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Showing 81 to 100 of 2098 Records
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2019 (2) TMI 2023
TP adjustment made in respect of finished goods exported to the Associated Enterprises (AE) of the assessee - difference in the level of capacity utilization - assessee herein is a subsidiary of SKF Inc. US, which is a leading global supplier for products, sales and services for rolling bearing and seals business - Assessee had adopted TNMM method as most appropriate method and operating profit margin to sales ratio as PLI - HELD THAT:- We noticed that the Hon’ble Bombay High Court in the case of Petro Araldite (P.) Ltd. [2018 (6) TMI 452 - BOMBAY HIGH COURT] and the Delhi Bench of the Tribunal in the case of Claas India (P.) Ltd. [2015 (8) TMI 755 - ITAT DELHI] have held that the adjustment towards difference in capacity utilization is required to be made in terms of Rule 10B(1)(e)(iii) of the Income-tax Rules.
We find merit in the prayer of the assessee for the adjustment towards the difference in the level of capacity utilization. Since this issue has not been examined by the tax authorities and since the assessee has to furnish necessary details in order to support its claim, which in turn requires examination at the end of AO, we deem it proper to restore it to the file of the AO / TPO for examining the claim of the assessee.
Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the AO / TPO for examining the claim of the assessee, in accordance with law, by duly considering the decisions rendered by the High Court / Tribunal on capacity utilization adjustment. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2019 (2) TMI 2022
TP Adjustment - adjustment to the value of international transactions pertaining to provision of software development services by the Appellant under Section 92CA(3) - Comparable selection - PERSISTENT SYSTEMS LTD. (PERSISTENT) - HELD THAT:- As on non-availability of segmental data. So, we are of the considered view that Persistent is not a valid comparable, hence ordered to be excluded.
TATA ELXSI LTD. (TATA ELXSI) - The taxpayer is not the owner of IP which is a captive software development service provider whereas, on the other hand, Tata Elxsi is the owner of IP design of it. Moreover, business unit of taxpayer is very diverse having four business segments as discussed in the preceding paras, whereas only segmental of two of its unit are available. Moreover, there are un-allocable expenses (Net) of ₹ 937.66 lakhs, as is evident from Schedule to the Financial Statements from the year ending March 31, 2010, available at page 526 of the paper book. So far as segmental reporting given at page 526 of the paper book (Annual Report) is concerned, it shows that the company’s operations predominantly relate to providing systems integration and software development services in the information technology field. So, all these facts go to prove that Tata Elxsi is functionally dissimilar vis-à-vis the taxpayer being engaged in the development of specialized/niche product, hence ordered to be excluded being not a valid comparable.
E-INFOCHIPS BANGALORE LTD. (E-INFOCHIPS) - We are of the considered view that E-Infochips being a product and semiconductor engineering services having 500 products for key verticals like aerospace and defence, security and surveillance, etc., having huge intangibles which increases its brand value and its segmental financials are not available, is not a suitable comparable vis-à-vis the taxpayer, hence ordered to be excluded.
INFINITE DATA SYSTEMS PVT. LTD. (INFINITE) - We are of the considered view that Infinite is functionally dissimilar vis-à-vis taxpayer having been into providing solutions that encompass technical consulting, design and development of software maintenance, systems integration, implementation, testing and infrastructure management services. Furthermore, Infinite has entered into Build, Operate and Transfer (BOT) agreement with Fujitsu Services Limited to set up global delivery centers in India to provide offshore capabilities to Fujitsu and Fujitsu’s associated companies. It has also shown exceptional growth in business operation in the last four years i.e. 908% growth rate over the previous year. So, Infinite cannot be a valid comparable vis-à-vis the taxpayer, hence ordered to be excluded.
ZYLOG SYSTEMS LTD. (ZYLOG) - On account of diversified operation, substantial brand value and huge intangible assets having significant AMP spent and R & D expenses, Zylog cannot be a valid comparable vis-à-vis taxpayer which is a captive software development service provider to its AE only, so we order to exclude the same.
Addition on account of overdue receivables from its AE by applying the ad hoc interest rate of 14.88% - HELD THAT:- It is the case of the taxpayer that as per para 5.7 of the Agreement, interest, if any, is to be charged on receivables which has been followed in the earlier years and subsequent years. So, TPO/AO is directed to compute the interest, if any, following the rule of consistency, in view of para 5.7 of the Agreement by taking into account the findings returned in earlier years and subsequent years. So, this issue is remanded back to TPO/AO to decide afresh after providing an opportunity of being heard to the taxpayer.
Disallowance of severance cost incurred by the taxpayer - HELD THAT:- In view of the matter, this issue being of subsequent year is required to be decided by the AO along with AY 2009-10. Consequently, this issue is set aside to AO to decide afresh after providing an opportunity of being heard to the taxpayer.
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2019 (2) TMI 2021
Initiation of Corporate Insolvency Resolution Process against the Principal Borrower - admission of an application under Section 7 - it was held by NCLAT that Without initiating any Corporate Insolvency Resolution Process against the Principal Borrower, it is always open to the Financial Creditor to initiate Corporate Insolvency Resolution Process under Section 7 against the Corporate Guarantors, as the creditor is also the Financial Creditor qua Corporate Guarantor - HELD THAT:- There are no merit in the appeal. The civil appeal stands dismissed.
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2019 (2) TMI 2020
Revision u/s 263 by CIT - income generated out of the assessee's investment funds in fixed deposits - As per CIT AO had not undertaken proper inquiries and had not examined the issue whether the interest income was to be assessed under the head “Income from business income or of other source” - Tribunal by the impugned judgment allowed the assesssee's appeal and set aside the order of the Commissioner of Income Tax - HELD THAT:- Tribunal noted that the assessee was previously engaged in the business primary dealing of securities. The assessee was in the process of switching over to the new business of stock broking. The assessee had liquidated its investment from the past business and parked the surplus fund in fixed deposit awaiting commencement of activities in the new business. It was on account of such facts that the assessee had claimed the interest income as arising out of its business activity. The Tribunal was of the opinion that this was entirely plausible view.
We see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed. - Decided in favour of assessee.
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2019 (2) TMI 2019
Interest on the borrowed money - funds were utilized by the assessee to subscribe to the equity capital of the subsidiary company - subsidiary company used the said funds for the purpose of acquiring the Centaur Hotel, Juhu Beach, Mumbai, which is now functioning as "The Tulip Star, Mumbai" - tribunal has also held that this expenditure would be allowed even under section 57(iii) - As held by HC though there may be some controversy as to whether the aforesaid expenditure is allowable under section 57(iii) of the Act or not, we have no doubt, in our mind, that the expenditure incurred under the aforesaid circumstances would be treated as expenditure incurred for business purposes and was thus allowable under section 36 - HELD THAT:- Special Leave Petitions are dismissed for non-prosecution.
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2019 (2) TMI 2018
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As assessee submits that in the light of Special Bench decision in the case of ACIT Vs Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] the computation of 0.5% of investments must remain confined to only such investments which have yielded tax exempt income during the relevant previous year. DR, on the other hand, relies on the judgment of Hon’ble Supreme Court in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] in support of the proposition that a reasonable disallowance in relation to exempt income must be made. That does not however dilute the principle laid down by the Special Bench in the case of Vireet Investments (supra). To this extent, we uphold the plea of the assessee and modify the orders of the authorities below by directing the Assessing Officer to compute the 0.5% of the investments yielding tax exempt income during the relevant previous year.
Deduction of bad debts u/s 36(2) - HELD THAT:- As the claim of bad debt itself has been allowed in principle and the matter has been remitted to the file of the Assessing Officer only for a factual verification, the claim for business loss is infructuous at this stage and does not need to be adjudicated upon. Similarly, we are unable to see any merits in the grievance of the Assessing Officer for CIT(A)’s directing a factual verification which is so fundamental to the claim being denied as the claim for deduction was declined primarily on the ground that the assessee had not offered related income to tax. Grievances of both the parties, therefore, lack legally sustainable merits. We confirm the action of the CIT(A) on this issue as well and decline to interfere in the matter.
Disallowance of 'marking to market' foreign currency forward contracts outstanding as at the end of the year - HELD THAT:- The assessee is consistently following the mercantile method of accounting, the same accounting treatment for the foreign exchange losses and gains has been given by the assessee all along, the assessee is making entries in respect of such losses and gains, and the treatment is consistent with the Accounting Standards. As a matter of fact, the AO has not even raised any issues with respect to the above. His case is confined to the loss being notional in nature and contrary to the CBDT guidelines. As for the CBDT instructions, it is only elementary that any instructions issued by the CBDT cannot bind the assessee even though the assessee is entitled to, and can legitimately ask for, any benefits granted to the assessee by such instructions or circulars. Nothing, therefore, turns on the CBDT instruction even if it is actually contrary to the claim of the assessee.
As per the details filed by the assessee, the foreign exchange contracts have been entered into for genuinely restricting its bonafide risk exposure of the assessee in respect of its exports and imports transactions. These contracts cannot, therefore, be viewed on a standalone basis as speculative transactions. These transactions are integral part of the business transactions and any loss or gains arising from these transactions, for the detailed reasons set out above, are deductible in computation of profits and gains of business.
We uphold the action of the CIT (A) so far as this relief in respect of deleting the disallowance on account of loss, at the end of the year, on foreign exchange contracts. We confirm the same and decline to interfere in the matter. - Decided in favour of assessee.
TPA - upward adjustment on account of guarantee given by the assessee to its Associate Enterprise located at Singapore without any consideration - HELD THAT:- TPO made the addition on the ground that loans were taken from ICICI bank Limited, Singapore whereas RBI's permission refusing pledge of shares was In the case of IDBI trusteeship Ltd. TPO considered these two transactions separate and held that appellant provided guarantee to AE by pledging its Investment in shares. However after considering these letters referred earlier, it is clear that IDBI trusteeship Ltd is security trustee of ICICI bank limited, Singapore and RBI's letter refusing the permission for pledge of shares is in respect of same shares which were provided for guarantee to ICICI bank Limited, Singapore. Thus, it is clear that entire addition is based on the misconception that these two entities represented separate transactions. In view of this it is clear that appellant did not provide guarantee services by pledging shares of MPSEZ for which any adjustment of guarantee commission can be made. The addition made by the assessing officer is therefore not sustainable on facts. See ADANI ENTERPRISES LTD [2016 (8) TMI 163 - GUJARAT HIGH COURT]
Addition u/s 14A despite the fact that the company had claimed an expenditure on its Treasury department which mainly dealt with investments related to earning exempt income - CIT-A deleted the addition - HELD THAT:- As adhoc allocation of expenses of treasury department, in addition to the disallowance under rule 8D(iii) for such indirect expenses, computed @ .5% of related investments earning tax exempt income, will indeed amount to double deduction of expenses under rule 8D. What can be disallowed under rule 8D(i) is only direct expenses and clearly the expenses on treasury function are not direct expenses to earn the tax exempt income. Even going by the stand of the Assessing Officer, treasury function includes many functions including, to some extent, investment function. The understanding of the Assessing Officer is clearly incorrect. There is no basis for allocation of 50% of expenses, on purely adhoc basis, either. There is nothing on record to even show that the expenses disallowed under rule 8D(iii) are lower than a reasonable share of common expenses incurred on earning the tax exempt income. In these circumstances, and bearing in mind entirety of the case, we approve the stand of the CIT(A) and decline to interfere in the matter.
Disallowance of interest expense u/s 36(1)(iii) - comprehensible findings in the assessment order that the funds were diverted for non business purposes - CIT-A deleted the addition - HELD THAT:- As there was a trade relationship between the assessee and the entities to which the payments in question were made. The assessee had made huge purchases from these entities, and the fact that the amounts were not payable is not really relevant because the case of the assessee is that the payments were in the nature of business advances. What happens to these monies subsequently is not relevant so far as the treatment of advances in the hands of the assessee is concerned. That aspect is wholly irrelevant for our purposes. As long as the payments are made in the course of assessee’s business, it does not really matter, so far as interest disallowance in the hands of the assessee is concerned, as to where these monies ultimately find its way. That’s not in the control of the assessee anyway. Nothing really turns on these monies ultimately finding its way to another entity, admittedly unrelated to the assessee. The reason for making the interest disallowance is thus not sustainable in law. In any event, the availability of interest free funds is far more than interest free funds advanced to these entities. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
Disallowance of depreciation claimed on shares - As per AO shares are not depreciable assets - CIT-A deleted the addition - HELD THAT:-Learned representatives fairly agree that this issue is squarely covered, in favour of the assessee, by a decision in assessee’s own case for the assessment year 2007-08 [2016 (1) TMI 459 - ITAT AHMEDABAD]. A copy of the said decision was placed before us as well.. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we confirm the relief granted by the CIT(A) and decline to interfere in the matter.
Disallowance of deduction u/s 80IA - receipts represents miscellaneous income which was not derived from the undertaking itself - CIT-A deleted the addition - HELD THAT:- We have noted that the eligible business activity of the assessee is operations and maintenance of the port, and that the miscellaneous receipts represents receipts on account of activities which pertain to operations and maintenance of port. The receipts for weighment charges and token charges, and the allied activities in question, cannot be considered in isolation with the operations and maintenance of port. In view of these discussions, and in the light of well reasoned findings of the CIT(A) with which we are in considered agreement, we uphold the relief granted by the CIT(A) and decline to interfere in the matter.
TP Adjustment - whether issuance of corporate guarantees does not constitute an international transaction with the meanings of section 92B? - HELD THAT:- As for the observations of the authorities below that the assessee has not produced any evidence of not incurring any costs, this observation is incorrect inasmuch as none can be expected to prove a negative. The onus of demonstrating that the costs have been incurred can only be on the revenue authorities, and that onus has not been discharged. Even during the course of hearing when it was asked as to what are the costs incurred by the assessee, learned Departmental Representative did not have anything to say. Respectfully following the views of the coordinate benches on the issue, in the case of Micro Ink [2015 (12) TMI 143 - ITAT AHMEDABAD] we hold that issuance of guarantees, without incurring any specific costs, does not constitute an international transaction, and, accordingly, no arm’s length price adjustment can be made in respect of issuance of corporate guarantees. Once we hold so, the ALP adjustment sustained by the CIT(A) must stand deleted.
Disallowance u/s 14A - HELD THAT:- One has to proceed on the basis that such interest free funds in making these investments, and no part of interest can thus be disallowed under section 14A read with rule 8D. We see no reasons to take any other view of the matter for this assessment year as well.
TDS u/s 195 - Disallowance of interest expenditure invoking the provisions of section 40(a)(i) - HELD THAT:- We find that the payment has indeed been made to a non-resident and no tax has been deducted at source. The payment being in the nature of interest income which is separately covered under the respective tax treaties and, beyond any dispute or controversy, these payments have an element of income taxable in India. As regards learned counsel’s contention that the payment having been made to a bank which are specifically excluded from the scope of tax withholding obligations under section 194A, this argument overlooks the fact that this exclusion relates only to a resident taxpayer and the recipients in this case are non residents. In our considered view, the authorities below were right in holding that the payments were made to the foreign companies, and, therefore, section 195 came into play, and that section 194A was applicable only with respect to payment to residents and will not accordingly come to the rescue of the assessee. We uphold the reasoning of the authorities below, and decline to interfere in the matter.
Disallowance on account of loss from foreign currency swaps - HELD THAT:- The issue is covered, in favour of the assessee, by decisions of the coordinate benches of this Tribunal, including in the case of Cadila Pharmaceuticals Ltd Vs ACIT [2017 (9) TMI 727 - ITAT AHMEDABAD] as hold inter alia that hedging contracts; in order to be out of speculative transactions, must be in respect of raw materials only in manufacturers' cases though they could be both with regard to sales and purchases, such hedging contracts need not succeed the contract for sale and actual delivery of goods manufactured, but the latter could be subsequently entered into within reasonable time not exceeding the relevant assessment year in normal circumstances and such transactions should not exceed the total stock of the raw material or merchandise on hand including existing stocks as well as that acquired under the firms contract of purchases in order to be genuine and valid hedging contract of sales; respectively.
Upward adjustment on the basis of the TPO's order passed u/s.92CA(3) determining the A.L.P. in respect of transaction of export of Maize - HELD THAT:- We are not inclined to interfere in the matter. We agree with the authorities below that such an independent third party quotation, on standalone basis and without any material to establish its bonafides and without anything to show that it’s contemporaneous nature and sufficient parity with actual transaction, cannot be accepted as a valid CUP input. The plea regarding back to back transaction was also not proved before us. In view of these discussions, and bearing in mind entirety of the case, we uphold the stand of the authorities below and decline to interfere in the matter.
Disallowance of business loss in respect of balances being advances for business purposes to suppliers, written off in the books of account as irrecoverable, in spite of the fact that such writing off was in the nature of legitimate business loss allowable u/s.28 - HELD THAT:- We find that as long as a loss is incurred in the course of a business, and in legitimate furtherance of its bonafide interests, the loss is deductible in computation of business income. What, therefore, needs to be examined is whether or not these advances were made in the course of the business and whether these advances have actually become bad. If the answer to both these questions are in positive, there cannot normally be a good reason to reject the claim. We, therefore, deem it fit and proper to remit the matter to the file of the Assessing Officer with a direction to decide the matter afresh by way of a speaking order in accordance, in the light of the above observations and after giving yet another opportunity of hearing to the assessee. We order accordingly.
Disallowance made of depreciation on office equipment after treating the same as furniture and fittings - HELD THAT:- We find that this issue is also covered, in favour of the assessee, by a decision of the coordinate bench in the case of Cera Sanitaryware Ltd [2015 (7) TMI 174 - ITAT AHMEDABAD] - Respectfully following the same, we confirm the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
Disallowance of depreciation on UPS - HELD THAT:-This issue is also covered, in favour of the assessee, by Hon’ble Delhi High Court’s judgment in the case of CIT Vs BSES Yamuna Power Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] even as learned Departmental Representative vehemently relied upon the stand of the Assessing Officer. There is non contrary judicial precedent pointed out to us. In this view of the matter, and respectfully following the esteemed views of Hon’ble Delhi High Court in the case of BSES Yamuna Power (supra), we confirm the order of the CIT(A) on this point as well, and decline to interfere in the matter.
Disallowance being 10% of aircraft hire charges - HELD THAT:- We find that, in view of Hon’ble jurisdictional High Court’s judgment in the case of Sayaji Engg [2001 (7) TMI 70 - GUJARAT HIGH COURT] no disallowance can be made in the hands of a corporate entity for personal use of cars, and, by the same logic, of the aircrafts as well, by the directors. The CIT(A) was thus indeed quite justified in deleting the impugned disallowance. We uphold the action of the CIT(A) and decline to interfere in the matter on this count as well.
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2019 (2) TMI 2017
Validity of SCN as being time barred having been issued after more than 14 years from the date of last export and realization of export proceeds - HELD THAT:- A perusal of the writ petition show that the petitioners have not even submitted any reply to the aforesaid show cause notice. After hearing learned counsel for the petitioners, without going into the merits of the controversy at this stage, we dispose of the present writ petition by relegating the petitioners to file a detailed and comprehensive representation raising all the pleas as raised in the present writ petition before respondent No.2 by way of reply to the show cause notice dated 15.06.2018 (C) within a period of one month.
As directed that in the event of a representation being filed by the petitioners within a period of one month from the date of receipt of the certified copy of the order, the same shall be decided by respondent No.2 in accordance with law, by passing a speaking order and after affording an opportunity of hearing to the petitioners within a period of next one month from the date of receipt of the representation.
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2019 (2) TMI 2016
Territorial Jurisdiction - permissibility of instituting suit in one Court, where properties, which are subject matter of the suit are situated in jurisdiction of different courts have been permitted with one rider - cause of action for filing the suit regarding property situated in different jurisdiction is one and the same - HELD THAT:- In a suit when the cause of action for filing the suit is different, the Courts have not upheld the jurisdiction of one Court to entertain suits pertaining to property situated in different courts.
In Sardar Nisar Ali Khan v. Mohammad Ali Khan [1932 (4) TMI 22 - PRIVY COUNCIL], Privy Council had occasion to consider the case where subject matter of the suit were several properties situated in jurisdiction of different courts. Suit was instituted in Oudh (which later became part of Uttar Pradesh). The Privy Council held that since there was different cause of actions, the same cannot be clubbed together. One of the properties, which was situated in Punjab was referred to in the suit as Khalikabad property. Although, suit with regard to the other three properties had similar cause of action but cause of action with regard to Khalikabad property being found to be different, the Court held that Section 17 Code of Civil Procedure was not applicable.
The scheme as delineated by Section 39 indicates that when a decree is passed by a Court with regard to sale or delivery of immovable property situated outside the local limits of the jurisdiction of that Court it may transfer the decree for execution to another Court. The provision clearly indicates that a decree of Court may include immovable property situate in local limits of that Court as well as property situated outside the local limits of the jurisdiction of the Court passing the decree. Section 39(1)(C) re-enforces the conclusion that as per Section 17 suit may be filed with regard to immovable property situated outside the local limit of the jurisdiction of the Court.
The partial partition of property is well accepted principle with regard to a joint family.
The cause of action relating to Indore property and Bombay property were entirely different with different set of Defendants. The suit filed by the Plaintiff for Indore property as well as Bombay property was based on different causes of action and could not have been clubbed together. The suit as framed with regard to Bombay property was clearly not maintainable in the Indore Courts. The trial court did not commit any error in striking out the pleadings and relief pertaining to Bombay property by its order dated 17.08.2011 - A perusal of Sub-clause (1) of Order II Rule 3 provides that Plaintiff may unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly. What is permissible is to unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly. In the present case suit is not against the same Defendant or the same Defendants jointly. As noticed above there are different set of Defendants who have different causes of actions.
The trial court has rightly allowed the application filed by the Defendant Nos. 7 and 8 - The High court did not commit any error in dismissing the writ petition filed by the Appellant challenging the order of the trial court.
Appeal dismissed.
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2019 (2) TMI 2015
Recall/revision of judgement - possession of suit property - suit was barred under the previsions of the Small Causes Court Act or not - mis-joinder of parties - HELD THAT:- Both the courts below have ruled against the defendant/petitioner and had held that the trial court had jurisdiction to entertain and decide the suit. The executing court does not sit in appeal over the findings recorded by the trial court or the appellate court as the case may be. The executing court cannot go behind the decree when the issue was specifically framed regarding the jurisdiction and it got decided against the defendant. The defendant cannot be permitted to take the very same ground in execution proceedings by filing an application under Section 47 C.P.C. to contend that the trial court did not have jurisdiction to entertain the suit and, therefore, the decree passed by the trial court was without jurisdiction and the same cannot be executed - there are no substance in the submission of learned counsel for the petitioner/judgment debtor that the decree passed by the trial court was without jurisdiction and, therefore, it cannot be executed.
The second ground that the judgement and decree was passed on the amended plaint which was amended without leave of the court, has no force. The petitioner has filed objection to the amendment application and there is no material on record on the basis of which it can be said that some fraud was played with the trial court and the judgement and decree was obtained as an act of fraud - there are no substance even in the second ground and it is held that the executing court and the revisional court have correctly decided the issue and rightly rejected the objection of the petitioner under Section 47 C.P.C.
Petition dismissed.
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2019 (2) TMI 2014
Possession of suit property - decree for permanent prohibitory injunction restraining the Defendant No. 1 from causing any interference on any portion of suit premises/Shop - Section 6 of the Specific Relief Act - HELD THAT:- A reading of proviso added by 1999 amendment to the Code of Civil Procedure, will show that, after 1999, revision petitions filed Under Section 115 Code of Civil Procedure are not maintainable against interlocutory orders - Even otherwise, it is well settled that the revisional jurisdiction Under Section 115 Code of Civil Procedure is to be exercised to correct jurisdictional errors only.
Since the suit filed is a Section 6 suit which is a summary proceeding in itself, the trial Court should endeavour to dispose of the Suit itself within a period of six months from today.
The appeal is allowed.
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2019 (2) TMI 2013
Validity of decision of the COC to initiate liquidation rather than consider their proposal put forth for reconsideration - HELD THAT:- It was resolved by e-voting that the assets of the Corporate Debtor be liquidated under Section 33(2) of IBC.
The said approval has been granted by 88.92 per cent of voting power of the COC. It is also submitted on behalf of the RP that the period of 270 days expired on 10.02.2019. Under such circumstances, no further proposal of the resolution applicant can be taken into consideration. Given the averments made in the said application, which is duly annexed with the resolution and the affidavit of the RP, this application merits consideration. The resolution of the COC to reject the RA's proposal and proceed with liquidation is hereby approved.
Application disposed off.
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2019 (2) TMI 2012
Validity of assessment order - sufficient opportunity was not granted to the petitioner in the assessment proceedings - violation of principles of natural justice - Section 51 of the TNVAT Act 2006 - HELD THAT:- Except making an averment in the affidavit that the petitioner had personally met the second respondent and requested him to furnish the details as well as the transportation documents pertaining to the alleged purchase made by the petitioner from M/s. Britto Saw Mill and Timbers to the tune of ₹ 37,05,000/-, there is no other written communication sent by the petitioner to the respondent duly acknowledged by them requesting for producing details as well as documents pertaining to the alleged purchase of the petitioner from M/s. Britto Saw Mill and Timbers.
Admittedly, there is a statutory appellate remedy under Section 51 of the TNVAT Act, 2006 available to the petitioner, which he has not exercised in the instant case. The reason given by the petitioner for not exercising the statutory appellate remedy cannot be accepted by this Court, since there is no acknowledgement made by the respondents that a request was made by the petitioner for production of details and documents pertaining to the alleged purchases made by the petitioner from M/s. Britto Saw Mill and Timbers, except an averment made by the petitioner in the affidavit in support of the writ petition that he made a personal request to the second respondent for production of the details and documents pertaining to the alleged transaction.
This Court is of the considered view that the principles of natural justices has not been violated by the respondents, while passing the impugned assessment order. However the statutory right of appeal available to the petitioner should not be deprived, just because the petitioner has chosen a wrong forum for ventilating his grievance - In the instant case, the petitioner has approached this Court under the Article 226 of the Constitution of India, instead of filing the statutory appeal under Section 51 of the TNVAT Act, 2006.
This Court grants liberty to the petitioner to prefer an appeal before the Appellate Authority under Section 51 of the TNVAT Act, 2006 against the impugned assessment order - Petition disposed off.
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2019 (2) TMI 2011
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- Tribunal being the first appellate authority, the assessee in the present appeal has raised this issue, therefore, this Tribunal is expected to adjudicate the same. This Tribunal being the second appellate authority cannot ignore the fact that the Assessing Officer failed to struck down the relevant plea indicating whether he initiated penalty proceeding for concealing any part of income or furnishing inaccurate particulars of such income. In view of the above, by respectfully following the judgment of Kerala Jewellers [2019 (2) TMI 127 - MADRAS HIGH COURT] the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.- Decided in favour of assessee.
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2019 (2) TMI 2010
Initiation of ‘Corporate Insolvency Resolution Process’ against the two ‘Corporate Guarantors’ - ‘Principal Borrower’ is not a ‘Corporate Debtor’ or ‘Corporate Person’ - Section 7 of the ‘I&B Code’ - initiation of the process against two ‘Corporate Guarantors’ simultaneously for the same set of debt and default - HELD THAT:- Appeal is admitted.
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2019 (2) TMI 2009
Deletion of Tax free and First Point Tax Paid goods turnover from the taxable turnover - receipts of hire charges recovered from contractors by appellant falls within ambit of deemed sales as contemplated u/s 2(g)(iv) of the Orissa Sales Tax Act or not - receipt of hire charges of machinery’s from inter-department of the assessee for account purpose is sale to self or not.
Whether the learned Tribunal is justified in not deleting the Tax free and First Point Tax Paid goods turnover from the taxable turnover and as such the order is illegal & arbitrary? - HELD THAT:- The question which has been poised for consideration whether deletion of tax free and first-point tax paid goods from taxable turnover, is warranted or not, on the basis of ratio of Madras High Court does not arise, as there was nothing on record to show that earlier tax was paid or materials to that effect was ever produced before any of the authority. Even if learned Tribunal’s observation on Madras High Court is taken into consideration, the learned Tribunal while considering the law has discussed the judgment of the Hon’ble Supreme Court and has come to the conclusion that no material was produced on record to give any benefit in favour of the assessee.
Whether the learned Tribunal is justified in holding that the receipts of hire charges recovered from contractors by appellant falls within ambit of deemed sales as contemplated u/s 2(g)(iv) of the Orissa Sales Tax Act? - Whether the receipt of hire charges of machinery’s from inter-department of the assessee for account purpose is sale to self as contemplated u/s 2(g)(iv) of the Orissa Sales Tax Act? - HELD THAT:- The questions have rightly been decided by learned Tribunal, wherein it is observed that the contract was not completely placed on record - We need not reproduce the complete reasoning of learned Tribunal, which have been reproduced in the preceding paragraphs. The questions those have been raised by the petitioner are basically emanating from finding of fact and therefore, no question of law arises for our consideration.
In that view of the matter, all reference are required to be answered in favour of the Department against the assessee - tax revision dismissed.
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2019 (2) TMI 2008
Disallowance u/s 40(a)(ia) - Non deduction of TDS on head ‘LFR rent’ - AO noted that assessee has not filed any evidence of TDS deducted on such rent - HELD THAT:- This issue had come up for consideration in the earlier years also, wherein the Tribunal had deleted the said disallowance held that second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1.4.2005. On a conjoint reading of second proviso to section 40(a)(ia) and first proviso to section 201(1), it becomes graphically clear that if the payee has furnished his return of income under section 139 and has taken into account such sum paid by the payer for computing income in such return of income and has paid income tax thereon, then the payer cannot be treated as assessee in default. A fortiori, no disallowance under section 40(a)(ia) can be made in such circumstances.
Adverting to the facts of the instant case, it is seen that the assessee paid a sum to Bharat Petroleum Corporation Limited. There can be question of suspecting that the BPCL did not include such rental income from the assessee in its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. - Decided in favour of assessee.
Disallowance on account of cash handling expenses - HELD THAT:- Reasoning given by the Assessing Officer that handling of cash is responsible and risky work for which he should have engaged professionals, then he was required to deduct TDS. Such a reasoning for making the disallowance cannot be held to be valid ground, because in the nature of business carried out by the assessee which is selling of petrol and petroleum product from its petrol pump, huge cash is generated throughout the working hours and if assessee is paying cash handling charges to two persons which is in the form of salary, then disallowance cannot be made especially when vouchers for such payment have been produced. Accordingly, respectfully following the order of the Tribunal for the earlier years, we delete the same.
Disallowance on account of remuneration paid to the partners - HELD THAT:- We remit the issue back to the file of the Assessing Officer to see whether similar remuneration paid to the partners have been allowed in the earlier years or in subsequent year or not; and secondly, he should examine the partners’ salary and remuneration are paid in accordance with provision contained in Section 40(b) or not. AO will give opportunity of hearing to the assessee to substantiate is case.
Disallowance of claim of bad debt - AO has disallowed the same on the ground that no documentary evidences have been filed for claim of such and bad debt remained not genuine - HELD THAT:- We find that, nowhere Assessing Officer has disputed the fact that assessee has not written off the bad debts as irrecoverable in the books of account, albeit the case of the Assessing Officer is that Assessee has not produced any documentary evidences that debt has become bad. As stated by the ld. counsel now there is no requirement under the law for the assessee to establish that debt has become irrecoverable and it is enough that the same is written off as irrecoverable in the books of account of the assessee. This has been also clarified by the CBDT Circular dated 30.05.2016 being Circular No.12/2016 [F.No.279/Misc/140/2015-ITJ], wherein the CBDT has clarified that now in the wake of judgment in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] no appeal should be filed by the Revenue before any Court or Tribunal. Thus, this clarification by CBDT also supports the case of the assessee. Hence, this ground is allowed.
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2019 (2) TMI 2007
Permission for withdrawal of application - grievance of the Punjab National Bank is that Mr. Krishna Kumar Mintri, the shareholder, while settled the claim with the sole financial creditor and other claimants agreed to make payment of fees and resolution cost of the Resolution Professional, as verified and approved by the Committee of Creditors (Punjab National Bank) - HELD THAT:- The issue relating to application of Section 12A and Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 framed by the IBBI fell for consideration before the Hon'ble Supreme Court in BRILLIANT ALLOYS PRIVATE LIMITED VERSUS MR. S. RAJAGOPAL & ORS. [2019 (3) TMI 1016 - SC ORDER] it is clear that Regulation 30A cannot override the substantive provision of Section 12A. The Regulation has to be read alongwith the provision in Section 12A, which contains no such stipulation. No discrimination can be made for withdrawal of an application under Section 7 or Section 9 on the ground that the application was filed before a cutoff date or filed after a cutoff date. Such cutoff date has no nexus with the objective which is to be achieved. The Adjudicating Authority having failed to notice the aforesaid provisions issued long order discussing regulations and provisions of the Code. The Adjudicating Authority should have allowed application of withdrawal filed by the Applicant - Punjab National Bank, the Committee of Creditors having approved the Settlement with 100% voting share.
So far as Resolution Applicant is concerned, they do not have any right to plead merely because they have filed resolution plan, till its approval or rejection by the Adjudicating Authority - the application filed by Punjab National Bank for withdrawal of the application under Section 7 is allowed - petition dismissed.
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2019 (2) TMI 2006
Reopening of assessment u/s 147 - Deduction u/s 10A - failure on part of the assessee in claiming wrongful claim of set off of business loss of ineligible business unit from profits of eligible business units before claiming deduction u/s 10A - HELD THAT:- CIT(A) has held that reopening is not justified. In this view of the matter when the CIT(A) has held that reopening is not justified it is amply evident that if revenue was aggrieved, it should have raised a ground in this regard. A reading of the grounds of appeal mentioned above shows that no ground challenging the ld. CIT(A)’s order on the issue of lack of jurisdiction has been raised before the ITAT.
The adjudication on the merits of the issue is only of academic interest. Hence, holding that ld. CIT(A) has held the assessment to be without jurisdiction and the revenue has not challenged the same, in our considered opinion, the adjudication on merits is infructuous. Accordingly, this appeal by the revenue stands dismissed being infructuous.
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2019 (2) TMI 2005
Seeking direction to COC members to reconsider the Resolution plan - seeking extension of CIRP period and not to consider the request for liquidation filed by Resolution Professional - HELD THAT:- This is an Application filed by Promoter / Director of the Suspended Board of Corporate Debtor M/s Servomax India Private Limited under Section 60 (5) of Insolvency & Bankruptcy Code, 2016 praying for extension of CIRP period for further 122 days stating that the said period was not utilized for CIRP on account of replacement of Resolution Professionals.
As many as 09 CoC meetings were held and meetings were being held regularly since the day of constitution of CoC. No Resolution Plan was approved by the CoC. In fact, on the Application filed by Resolution Professional on the direction of CoC, CIRP was extended by 90 days beyond 180 days. CIRP continued for about 270 days, the maximum period allowed. The CoC has not approved any Resolution Plan. CoC decided before conclusion of CIRP period for liquidation of Corporate Debtor which is also made clear by the Resolution Professional that he would file a separate Application for passing order of liquidation under Section 33 of IBC. The Applicant being Director has no locus standi to seek exclusion of time. Decision is to be taken by CoC with majority if any. The Applicant is only a Director (Suspended Board) - the present Application does not survive. Even otherwise the allegations made by Applicant are found not to be true and correct as Resolution Professional filed sufficient proof that during entire period of CIRP, the proceedings are conducted in accordance with the provisions of IBC, 2016 and Regulations thereunder.
The present Application is filed with a view to prolong the CIRP and it is nothing but misuse of the process, Therefore, the present Application deserves to be dismissed.
Seeking directions to pass Liquidation Order against Corporate Debtor - seeking direction to appoint Resolution Professional as Liquidator - Section 33 (1) (a) and 34 (1) of Insolvency & Bankruptcy Code, 2016 - HELD THAT:- Since no resolution plan is received by the Adjudicating Authority under Section 30 (6) of IBC, 2016, therefore. Tribunal has to pass an order of Liquidation against Corporate Debtor - The Application is allowed and Corporate Debtor M/s Servomax India Private Limited is ordered to be liquidated.
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2019 (2) TMI 2004
Disallowance u/s. 36(i)(iii) - money advanced to the sister concerns - Assessee had diverted the interest bearing borrowing towards interest free loan and advances - Whether assessee had sufficient interest free funds to cover advances given to its associate concerns and no interest bearing fund was advanced to its associate concerns.? - counsel has submitted that the assessee was having total interest free funds and pleaded that no disallowance u/s.36(i)(iii) is called for - HELD THAT:- As counsel has submitted that such fact was categorically pointed out before the assessing officer and the same has not been denied by either of the lower authorities. During the course of appellate proceedings before us these contentions of the ld. counsel was not controverted by the Revenue Therefore, we are of the view that it would be appropriate to restore this issue to the file of the assessing officer to decide de-novo on the points (i) and (ii) as above after affording adequate opportunity to the assessee. Accordingly this ground of the appeal is restored to the file of the assessing officer for deciding afresh as directed above. Therefore this ground of appeal of the assessee is allowed for statistical purpose.
Addition made on account of exchange rate of difference - HELD THAT:- We noticed that the assessee had not filed the impugned ground of appeal before the ld. CIT(A). We have also gone through the form No. 35 filed before the ld. CIT(A) and noticed that neither such ground of appeal reflected in the form No. 35 nor such ground of appeal was adjudicated by the Ld.CIT(A). In the light of the above fact and circumstances this ground of appeal of the assessee stands dismissed.
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