee on scientific basis and assessee has claimed net of provision utilized during the year as per reversal method of accounting and hence we find no infirmity in the claim of the assessee. Accordingly, we reverse the orders of the lower authorities and allow the claim of the assessee. This issue of assessee’s appeal is allowed.
Nature of gain - Gain arising on land building as a separate long term capital gain and short term capital gain - HELD THAT:- We find that the CIT(A) has rightly treated the sale consideration arising out of land as long term capital gain and sale consideration attributable to building as short term capital gain. Hence, we find no infirmity in the order of CIT(A) and hence the same is confirmed. The issue of Revenue’s appeal is dismissed.
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2018 (4) TMI 1978
Denial of cum tax benefit and imposition of simultaneous penalty under Section 76 as well as under Section 78 of the Finance Act, 1994 - Non-payment of service tax - entire amount of service tax with interest was paid to the Department before issuance of SCN - Security Services - HELD THAT:- It is not in dispute that at the relevant point of time, the appellant had charged a consolidated amount from the customers and while charging such amount, the appellant was not aware about the liability of service tax payable on the security services, which they discharged subsequently. Therefore, as observed in Advantage Media Consultant’s case [2008 (3) TMI 59 - CESTAT KOLKATA] even though for the period before 2006, the tax component is inbuilt into the value charged from the customers and ought to be considered as cum-tax price; the said benefit accordingly admissible to the appellant.
Simultaneous penalty under Section 76 and 78 of the Finance Act, 1994 - HELD THAT:- The issue is covered by the judgment of the Hon’ble Gujarat High Court in Raval Trading Co. case [2016 (2) TMI 172 - GUJARAT HIGH COURT]. Consequently, imposition of penalty under Section 76 of the Finance Act is liable to be set aside and accordingly, dropped. In the result, the impugned order is modified and cum tax benefit is hereby allowed penalty continued under Section 76 of the Finance Act is set aside. Further, the matter is remanded to the adjudicating authority to recalculate the amount of service tax payable after extending cum tax benefit to the appellant.
Appeal allowed by way of remand.
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2018 (4) TMI 1977
Disallowance u/s 14A r.w.Rule 8D - HELD THAT:- This issue is covered by the judgment of this Court in the case of ‘Commissioner of Income Tax-VI vs. Taikisha Engineering India Ltd.[2014 (12) TMI 482 - DELHI HIGH COURT] where the Court held that unless the AO rejects the explanation that induces the necessity to offer a specific amount as expenditure by some reasons, the mere rejection per se is unacceptable. The ITAT followed that decision; therefore, no question of law arises on this aspect.
MAT Computation - Second question urged by the Revenue does require consideration, which is as follows:-
“Did the ITAT fall into error in overlooking the Explanation (f) to Section 115J of the Act, in the circumstances of the case?”
Issue notice of the appeal to the assessee, returnable on 27th July, 2018.
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2018 (4) TMI 1976
Seizure of goods - goods not accompanied by the E-way bill - HELD THAT:- On perusal of relevant documents, namely, Invoice, Goods receipt, E-way Bills etc., which are enclosed as Annexures to the writ petition and found that the E-way bill under the UPGST Act has been downloaded by the petitioner, much before the detention and seizure of the goods and the vehicle, disclosing all the necessary informations.
There are no irregularity in the present transaction and, therefore, the seizure order as well as penalty notice dated 07.04.2018 issued under Sections 129(1) and 129 (3) of the Act as well as the consequential proceedings are hereby set aside.
Petition allowed.
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2018 (4) TMI 1975
Seizure of goods - goods not accompanied by the E-way bill - HELD THAT:- On perusal of relevant documents, namely, Invoice, Goods receipt, E-way Bills etc., which are enclosed as Annexures to the writ petition and found that the E-way bill under the UPGST Act has been downloaded by the petitioner, much before the detention and seizure of the goods and the vehicle, disclosing all the necessary informations.
There are no irregularity in the present transaction and, therefore, the seizure order as well as penalty notice dated 07.04.2018 issued under Sections 129(1) and 129 (3) of the Act as well as the consequential proceedings are hereby set aside.
Petition allowed.
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2018 (4) TMI 1974
Detention and seizure of goods - goods not accompanied by the E-way bill-01 - HELD THAT:- On perusal of relevant documents, namely, Invoice, Goods receipt, E-way Bills etc., which are enclosed as Annexures to the writ petition and found that the E-way bill under the UPGST Act has been downloaded by the petitioner, much before the detention and seizure of the goods and the vehicle, disclosing all the necessary informations.
There are no irregularity in the present transaction and, therefore, the seizure order as well as penalty notice dated 22.03.2018 issued under Sections 129(1) and 129 (3) of the Act as well as the consequential proceedings are hereby set aside.
Petition allowed.
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2018 (4) TMI 1973
Direction to official Respondents to consider the name of the first Respondent herein for appointment to the IPS by taking into account the service records for the period from 1.4.2003 to 31.3.2008 - appointment to the IPS by notionally treating such appointment with effect from the date of notification, i.e., 5.5.2009, and also by giving appropriate place of seniority to the first Respondent amongst the private Respondents - HELD THAT:- No doubt, the Selection Committee may be guided by the classification adopted by the State Government but, for good reasons, the Selection Committee may evolve its own classification which may be at variance with the grading given in the Annual Confidential Reports. As has been held by this Court in the case of UPSC v. K. Rajaiah and Ors. [2005 (5) TMI 676 - SUPREME COURT], the power to classify as "Outstanding", "Very Good", "Good" and "Unfit" is vested with the Selection Committee. That is a function incidental to the selection process. The classification given by the State authorities in the Annual Confidential Reports is not binding on the Selection Committee. Such classification is within the prerogative of the Selection Committee and no reasons need be recorded, though it is desirable that in a case of grading at variance with that of the State Government, reasons be recorded.
This Court has repeatedly observed and concluded that the recommendations of the Selection Committee cannot be challenged except on the ground of mala fides or serious violation of the statutory rules. The courts cannot sit as an appellate authority or an umpire to examine the recommendations of the Selection Committee like a Court of Appeal. This discretion has been given to the Selection Committee only, and the courts rarely sits as a Court of Appeal to examine the selection of a candidate; nor is it the business of the Court to examine each candidate and record its opinion. Since the Selection Committee constituted by the UPSC is manned by experts in the field, their assessment have to be trusted, unless it is actuated with malice or bristles with mala fides or arbitrariness.
The High Court was of the view that since the records submitted before the Selection Committee did not include the grading of the officers recorded by the State Government, the Selection Committee did not have an opportunity to take into account the grading recorded by the State Government while coming to its conclusion, the said observations cannot be agreed upon.
The records pertaining to the grading of the officers recorded by the State Government could have been secured by the High Court from the State Government. Instead of securing records from the State Government, the High Court has strangely observed that such records were not available before the Selection Committee. It is but natural for the Selection Committee to send back the records to the State Government after the selection process is ended and appointments are made.
The judgments of the CAT and the High Court of Judicature at Madras stand set aside - appeal allowed.
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2018 (4) TMI 1972
Disallowance u/s 14A - assessee has earned exempt income or not? - HELD THAT:- We find that the assessee has not earned any dividend income during the year. As the assessee has not earned income which is exempt from tax during the year, no disallowance can be made u/s 14A as held by the Hon’ble Jurisdictional High Court in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] Therefore, Ground No.1 is allowed.
Nature of expenses - expenditure on amortization of leasehold land - revenue or capital expenditure - HELD THAT:- Assessee issue is covered by the decision of assessee’s own case [2017 (8) TMI 77 - ITAT DELHI] wherein the issue has been set aside to the file of the AO for denovo adjudication as there is no material on record to show that assessee has made these payments as advance rent for future years to secure any reduction in rent payable for future years or for any other business consideration.
We are, therefore, unable to appreciate arguments advanced by Ld. Counsel that these advances paid are towards advance rent. Even from the terms of agreements, it is not clear as to whether advances paid has been adjusted against future rent or whether these are in the nature of security deposits which are refundable in nature on termination of agreements. Both parties before us have expressed their intention regarding issue being re-adjudicated by assessing officer de novo. Ground allowed for statistical purposes.
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2018 (4) TMI 1971
Revision u/s 263 - withdrawal of deduction u/s 80IC for the reason that AO failed to verify whether Form No.10CCB was available with him at the time of scrutiny and also AO failed to verify whether those are covered in the negative list as specified in Schedule XII of the Act - HELD THAT:- On a reading of the decision in Kewal Kishan Clothing P. Ltd. (2015 (4) TMI 1323 - ITAT MUMBAI) we find that the facts are almost identical. In that case also form 10 CCB was not filed and the AO allowed the claim made by the assessee for earlier nine years. While placing reliance on the decision in Zenith Processing Mills (1995 (9) TMI 37 - GUJARAT HIGH COURT], the Mumbai tribunal held that the Audit Report in prescribed form no.10CCB could be filed even if revision jurisdiction is exercised by the CIT u/s 263 of the Act.
Thus we hold that non-submission of the form 10 CCB or the non-verification of the eligibility of the product to claim deduction under section 80 IC of the Act, in view of the fact that such a deduction was allowed for 5 years earlier, do not constitute valid grounds to exercise jurisdiction under section 263. We therefore find it difficult to sustain the order passed u/s 263 by the Commissioner of income tax, Delhi. Decided in favour of assessee.
Deduction u/s 80IC - Manufacturing item or not? - manufacturing DGX and Pillar filler - assessee’s case is that the Pillar filler is in an irregular shape, specific to the requirement of the motor vehicle manufactured has assumed the character of an automobile component and it cannot be used for any other purpose - As per AO Application of DGX need very high level of thixotropic properties so that it can be pumped and applied as stable bead and, therefore, the assessee company is manufacturing item which is included in the negative list of Schedule XIII which disentitle the assessee to claim deduction u/s 80IC - HELD THAT:- AO made the report of CIPET the sole basis for his conclusion that the assessee has been manufacturing plastic and plastic product and failed to notice the elaborate process which the raw materials have undergone to become the finished product which have only one usage i.e. in automobile industry and none else.
It is not brought to our notice that these two products either pillar filler or the DGX are generic in their use as plastic or they could be put to use everywhere the plastic could be. The sole and single purpose of the finished goods in the automobile industry sets the raw material of plastic apart from the finished goods which are known as automobile parts in the commercial world. We do not find any perversity either in the approach or in the conclusions reached by the learned CIT(A) after appreciating the same material which the learned AO made basis for his conclusion. AO stopped at the chemical composition whereas learned CIT(A) took it a little further to its logical conclusion by identifying the products with their usage and their nomenclature in the world where they are made use of. The reasoning given by the learned CIT(A) is impeccable and we find ourselves in agreement with the same. Such findings of learned CIT(A) do not warrant any interference.
Nature of expenses - deduction of royalty paid by the assessee to Company in Germany - revenue treated such an expenditure is towards the acquisition of assets by way of intangible assets of the nature provided u/s 32(1)(ii) of the Act and accordingly allowed depreciation @ 25% and made addition on that account - HELD THAT:- Tribunal in own case allowed the royalty fee paid to Company in Germany u/s 37(1) of the Act as revenue expenditure on the ground that such payment was only for right to use the technical knowhow and no benefit of enduring nature accrued to the assessee.
CIT(A) further recorded that in respect of Asstt. Year 2006-07 to 2008-09, such a finding was returned by the first appellate authority only. As rightly observed by the learned CIT(A), the AO has not brought on record any change in the facts and circumstances that took place from the earlier years. In the absence of any compelling reasons pleaded by the revenue before us, we do not find any reason to take a different view from the one taken for the earlier years by the authorities below.
Difference of 10% gross profit rate - Basing on the comparative gross profit, learned AO opined that the assessee had disclosed more profit in 80IC unit than the other unit by 10% just to claim enhanced deduction u/s 80IC and the profit of the eligible unit need to be calculated and resultant disallowance on account of claim of deduction u/s 80IC need to be calculated - CIT(A) found that since the full details and figures were not available to examine the price at which the inputs are obtained or the output is transferred to the warehouse so to draw an appropriate conclusion, the AO may make further enquiry to arrive at a suitable conclusion - HELD THAT:- CIT(A) observed that basically if in market condition the goods could have been sold at the same prices at which these are transferred by the non-eligible unit to the eligible unit or vice versa, then there is no case of any addition u/s 80 IA(8) following the arm’s-length principle. He considered the submissions advanced on behalf of the assessee that only to ensure timely delivery as per the requirement, the finished goods are first transferred to the warehouse of Gurgaon, Pune and Chennai units with warehouse facility only in order to provide proximity to the location of the customer to ensure immediate transfer as per requirement.
CIT(A) further considered the submission on behalf of the assessee that as per Excise, the transfer is to be made to the warehouse at the final sale price to the customers that is market price and therefore question of adjustment under section 80 IA (8) does not arise. Lastly he recorded that he broadly agreed with the rationale of this argument. However, inasmuch as the facts and figures were not available to the full extent, he allowed the AO to make further enquiry in this regard.
Having observed so, CIT(A) found that to draw an appropriate conclusion, the full details and figures are necessary to examine the price at which the inputs are obtained are the output is transferred to the warehouse and for such purpose learned CIT(A) permitted the AO to make further enquiry in this regard and reach a suitable conclusion.
No necessity to interfere with this observation of the Ld. CIT(A) and suffice it to say that the Ld. AO may base the conclusion on the facts and figures obtained during the enquiry but not on any surmises and conjectures or extraneous inferences. We therefore approve the observations of the learned CIT(A) to the Ld. AO to cause enquiry after obtaining the full details and figures to examine the price at which the inputs are obtained or the output is transferred to the warehouse and reach a factual conclusion firmly based on the facts and figures.Cross objection filed by the assessee are allowed accordingly.
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2018 (4) TMI 1970
Disallowance of interest u/s 14A - expenditure incurred on earning exempt income - sufficiency of own funds - CIT(A) deleted the addition - HELD THAT:- As decided by CIT(A) what s.14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax-free income. Hence in the absence of any tax-free income, the corresponding expenditure could not be worked out for disallowance.
There are ample interest free funds available for investment in shares. A table showing year wise accruals are testimony to the same.The intention of investment was not to earn dividend. There has been no dividend during the period of holding is a testimony to that proposition. Also the objective of investment was to sit in management to influence decision making of that company and fetch construction contract and also to gain capital appreciation in value of shares by selling the same when execution risk is overcome. Therefore even presuming that the same was out of borrowed funds, it is clearly manifested that there has been no dividend but the income from acquiring contract was offered to tax. Also capital gains on sale of shares were offered to tax. Therefore in the peculiar facts and circumstances, it is demonstrated by the assessee by actually offering the income to taxation then it cannot be said that shares were intended to earn income which is tax exempt.If the investment has a potential to earn non exempt income 14A cannot be invoked.
The visit to 14A (2) or (3) is permissible only when the claim of the assessee has been held to be incorrect by showing cogent reason. Satisfaction or dissatisfaction is to be supported by valid reasons
From the order of the Ld. CIT(A), it is evident that the Ld. CIT(A) has examined the factual aspects of the case. The Revenue has not rebutted the finding by placing any contrary material on record. Therefore, we do not see any reason to interfere with the orders of the Ld. CIT(A). Decided against revenue.
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2018 (4) TMI 1969
Treatment of agricultural income as non agricultural income - search carried out u/s.132 and also survey u/s. 133A at the business premises of the assessee on 05/11/2009 - HELD THAT:- The return of income for the assessment year 2004-05 was filed on 19/12/2010 showing agricultural income which was filed before the due date of filing the return of income. Whenever the assessee declared agricultural income in his return, burden is on the assessee to show that income is actually earned from agricultural and not from other sources. In the present case, there is no evidence placed with reference to the earning of agricultural income and corresponding expenditure incurred with reference to agricultural operations. The Assessing Officer has made a reasonable estimate on the basis of material seized. Being so, for the assessment year 2004-05, the Assessing Officer treated the agricultural income and treated balance as non agricultural income. Before us also, the assessee was not able to show any material to suggest that the entire income of Rs. 2,20,000/- for the assessment year 2004-05 is from only agriculture. Being so, for the assessment year 200405, we have no hesitation to confirm the order of the CIT(A) on this issue. This ground of appeal of the assessee is rejected.
Addition towards unexplained credit in the bank accounts of the assessee - The assessee is operating bank account in the name of his employees which was admitted by the assessee in his sworn statement recorded u/s. 132(4) of the Act which itself is an evidence. The assessee though agreed to treat the account as suppressed receipts, the only plea was that the GP rate is to be considered on peak credit to estimate the income. In our opinion, whenever any unexplained deposits is found in the name of the assessee, then it is the duty of the assessee to explain the source of the same. In the present case, the assessee is not able to lead any evidence on this. The whole deposits is to be considered as income of the assessee since the expenditure relating to the receipts has already been taken care of by the expenditure claimed in the assessee’s regular books of accounts. Being so, we are inclined to sustain the addition for the assessment year 2006-07. This ground of appeal for the assessment year 2006-07 is rejected.
Deposit in the bank accounts represents suppressed sale - As such only profit element is to be considered. On the other hand, the contention of the Ld. DR is that the employees in their statements u/s. 132(4) stated that these accounts were operated in the name of the employees and it is the income of the assessee. Admittedly, in this case, the assessee was not able to show it as trading profit of the assessee and incurring of any expenditure to earn this income. It means that it is concealed income of the assessee and all relevant expenditure relating to this income has already been taken care of in the regular books of account and there is no question of any further deduction out of this. The unaccounted deposit is to be considered as the income of the assessee and not the G.P on it. We do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, this ground of appeal of the assessee is for the assessment year 2008-09 is rejected.
Undisclosed investment - Admittedly there is a reference of statement of Shri K.C. Thomas in the assessment order. The Assessing Officer adopted the value of the property at Rs. 1550 per cent on the basis of the statement of Shri K.C. Thomas of 5/11/2009 in whose favour the power of attorney was obtained. Further, the land was purchased in the assessment year under consideration from 16 different owners and enquiry was not made with these persons regarding the extra payment. In our opinion, it is appropriate to remit the issue to the file of the Assessing Officer with a direction to the assessee to furnish a copy of the statement of Shri K.C. Thomas and also to enquire with the respective seller and decide thereupon. With this observation, we remit the issue to the file of the Assessing Officer for fresh consideration. This ground of appeal is allowed for statistical purpose.
Valuation of the property after applying State PWD rates - The assessee had constructed a factory and office building at Vazhakad during the period 1.3.2005 to 1.4.2008. As per the report of the Valuation Office, the total cost of construction was arrived at Rs. 1,67,92,000/-. The assessee declared only a sum of Rs. 1,14,63,115/- as the cost of construction. Thus there was a difference of Rs. 53,28,885/- between the valuation report furnished by the DVO and the cost of construction declared by the assessee. Further, the Ld. AR submitted that the State PWD rates should be applied. If the assessee spent Rs. 20 lakhs after the assessment year 2008-09, then the difference would be only Rs. 14,22,641/- . In our opinion, there is force in the argument of the Ld. AR with regard to the consideration of State PWD rates for valuation of the construction. To that extent, we agree with the contention of the Ld. AR. Accordingly, we direct the AO to re-work the valuation of the property after applying State PWD rates. Regarding the actual cost of construction, the Ld. DR cannot have any objection. Hence, this ground of appeal of the assessee is partly allowed for statistical purposes.
Agricultural lease rent received - The documents produced by the assessee are in the form of Xerox copies of the lease agreements which is only self-serving and no importance is to be given. In view of the fact brought on record by the Assessing Officer and confirmed by the CIT(A), we have no hesitation in upholding the order of the lower authorities. Hence, this ground of appeal for the assessment years 2007-08 and 2008-09 is rejected.
Assessments u/s. 153A r.w.s. 153C - HELD THAT:- We find no infirmity in the issue of notice u/s. 153A of the Act calling for filing of returns of income on 03/05/2010 for the assessment year 2004-05 to 2009-10. Being so, we are not in agreement with the argument of the ld. AR that the issue of notice u/s. 153A is bad in law and thereafter, framing of assessments u/s. 153A r.w.s. 153C of the Act.
Addition made towards lease rent from property in Maharashtra as agricultural income - HELD THAT:- The issue was dealt with in earlier paras wherein we held that it is only a make believe story so as to show the source of income to explain the investments. The facts of this case is also similar and the assessee created self serving documents towards introducing own cash in the garb of exempted agricultural income. No credence is to be given to the photocopies of the agreements filed by the assessee. Accordingly, in our opinion, the lower authorities are justified in rejecting the claim of the assessee in this case also. This ground of appeals of the assessee is dismissed.
Additions towards suppression of sale - HELD THAT:- CIT(A) considered 10% of GP on the suppressed sales in respect of entire turnover as income of the assessee. Generally, we consider the entire turnover as suppressed income of the assessee. However in the present case, CIT(A) considered only 10% of the GP on the suppressed sales as income of the assessee and he was very liberal. Since the Department is not in appeal before us, there being no option before us, we are inclined to confirm the order of the CIT(A) on this issue. This ground of appeals of the assessee is rejected.
Refusal of the assessing authority to accept the claim of receipt of the assessee from Shri Ziad - HELD THAT:- In this case, the assessee has not brought on record cogent evidence to show that the said amount has been received from Shri Ziad. In the absence of specific evidence, we are not in a position to accept the genuineness of the claim of the assessee. Hence, this ground of appeals for both the years is rejected.
Inflated expenditure to the extent of 10% - HELD THAT:- At the time of search, manager of the assessee stated that it was a normal practice of inflating expenditure at the time of finalization of the accounts which was evident from the materials seized from the premises of the assessee and the statement alongwith the return. Since there was evidence in the form of seized material to suggest inflation of expenditure, the CIT(A) considered 10% of the gross profit as inflated expenditure. In view of this we do not find any infirmity in the order of the CIT(A). Accordingly, we confirm the same. This ground of appeal of the assessee is dismissed.
Addition made on the basis of seized material found during the search - As assessee has not placed any material contrary to this. Hence we do not find any infirmity in the order of CIT(A) and confirm the same.
Unexplained investment and on the basis of valuation report filed by the DVO - HELD THAT:- As there was no incriminating material or any statement of the assessee or his employee to indicate the fact of the under valuation of the machinery. In the absence of any incriminating material it is not possible for us to sustain the addition made by the Assessing Officer. In our opinion, the deletion of addition made by the CIT(A) is justified and the same is confirmed. Accordingly, this ground of appeal of the Revenue is rejected.
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2018 (4) TMI 1968
Conviction based upon a retracted confession - circumstantial evidence - whether the High Court was right in dismissing the appeals preferred by the Appellants-Accused? - HELD THAT:- The law is well settled that each and every incriminating circumstance must be clearly established by reliable and clinching evidence and the circumstances so proved must form a chain of events from which the only irresistible conclusion about the guilt of the Accused can be safely drawn and no other hypothesis against the guilt is possible. In a case depending largely upon circumstantial evidence, there is always a danger that conjecture or suspicion may take the place of legal proof. The court must satisfy itself that various circumstances in the chain of events must be such as to Rule out a reasonable likelihood of the innocence of the Accused. When the important link goes, the chain of circumstances gets snapped and the other circumstances cannot, in any manner, establish the guilt of the Accused beyond all reasonable doubt. The court has to be watchful and avoid the danger of allowing the suspicion to take the place of legal proof for sometimes, unconsciously it may happen to be a short step between moral certainty and legal proof. There is a long mental distance between "may be true" and "must be true" and the same divides conjectures from sure conclusions.
The Court in mindful of caution by the settled principles of law and the decisions rendered by this Court that in a given case like this, where the prosecution rests on the circumstantial evidence, the prosecution must place and prove all the necessary circumstances, which would constitute a complete chain without a snap and pointing to the hypothesis that except the Accused, no one had committed the offence, which in the present case, the prosecution has failed to prove.
Both the courts below have erred in relying that part of the statement which can be termed as confession which were given to the police officer while they were in custody and it will be hit by Section 26 of the Indian Evidence Act, 1872 and only that part of the statement which led to the discovery of various materials would be permissible. Hence, in the absence of any other material evidence against the Appellants-Accused, they cannot be convicted solely on the basis of evidence of last seen together with the deceased.
The judgment and order dated 23.11.2009 passed by the High Court is set aside - Appeal allowed.
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2018 (4) TMI 1967
Striking off of names of the companies in which the petitioners were Directors from the Register of Companies - Section 164 of the Companies Act, 2013 - HELD THAT:- The names of the companies in which the petitioners were Directors were struck off from the Register of Companies and a list of disqualified directors under Section 164(2) (a) of the Companies Act, 2013 has been issued by the second respondent on 8.9.2017. Now the last date for filing the annual return has been extended from 29.11.2017 to 30.4.2018 under the Condonation of Delay Scheme, 2018. Therefore, the impugned order is liable to be interfered with.
Petition disposed off.
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2018 (4) TMI 1966
Business Auxiliary Services - HELD THAT:- Application for exemption from filing certified copy of the impugned order is allowed.
Leave granted.
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2018 (4) TMI 1965
Brutal murder of a person with a view to prohibit such person from deposing before the Court in a case against his assailant - dead body was cut into two pieces, and thrown at two different places, in order to destroy the evidence - Existence of common object or not - Doctrine of falsus in uno, falsus in omnibus (false in one thing, false in everything).
The Accused were charge-sheeted, and tried, convicted and sentenced. However, in the meanwhile, two of the Accused died.
HELD THAT:- From the entire evidence, including the ocular testimony of PWs 6, 11 and 14, in our considered opinion, it can be concluded that the prosecution has proved its case beyond reasonable doubt as against the Accused-Kameshwar Singh. However, omnibus and vague evidence is forthcoming as against the other Appellants. The incident had taken place abutting the cattle shed of Nagina Koiri, Accused No. 7. Certain articles were seized from the cattle shed of Nagina Koiri. Two iron rods from the window shutter were found to be cut, which were presumably used for the commission of the offence - It is no doubt true that the evidence on record creates suspicion in the mind of the Court about the participation of the other Accused, but any amount of suspicion may not take the place of proof.
The maxim falsus in uno, falsus in omnibus (false in one thing, false in everything) is not being used in India. Virtually, it is not applicable to the Indian scenario. Hence, the said maxim is treated as neither a sound Rule of law nor a Rule of practice in India. Hardly, one comes across a witness whose evidence does not contain a grain of untruth or at any rate exaggerations, embroideries or embellishments. It is the duty of the Court to scrutinise the evidence carefully and, in terms of felicitous metaphor, separate the grain from the chaff. But, it cannot obviously disbelieve the substratum of the prosecution case or the material parts of the evidence and reconstruct a story of its own out of the rest. Efforts should be made to find the truth. This is the very object for which Courts are created - It is the onerous duty of the Court, within permissible limits to find out the truth. It means, on one hand that no innocent man should be punished, but on the other hand to see no person committing an offence should go scot free. If in spite of such effort suspicion is not dissolved, it remains writ at large, benefit of doubt has to be credited to the Accused. The evidence is to be considered from the point of view of trustworthiness and once the same stands satisfied, it ought to inspire confidence in the mind of the Court to accept the evidence.
The evidence on record points towards the guilt of Kameshwar Singh. It is no doubt true that one man alone could not have committed such a ghastly crime by separating the dead body into two pieces. He must have taken the assistance of others. The prosecution has come out with seven names including Kameshwar Singh, but so far as the other Accused are concerned, particularly in respect of the other Appellants (except Kameshwar Singh), except the omnibus and vague evidence that they were also present and they also joined hands with the Accused-Kameshwar Singh, no other specific and reliable material has come on record. Common object is also not proved - the judgment of conviction passed against the Accused Kameshwar Singh needs to be confirmed, and the same is hereby confirmed.
The Criminal Appeal filed by the Accused-Kameshwar Singh stands dismissed, and the judgment dated 24.05.1988 passed by the VIII Additional Sessions Judge, Sasaram in Sessions Trial No. 192/117 of 1977/1983, convicting and sentencing the Accused-Kameshwar Singh to life imprisonment Under Section 302 Indian Penal Code and three years rigorous imprisonment Under Section 201 Indian Penal Code, as confirmed by the High Court by the impugned judgment, stands confirmed.
Appeal disposed off.
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2018 (4) TMI 1964
Accrual of income in India - PE in India - LO executing business or contracts independently with the customers in India - Whether the assessee’s LO in India constitutes a PE under Article 5 of the DTAA between India and Japan? - HELD THAT:- As following the parity of reasoning brought out by our co-ordinate Bench for Assessment Year 2007-08 in its order we may note that so far as the instant year is concerned, there is no evidence and material referred to by the income-tax authorities so as to establish in the instant year that the LO was executing business or contracts independently with the customers in India and, therefore, the plea of the assessee that the LO was carrying only support activities and was engaged in preparatory and auxiliary activities deserves to be affirmed and the LO could not be construed as a PE in India.
There was no material to suggest that any action was taken by the RBI or whether any correspondence in this regard was at all made by the AO or not. Be that as it may, even before us, there is nothing to suggest that the RBI has found the activities of the LO as being noncompliant with the terms and conditions of its permission and, therefore, the said factual matrix strengthens the assertions of the assessee that the LO was performing activities which were permissible by the RBI, meaning thereby, that it was only performing support activities and engaged in only preparatory and auxiliary activities and not in the nature of a PE so as to impute any business connection in India. Thus, following the precedent as also the aforesaid discussion, in our view, it is irresistible to conclude that the assessee’s LO did not constitute a PE in India for the Assessment Year 2005-06. In this view of the matter, the Ground of appeal no. 1 raised by the assessee is allowed.
Levy of interest u/s 234B - While completing the assessment, interest u/s 234B of the Act was levied by the Assessing Officer for default in payment of advance tax. It has been brought out that similar issue for Assessment Year 1998-99 was considered by our co-ordinate Bench in its order dated 12.01.2017 [2017 (1) TMI 1098 - ITAT MUMBAI] and decided in favour of the assessee following the ratio of the judgment in the case of NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT]. Following the aforesaid precedent, the plea of the assessee on this aspect is also upheld.
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2018 (4) TMI 1963
TP Adjustment - method for ALP determination - selection MAM - CUP v/s TNMM - HELD THAT:- In the present case, the CUP method was rejected as an appropriate method having regard to the fact that it unduly restricted the choices of the Revenue. TNMM was considered to be a more appropriate method where greater choice was available. The assessee’s contention in this respect that the supplies made to the Metro Rail alone ought to be considered is equally unpersuasive. The most appropriate method or the transactional similarity does not dictate that two entities alike in all particulars, can only be considered for comparative purposes. As has been repeatedly emphasized in judicial decisions and recognized by rule making authorities, it is the functional similarity which is to be taken into account.
Having regard to these, the question Nos.1 and 2 urged do not arise.
Admit.
The following questions of law arise for consideration:
“1. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the action of the TPO in cherry-picking comparables and considering Titagarh and Texmaco as comparable companies for undertaking benchmarking analysis of international transaction of main line (MLN) segment applying TNMM, not appreciating that the said companies did not satisfy the test of comparability as provided in Rule 10B(2) of the Rules?
2. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the action of the TPO in deleting the comparables proposed by the appellant, viz., Braithwaite and Bharat Wagon, (without prejudice and in response to the additional comparables selected by the TPO), completely ignoring that the same are identical in functional profile to the comparables introduced by the TPO for undertaking benchmarking analysis of international transaction of main line (MLN) segment applying TNMM, not appreciating that the said companies satisfy the test of comparability as provided in Rule 10B(2) of the Rules?
3. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the addition made by the TPO on account of intra-group services related to management support by President and his team, human resources, Six Sigma and operation, and quality and other services, received by the appellant from its associated enterprises, on the erroneous reasoning that such services, rendered by the AEs are in the nature of shareholders activities and of no economic and commercial value to the business of the appellant?”
Issue notice of appeal.
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2018 (4) TMI 1962
Accrual of income - Income from the contract awarded by the principal - ITAT holding that CIT (A) rightly held the income from the contract awarded by the principal cannot be said to have been accrued in the hands of the assessee AOP notwithstanding JV document executed for bidding and subsequently, the assessee is not liable for income estimated on the contract awarded - HELD THAT:- Materials on record would suggest that the consortium of joint venture of two entities was constituted for execution of a project. A supplementary agreement dated 8.2.2008 between the two joint venture members was executed in which JCM, one of the members of the joint venture, was responsible for all the loss and profits. It was this JCM alone who had taken over the financial rewards and risks. The bank guarantee would be provided by JCM alone.
The bank account would also be operated by JCM alone. JCM would be responsible for compliance of all statutory requirements. It was under these circumstances that the Tribunal came to the conclusion that only one member of the joint venture was essentially responsible for the risks and for execution of the work with total control over the project. Tribunal, therefore, confirmed the view of CIT (A) and rejected the revenue's contention that such further agreement could not have overridden the initial agreement document executed at the time of bidding for the contract. We are broadly in agreement with the view of the Tribunal.
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2018 (4) TMI 1961
Levying tax u/s 201(1) and interest u/s 201(1A) - treating the assessee company in default - failure to collection of tax at source u/s 206C on the sale of material as scrap - HELD THAT:- The word "waste and scrap" are one item. Thereafter, the word used is "from" the manufacture or mechanical working of material. It would mean that the waste and scrap being one item should arise from the manufacture or mechanical working of material. It is, therefore, necessary to read the words waste and scrap together which are generated out of manufacturing process of the assessee. The words waste and scrap should have nexus with the manufacturing or mechanical working of material.
Thereafter, the word used is "which is" definitely not usable. The word "is" as used in this definition of the scrap meant for singular item i.e., "waste and scrap". The word waste "which is" denotes to singular item and thus the singular item would be waste and scrap.
As gone through the details of scrap sold which shows that the assessee has sold Plastic Kabrs, Old Tyre weighing scale, M S Barrel Gunny Bags, rubber tubes, M S Scrap ceiling wires which can be re used.
These items of scrap sold are not generated out of manufacturing processes of sugar factory, therefore, such items sold are not filing under the definition given under explanation (b) to 206C - The words waste and scrap thus cannot be read differently as is considered by ld. CIT (A). The list of scrap sold by the assessee is reproduced above which are not connected with manufacture or mechanical working of material.
The findings of the learned CIT(A) are based on presumption only that since the assessee is engaged in manufacture of sugar, therefore, entire scrap is generated out of its manufacturing activities. The findings of the learned CIT(A) are not based on any material or evidence. By the nature of the scrap items noted above, the same cannot be used while manufacturing gases or doing any mechanical working of the material for the gases.
The items of the scrap in the case of the assessee would not form part of the definition of the scrap as is provided in Explanation (b) to section 206C - Thus, the Explanation is wrongly applied in the case of the assessee.
Reliance placed by the assessee on the decision of Navine Fluorine International Ltd. [2011 (2) TMI 1110 - ITAT, AHMEDABAD] also supports thus, view wherein it was held the assessee has sold certain scrap of consisting of plastic drums, wooden scrap , plates materials, used oil, electric cables etc. was not held to be covered by the definition of scrap as defined under section 206C of the Act.
Authorities below have wrongly applied the meaning of scrap as is provided in Explanation (b) to section 206C of the Income-tax Act in the case of the assessee. Therefore, the assessee cannot be held to be in default. The assessee is not required to deduct tax u/s 206C(6) of the Income-tax Act on the items of scrap as noted above. Assessee cannot be treated a assessee in within the meaning of section 206C - Ex-consequenti, no tax could be raised under section 201(1) and no interest could be charged under section 201(1A) - Appeal of the assessee allowed.
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2018 (4) TMI 1960
Reopening of assessment u/s 147 - as per the AIR information the AO noticed that assessee has deposited cash in the saving bank account which was actually the sales which were deposited in cash in the bank account of sole proprietor - HELD THAT:- We find that the return of income filed on 30.9.2009 was processed u/s 143(1)(a) of the Act which means that there was no scrutiny of accounts and records of the assessee.
Subsequently, received information on the basis of AIR received by the Income Tax Department which revealed that during the F.Y. 2008-09 total cash has been deposited in the savings bank account of the assessee held with Union Bank of India, Neemuch. This information supported by the material; evidence in the shape of AIR information was sufficient enough for the AO to issue notice u/s 148 - The action taken by the AO further seems to be correct because the alleged cash was deposited in the savings bank account and one cannot ignore the possibility that the income may have been concealed and not duly reflected in the income tax return.
We, find no infirmity in the findings of CIT (A) confirming the action of the Assessing Officer in issuing notice u/s 148 of the Act and to make the reassessment u/s 147.
Estimated disallowance of car expenses, mobile expenses, travelling expenses and depreciation AND addition for household expenses - HELD THAT:- The alleged cash deposit was also duly explained by the assessee through its account books and the AO was satisfied with the information and he has mentioned that the alleged cash was in the nature of sales during the year. AO after failing to make any addition on the count of alleged cash deposit, further scrutinised the account books and without pointing out any specific mistake made an ad hoc disallowance of 15% of various expenses treating them to be personal in nature.
Similarly, addition for household withdrawals was made just for the lack of information to be received by the assessee. In our view, to make such disallowances the AO should have made a test check of the bills and vouchers and should have brought on record sample of such expenditure which were personal in nature and had been booked as business expenditure. In the instant case, no such finding has been brought on record by the AO. We, therefore, find no basis for the disallowance made by the Assessing Officer for expenses as well as household withdrawals.
Appeal of the assessee stands partly allowed.
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