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Showing 141 to 160 of 1440 Records
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2022 (2) TMI 1301 - ITAT DELHI
TP Adjustment - determination of ALP of certain intra-group services claimed to have been received by the assessee from its AE - ALP of the payment made to the Associated Enterprises (AEs) towards provision of administrative services - assessee has benchmarked all the transactions by applying Transactional Net Margin Method (TNMM) by clubbing them with other transactions - HELD THAT:- On a specific query made by the Bench to demonstrate the receipt of services from AE through cogent evidence, including, any communication with the AE, Assessee expressed his inability to furnish any evidence and repeated his submission to restore the matter back to the AO for enabling the assessee to furnish evidence, if any. We are unable to accept the aforesaid submission of learned counsel for the assessee.
When the assessee has failed to furnish any evidence either before the departmental authorities or before us to demonstrate that administrative services, indeed, were rendered by the AE and the nature and scope of such services, in our view, no useful purpose would be served in restoring the matter back to the Assessing officer for reconsidering the issue. In view of the aforesaid, we do not find any valid reason to interfere with the decision of Commissioner (Appeals) on the issue
We have come to the aforesaid conclusion based on the facts involved in the impugned assessment year, wherein, the assessee has failed to furnish cogent evidence to demonstrate that administrative services were actually received from the AE. Therefore, this decision of ours may not prejudice assessee’s claim in any other assessment year, as, it has to be decided based on the evidences produce to establish the claim of receipt of services from AE. Assessee appeal dismissed.
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2022 (2) TMI 1300 - SC ORDER
Seeking grant of bail - HELD THAT:- Taking into consideration the fact that the petitioner has suffered incarceration for a period of 7 years and 6 months and more particularly the fact there is no possibility of the trial concluding in the near future, we deem it to be a fit case to grant him bail.
The petitioner is, accordingly, directed to be enlarged on bail on terms and conditions to be imposed by the trial court - SLP disposed off.
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2022 (2) TMI 1299 - SUPREME COURT
Conviction of appellant for life - acquittal for the offence charged under Section 307 of the Indian Penal Code (IPC) - reliability on eye witnesses - HELD THAT:- While appreciating the evidence as aforesaid along with the matters attached to it, evidence can be divided into three categories broadly namely, (i) wholly reliable, (ii) wholly unreliable and (iii) neither wholly reliable nor wholly unreliable. If evidence, along with matters surrounding it, makes the court believe it is wholly reliable qua an issue, it can decide its existence on a degree of probability. Similar is the case where evidence is not believable. When evidence produced is neither wholly reliable nor wholly unreliable, it might require corroboration, and in such a case, court can also take note of the contradictions available in other matters.
There are three eye-witnesses examined by the prosecution. PWs-1 & 2 have not contradicted between themselves being the eye-witnesses. Merely because they are related witnesses, in the absence of any material to hold that they are interested, their testimonies cannot be rejected. There is also no delay in the registration of the FIR. PW-3 though turned hostile, spoke about the incident in his chief examination. Strangely, in the cross examination he turned turtle, while disputing the very factum of his chief examination made before the court. We do not wish to say anything on the credibility of the said witness in view of the evidence of PWs -1 & 2. The view of the courts on this witness also deserves to be accepted.
The High Court has rightly set aside the conviction rendered by the trial court for the charge under Section 307 IPC. PWs-1 & 2 have not spoken about the presence of the injured witness, Om Prakash. The circumstances under which he could not be produced was explained by the prosecution. Merely because he was not produced, the entire case of the prosecution would not become false - the trial court as well as the High court considered the evidence threadbare in coming to the right conclusion. Similarly, the contention that there is non-explanation for the existence of some other empty cartridge recovered from the place of occurrence would not facilitate an acquittal for the appellants as there are materials sufficient enough to implicate and prove the offence against them.
Appeal dismissed.
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2022 (2) TMI 1298 - ITAT INDORE
Revision u/s 263 by CIT - assessment order passed under section 143(3) was erroneous and/or prejudicial to the interests of the revenue - as per CIT AO has not verified the issue of tax deducted at source on the payments made to contractors in light of the provisions of section 194C of the Act - whether the ld. AO was required to examine the issue for payment to contractors and tax deducted thereon”? - HELD THAT:- The issue of payment to contractors and tax deducted thereon was never a part of reasons for the limited scrutiny. Therefore, there was no occasion for the Ld. AO to examine this issue for payment to contractors. It is well settled that in case of limited scrutiny matter Ld. AO has to work within the parameters observed by the Central Board of Direct Taxes; instruction dated 29.12.2015 and various other circular issued in this behalf. Since the assessee’s case was selected for limited scrutiny on certain issues and Ld. AO has examined these issues and framed the assessments and the issue of examination of payment to contractors was not a part of the limited scrutiny reasons, in our considered view, CIT erred in assuming jurisdiction u/s 263 of the Act and also erred in holding that assessment order is erroneous and prejudicial to the interest of revenue.
CIT has held that the AO has failed to verify the cash payment made for purchase of goods which are not in conformity with the provisions of section 40A (3) - According to para number 2 (iii) the scope of enquiry should be limited only on that aspect only. In such cases, the assessing officer are also directed to confine themselves by questionnaire only to the specific issues pertaining to AIR data and further the wider scrutiny in those cases can only be conducted as per the guidelines and procedures stated in instruction number 7/2014.
According to us when the learned assessing officer was not required to enquire on those issues such as purchases in cash more than specified sum CIT was not correct in holding that the learned assessing officer has not made due inquiries on that ground as the verification of the purchases exceeding specified limit in cash was not an issue before the assessing officer. Naturally, he should not have made any enquiry on that aspect. Even though the learned assessing officer has raised the specific questions on that aspect and verified the requisite detail. Therefore, it cannot be said that the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue on this ground also.
According to us the order of the learned CIT in assuming jurisdiction under section 263 of the income tax act holding that the order of the learned assessing officer passed under section 143 (3) of the act is erroneous and prejudicial to the interest of the revenue is not correct. Accordingly, the order passed by the learned CIT is unsustainable.
As per the finding of case of Rakesh Kumar [2018 (12) TMI 1718 - ITAT DELHI] hold that Ld. Pr. CIT erred in assuming revisionary powers u/s 263 of the Act. The impugned order of Ld. Pr. CIT is quashed. Thus in our considered view assessment order u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of revenue and the same is restored. All the grounds raised by the assessee are allowed.
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2022 (2) TMI 1297 - ITAT AHMEDABAD
Addition u/s 68 - shares application money received - HELD THAT:- As the entire basis of allegation by the AO that the credit worthiness of the party i.e. share application money was not proved does not hold well in view of above discussion. As the assessee was able to establish the identity of the share applicant by furnishing PAN and company master data and proving the genuineness of transaction by adducing bank statements and also explained the sources of fund in the hands of the party, no addition is warranted.
We do not find any reason to interfere in the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is dismissed.
Reopening of assessment u/s 147 - Suspicion v/s reason to believe - Necessity of independent application of mind by AO - HELD THAT:- The proceedings under section 147 of the Act can be initiated if the assessing officer has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year.
The law does not mandate that an Assessing Officer should act on the dictate of any other authority ipso facto for initiating the proceedings under section 148 of the Act. However, if it’s done so by the AO, then it would tantamount to "borrowed satisfaction" which cannot be the basis for issue of notice u/s 148 of the Act. Thus, it is the satisfaction of the AO having jurisdiction over the assessee for initiating the proceedings under section 148 of the Act after application of mind on the information received from outside, indicating about the escapement of income.
In this case, the information has been received from the Investigation Wing Ahmedabad that the assessee has received credit in the Bank account from M/s. Rachna Finlease Pvt. Ltd. - M/s.Rachna Finlease Pvt. Ltd. is a non-filer of return of Income Tax and the enquiry conducted by the Investigation wing has made it clear that the creditworthiness of M/s. Rachna Finlease Pvt. Ltd. is not proved. Therefore the credit of Rs. 18,42,50,000/- received by M/s. Ambe Tradecorp Pvt. Ltd., is unexplained cash credits.
From the above, it is revealed that the proceedings under section 147 of the Act have been initiated on the information received from the investigation wing Ahmedabad that the assessee has received credit in the bank account from M/s Rachna Finlease private Ltd which is not filing income tax return.
Whether the proceedings under section 147 of the Act can be initiated merely on the basis of the information received from the investigation wing ? - To our understanding, merely transaction carried out through banking channel cannot give reasons to form believe that amount involved in such transaction represent income of the assessee which has escaped assessment in the circumstances when the payer is not filing return of income. That information can trigger to be used to initiate the proceedings in the case of the M/s Rachna Finlease Private Ltd being non-filer of income tax return. On the contrary, the assessee has filed its return of income disclosing the transaction for receiving the amount from M/s Rachna Finlease Private Ltd in its books of accounts. Thus the mere information that certain amount received by assessee was not giving any rise to form believe that the income has escaped assessment. Furthermore, the AO has not carried out any investigation to reach to the prima facie conclusion that amount credited represent income which has escaped assessment. As such the AO, has reacted based on the information received from the investigation wing without the application of mind.
We are of the opinion that proceedings under section 147 of the Act has been initiated by the AO without the application of mind and therefore the proceedings are void ab initio. Accordingly, we allow the technical ground raised by the assessee.
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2022 (2) TMI 1296 - ITAT BANGALORE
TP Adjustment - Comparable selection - HELD THAT:- The fact that the TPO rejected the TP study of the Assessee cannot be the basis not to consider the claim of the Assessee for inclusion of comparable companies. CPC excluded the companies only on the ground that information related to these companies was not available in the public domain and this fact was shown to be an incorrect assumption by the Assessee in the submissions before the DRP.
In such circumstances, it was incumbent 011 the part of the DRP to have adjudicated the question of inclusion of the companies as comparable companies. The fact that these companies do not figure in the search matrix of the TPO is not and cannot be a ground not to consider inclusion of these companies as comparable companies. Since the DRP has failed to do so, we are of the view that the issue regarding inclusion of the aforesaid companies as comparable companies should be set aside to for fresh consideration in the light of the information available in public domain. Thus ground as treated as allowed for statistical purposes.
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2022 (2) TMI 1295 - NATIONAL COMPANY LAW TRIBUNAL CUTTACK
Maintainability of petition - personal guarantor under Section 60(5), IBC, 2016 - applicability of notification dated 15.11.2019 - auction proceedings initiated against the applicant - Whether this petition filed by the personal guarantor under Section 60(5), IBC, 2016, is maintainable? - HELD THAT:- The subject matter involved in the present petition has not arisen solely or exclusively from the insolvency proceedings initiated against the corporate debtor, but in a proceeding under the SARFAESI Act,2002, between the 1st respondent and personal guarantor to corporate debtor. The DRT is only the appropriate forum to determine and decide the validity of the auction proceeding initiated against the applicant by the 1st respondent financial creditor under the SARFAESI Act, 2002. Besides, in view of the caution mandated by the Hon'ble Apex court in Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta supra [2021 (3) TMI 340 - SUPREME COURT], patently this Tribunal has no jurisdiction to entertain this petition - it is determined that the applicant personal guarantor herein, who is a stranger to the insolvency and bankruptcy proceedings pending between the financial creditor and corporate debtor before this Tribunal, cannot invoke section 60(5) (c), IBC, 2016, to file this present petition, which therefore is neither maintainable nor sustainable before this Tribunal.
Whether the notification dated 15.11.2019 mandates that any / all proceeding /s against the personnel guarantor of corporate debtor must be initiated only under the provisions of the IBC, 2016? - HELD THAT:- The irresistible conclusion is that after the aforesaid notification S.O.4126(E) dated 15.11.2019, only if any insolvency proceeding is to be initiated against the personal guarantor of corporate debtor it must be only under IBC,2016, not under the provisions of the PTA and PIA Acts, and the said notification does not in any manner whatsoever prohibit the financial creditor to proceed against the person al guarantor of corporate debtor by instituting recovery proceedings permissible under any other existing and applicable law.
Whether the auction proceedings initiated against the applicant is liable to be quashed? - HELD THAT:- The respondent/financial creditor has initiated auction proceeding against the immoveable property of the applicant under the provisions of the SARFAESI Act, 2002. The Apex court in V. Ramakrishnan case supra has categorically held that proceedings under the SARFAESI Act are not proceedings under the IBC, 2016. Hence, there is no bar to continue the SARFAESI proceeding initiated by the respondent against the applicant and the said proceeding need not to be quashed.
Application dismissed.
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2022 (2) TMI 1294 - ITAT BANGALORE
Inclusion of profit / loss of passenger service fee (security component) managed in Fiduciary Capacity - AO had included surplus in Passenger Service Fee (Security Component) [PSF(SC)] as income assessable in the hands of the assessee - HELD THAT:- In view of the Bangalore Bench order in assessee’s own case [2019 (7) TMI 1956 - ITAT BANGALORE] we direct the A.O. to consider the issue afresh. A.O. is directed to examine the judicial pronouncements relied on by the assessee and take a decision in accordance with law after affording a reasonable opportunity of being heard to the assessee. It is ordered accordingly.
TDS u/s 194H - Disallowance u/s 40(a)(ia) towards amount retained by airlines while remitting the amount of Passenger Service Fees (PSF) and User Development Fees (UDF) - HELD THAT:- Respectfully following the Hon’ble High Court judgment in the case of Delhi International Airport (P) Ltd. [2018 (5) TMI 334 - ITAT BANGALORE] we restore this issue to the files of the A.O.
A.O. is directed to re-adjudicate the issue in light of proviso to section 40(a)(ia) of the Act. The A.O. shall afford a reasonable opportunity of hearing to the assessee. If it is established that the Airline Operators have offered receipt of commission as income in the respective assessment years in their returns of income and paid tax on the same, then the assessee shall not be held “as an assessee in default”. In such a scenario, the provisions of section 40(a)(ia) does not have any application. It is ordered accordingly.
Disallowance u/s 14A - HELD THAT:- As per the order of Special Bench of the Tribunal in the case of Veerat Investments [2017 (6) TMI 1124 - ITAT DELHI] only those investments, which have yielded exempt income has to be considered for the purpose of computing average value of investments for computing disallowance under Rule 8D(2)(iii). Hence, the issue of disallowance u/s 14A r.w.r.8D(2)(iii) is restored to the files of the A.O. A.O. is directed to follow the dictum laid down by the Special Bench order of the Tribunal in the case of Veerat Investments (supra) and compute the disallowance accordingly.
Addition / deduction by treating the duty credit entitlement under SFIS accrued as grant related to revenue - HELD THAT:- On identical facts, in the case of group company, namely, M/s.Delhi International Airport (Pvt.) Ltd. [2018 (5) TMI 334 - ITAT BANGALORE] the issue was restored to the files of the CIT(A). Thus we restore this issue to the files of the A.O. The A.O. is directed to follow the directions of the Tribunal given above.
Addition by including the revenue from NACIL on accrual basis - HELD THAT:- On identical facts, the Hon’ble jurisdictional High Court in the case of M/s.Delhi International Airport (Pvt.) Ltd. [2022 (1) TMI 841 - KARNATAKA HIGH COURT] had decided the issue against the assessee. Thus we hold that the revenue from NACIL are to be recognized on accrual basis. Further, in tune with the finding of the Hon’ble High Court, we direct the A.O. to exclude the income offered by the assessee on receipt basis. It is ordered accordingly.
Disallowance of Community Development expenditure - HELD THAT:- As decided in assessee’s own case for assessment year 2009- 2010 [2019 (7) TMI 1956 - ITAT BANGALORE] though the assessee has furnished details of expenditure, it has not demonstrated the connection between the expenditure and the business advantage to the assessee. Further, as stated earlier, the nature of payment as well as the nature of expenditure incurred by GMR Varalaskhmi Foundation require examination. Under these set of facts, we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to explain its case before the AO. Accordingly, we set aside the order passed by the ld CIT(A) on this issue and restore the same to the file of the AO for examining this issue afresh - In the light of the order of the Tribunal, which has restored an identical issue to the files of the A.O., we restore the issue raised as regards the allowability of expenditure incurred on community development expenses to the files of the A.O. for de novo consideration
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2022 (2) TMI 1293 - ITAT CHANDIGARH
Ex-parte order passed by Tribunal - As submitted that the assessee is interested, keen and desirous to prosecute his appeal under consideration and he undertakes to assist the Tribunal in most appropriate and proper manner - HELD THAT:- We find that the Coordinate Bench has passed an ex-parte order due to non-prosecution on behalf of the assessee and has also given liberty to seek recall of the said order by moving an appropriate prayer. Therefore, taking into consideration the facts and circumstances of the case and in the interest of substantial justice, the order so passed by the Coordinate Bench is hereby recalled and the Registry is directed to fix the matter on 24.05.2022 for fresh hearing on merits. Separate notice is dispensed with as pronounced in the Open Court.
In the result, the Miscellaneous Application filed by the assessee is allowed in the light of aforesaid directions.
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2022 (2) TMI 1292 - ITAT DELHI
Income deemed to accrue or arise in India - Royalty receipt - AO held payment falls under the term “Royalty” within the meaning of clause (iii) of explanation to Section 9(1) of the Income Tax Act, 1961 within the meaning of royalty as defined under Article 13 between India-Netherland treaty and taxed the receipt of Rs.1.83 crores @ 10% - HELD THAT:- We find that this issue stands covered by the order of the Hon’ble Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use 226 of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. - Decided in favour of assessee.
Payment received on account of Information & Communication Technology (ICT) service charges from Perfetti Van Melle India Pvt. Ltd. taxed as “Fees for Technical Services” under Article 12 of the India-Netherlands DTAA - HELD THAT:- As decided in case of SCA Hygiene Products AB [2021 (1) TMI 323 - ITAT MUMBAI] the person receiving the money as royalty, such as the actual seller of the software in this case, and the person providing service ancillary or subsidiary to the enjoyment of that right, must be the same. That's not the case here. In the present case, the payment received by the assessee has been held to be in the nature of reimbursement, which is outside the ambit of taxation. The person selling the SAP software is Be One Solution, Switzerland, whereas the person providing the services in question is the assessee. Article 12(4)(a) will not, therefore, come into play at all. In our considered view, therefore, the taxation under article 12 in the present case can come into play only when the "make available" clause is satisfied, but then the Assessing Officer's justification for the satisfaction of 'make available' clause, for the detailed reasons set out earlier in this paragraph, does not meet our judicial approval. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee on this point as well. Accordingly, we hold that the income on account of Information Technology Services is also not taxable under article 12 - Appeal of assessee allowed.
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2022 (2) TMI 1291 - ITAT BANGALORE
TP Adjustment - addition made on determination of Arm’s Length Price (ALP) u/s 92 in respect of the international transaction of rendering licenced manufacturing services (Licensed Manufacturing Segment) by the assessee to its Associate Enterprise - HELD THAT:- We accept the prayer of the learned Counsel for the assessee and set aside the order of the AO and remand the issue for denovo consideration to the AO/TPO to carry out the exercise of determination of ALP in the licence manufacturing segment denovo. The AO/TPO will afford opportunity of being heard to the assessee in the set aside proceedings. The relevant grounds of appeal are accordingly treated as allowed for statistical purpose.
Determination of ALP in respect of Information Service (IS) charges and corporate service charges Segment - The issue with regard to determination of ALP in respect of payment of IS charges should be set aside to the AO/TPO for fresh consideration denovo in the light of the submissions and additional evidence filed before us and these submissions and additional evidence go to the root of the matter. The AO and TPO will afford opportunity of being heard to the assessee in the set aside proceedings.
Acquisition of companies by the Assessee on Merger - Depreciation on Goodwill was claimed on account of Acquisition of business by the assessee on merger and on Slum sale basis - HELD THAT:- Goodwill arising on amalgamation, in the hands of amalgamated company is an intangible asset in terms of Section 32(1)(ii) of the Act and thus eligible for depreciation under the Act. The issue whether Goodwill arising on amalgamation is eligible for depreciation or not, is no longer Res-Integra. Further, it is not disputed by the Revenue that the assessee paid consideration which is said to be in excess of the fair value of assets taken over. See SMIFS SECURITIES LTD. [2012 (8) TMI 713 - SUPREME COURT]
Allowance of depreciation generated as a result of amalgamation in the hands of amalgamated company needs depper judicial scrutiny especially in the light of the intent of the legislature to keep amalgamation a tax neutral scheme for companies and not to provide any scope to derive undue tax benefits. In particular he drew attention to Explanation 7 to Sec.43(1) of the Act which provides that actual cost of the transferred capital asset to the amalgamated company to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business. When cost is not recorded of any goodwill in the amalgamating company, there can no cost or goodwill in the amalgamated company. It best can be nil in such a situation.
Both the parties agree that the facts as brought out in the submissions made by the learned Counsel for the assessee before the Revenue authorities have not been considered either by the AO or the DRP and therefore this issue also needs to be remanded to the TPO/AO for fresh consideration. Accordingly, we set aside the issue to the AO for fresh consideration in accordance with law and in the light of the submissions made before the Tribunal.
TDS u/s 194 - ‘Special Discounts’ to dealers who essentially its customers - AO disallowed the same under section 40(a) of the Act for failure to deduct tax at source, alleging that it is in the nature of commission, warranting deduction of tax at source - DRP confirmed the same, holding that special discount were rightly confirmed to be in the nature of commission since the assessee itself grouped the special discount under the head “commission” in its financials - HELD THAT:- We have given a careful consideration to the rival submissions and are of the view that the issue with regard to the question whether the payment in question is in the nature of discount or commission should be set aside to the AO/TPO for fresh consideration denovo in the light of the submissions made before us, the case laws cited and the real nature of the transaction and not to conclude only on the basis of entries in books of accounts and nomenclature used therein. The AO and TPO will afford opportunity of being heard to the assessee in the set aside proceedings.
Short grant of tax credit - HELD THAT:- We are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee as made above and allow credit for TDS in accordance with law, after affording assessee opportunity of being heard.
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2022 (2) TMI 1290 - CESTAT NEW DELHI
Application filed to permit the applicant to urge certain additional grounds at the time of hearing of the appeal - HELD THAT:- A perusal of the grounds indicate that they all are legal grounds and it has also been stated by the learned Counsel appearing for the applicant that they are based on facts already on record.
The application is allowed.
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2022 (2) TMI 1289 - PUNJAB AND HARYANA HIGH COURT
Attachment and sale of their properties - enforcement of guarantees given - assignmnet of debt - right of NCLT to proceed against guarantors - Financial Creditors or not - HELD THAT:- Since the Resolution Plan approved by the NCLT on 19.10.2020 itself contemplated assignment of the debt of the principal borrower to M/s Hasaud Steel Limited, and such assignment, by virtue of the above provisions, would take effect only if the exposure to the borrower is fully extinguished as per Clause 16 of the RBI circular RBI/2018-19/203 dt. 7.6.2019 , prima facie, there would be extinguishment of debt in the books of respondents No.3 to 11. This is because if such debt is not extinguished in the books of respondents No.3 to 11, the Resolution Plan itself cannot be deemed to be implemented.
Thus once the debt stands assigned to M/s Hasaud Steel Limited, the loan assignment payment must have been paid on a pro rata basis to each of the respondents No.3 to 11, and it would be the said purchaser who would be entitled prima facie to exercise all rights as a creditor in respect of the remaining debt, including the right to enforce any security, guarantee or mortgage granted in respect of such debt.
Primafacie it appears that the respondents are not entitled to continue the proceedings before the NCLT-New Delhi and the DRT-II, New Delhi to enforce the personal guarantees given by the petitioners to the loans given by the respondents to M/s ACCIL and only M/s Hasaud Steels Limited appears to be entitled to do so.
For filing of replies by the respondents, list along with CWP-24980-2021, CWP-26726-2021, CWP-26715-2021 and CWP-26668- 2021, on 21.03.2022.
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2022 (2) TMI 1288 - NATIONAL COMPANY LAW TRIBUNAL KOLKATA BENCH
Validity of approved Resolution Plan - illegality or non-adherence to the law with respect to the Resolution Plans or not - HELD THAT:- In view of the law laid down by Hon’ble Supreme Court in Arcelormittal India Private Limited vs. Satish Kumar Gupta and Ors. [2018 (10) TMI 312 - SUPREME COURT], it not a stage for us to look into the alleged irregularities/ violations in the resolution plan. It is the settled law that resolution professional is merely a facilitator. Resolution plan prepared by him is not binding upon the CoC. It is only the CoC which has to take the final call to approve the resolution plan or reject it.
The approval of the 'Resolution Plan' is in the domain of the 'Committee of Creditors' and not that of 'Resolution Professional, and CoC in the present case is yet to take a call on resolution plan/s before it.
Application not maintainable.
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2022 (2) TMI 1287 - ITAT DELHI
Income deemed to accrue or arise in India - PE in India - Attributing profits to assessee’s PE in India - treatment of Bombardier Transportation India Ltd. (BTIN) as the “Fixed Place Permanent Establishment” (“Fixed Place PE”) of the assessee in India - HELD THAT:- As decided in own case [2020 (10) TMI 1205 - ITAT DELHI] appellant does not have any place of business in India and all business activities with respect to offshore supplies are carried outside India. The equipment supply has been manufactured at overseas manufacturing facility of the appellant and sale of equipment has occurred outside India and payment has also been received by the appellant and outside India.
Entire findings of the DRP are based on erroneous appreciation of wrong facts and on such erroneous appreciation of wrong facts, the DRP held that BTIN is the PE of the appellant in India without appreciating the true facts that the appellant has no place of disposal in India in the office of BTIN from where the appellant could have conducted its business in India. Appeal filed by the assessee is allowed.
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2022 (2) TMI 1286 - DELHI HIGH COURT
Look Out Circular quashed - Whether LOC shall be deleted automatically and shall remain in force until and unless a deletion request is received from the Originator? - Learned Single Judge quashed the Look Out Circular (‘LOC’) issued against Respondent No.1(Income Tax Department) herein inter alia on the ground that the LOC has not been issued in terms of the Office Memorandum dated 05.12.2017 and that the circumstances of the case did not show that the LOC could be issued due to actions ‘detrimental to the economic interests of the country’ - HELD THAT:- Appellant has made out a prima facie case for grant of interim relief. The balance of convenience is also in favour of the Appellant and in case the impugned judgment is not stayed, irreparable loss shall be caused to the Appellant. We, accordingly, stay the operation, implementation and execution of the impugned judgment dated passed by the learned Single Judge till the next date of hearing.
Respondent No.1 is hereby directed to deposit his passport with the Learned Registrar General of this Court, latest by 5.00 PM on 04.02.2022. The passport shall be kept by the Learned Registrar General in safe custody in a sealed cover.
Since it is the stand of the Learned Senior Counsels appearing on behalf of Respondent No.1 that on account of business constraints, he is required to frequently travel abroad, we grant liberty to Respondent No.1 to file an appropriate application as and when the need arises to travel abroad, detailing the reasons therein. Needless to state, as and when such an application is preferred, the same shall be decided, based on facts and circumstances brought forth and in accordance with law.
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2022 (2) TMI 1285 - ITAT CHANDIGARH
TP Adjustment - Addition on account of transfer of power units - AO made a reference u/s 92C to the TPO for determining the arms length price in respect of specific domestic transaction undertaken by the assessee - HELD THAT:- In our opinion the facts of the issue under consideration are identical to the facts involved for the A.Y. 2013-14 [2021 (9) TMI 1420 - ITAT DELHI] in assessee’s own case wherein held that once there was a direct internal CUP, i.e., the assessee company had purchased electricity from Punjab State Power Corporation at Rs.7.57, then it represents the market rate on which any industry undertaking or consumer is getting the electricity. Thus, we do not find any reason as to why such market rate or CUP should be rejected. Nowhere, it has been brought by the TPO as to why the average trading rate in Indian Energy Exchange should be applied as external CUP. Accordingly, we hold that the sale of electricity @ 6.72 per unit is at Arms’ Length and no adjustment is required in this segment/unit.
Addition on account of transfer of steam from eligible unit to non eligible unit - As relying on assessee own case for the A.Y. 2013-14 [2021 (9) TMI 1420 - ITAT DELHI] steam is a form of power eligible for deduction u/s.80IA and same cannot be denied by taking its steam cost at Nil. Further. He has grossly erred in ignoring the audited certificate by Senior Chartered Engineer who is an approved valuer by Income Tax Department and the Cost Accountant appointed by the Central Government without any accounts report, without any agency or expert. Accordingly, for this unit also, we hold that no transfer pricing adjustment is required.
Appeal of assessee allowed.
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2022 (2) TMI 1284 - SC ORDER
Clarification made under Item No.9 of the Government of India, Ministry of Finance Circular No.192/02/2016-Service Tax dated April 13th, 2016 - HELD THAT:- Issue notice on the application for condonation of delay and on the Special Leave Petition.
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2022 (2) TMI 1283 - ITAT MUMBAI
TP Adjustment - comparable selection - Subscription segment - HELD THAT:- Innovana Thinklabs Limited - when the Ld. TPO has himself applied this filter of turnover he cannot go against it and as such Innovana is not suitable comparable vis-à-vis assessee, hence ordered to be excluded.
K7 Computing Pvt. Ltd. (K7) - Assessee is a limited risk reseller having no plant and equipments, owning no intangible assets, having no expenses on promotions and is not selling its product. So K7 is not a valid comparable vis-à-vis K7, hence ordered to be excluded.
Service Segment - MT Education Services Pvt. Ltd. (MT) - When this comparable does not qualify Ld. TPO’s own turnover filters it is not a valid comparable vis-à-vis assessee, hence, ordered to be excluded.
Assessee challenging the impugned rejection made by the Ld. TPO viz. Compucom Software Ltd. (segment), Chitale’s Personalised Learning Pvt. Ltd. and Anthena Eduspark Ltd - A.R. taken us to his detail search strategy available at page A1146 of the paper book where the word ‘royalty’ is not part of the search process. Moreover, when the assessee’s business morale has already been accepted by the Tribunal in assessee’s own case in earlier years rejecting comparable of the assessee without examining the same is not sustainable. So the Ld. TPO is directed to reexamine the comparables for benchmarking the international transactions qua service segment by providing opportunity of being heard to the assessee.
Software Support Segment - Aspire System India Pvt. Ltd. (Aspire) - Assessee sought exclusion of Aspire from the final set of comparables for benchmarking SDS segment on the ground that it fails Related Party Transaction (RPT) filters as its RPT/ sales ratio is more than 25%. The assessee computed the significant related party transactions at 37.58% whereas the Ld. TPO computed it at 23.55%. The TPO is directed to recalculate the RPT/sales ratio by providing opportunity of being heard to the assessee. So this comparable is remitted back to the Ld. TPO to decide afresh.
Interglobe Technology Quotient Pvt. Ltd. (Interglobe) - When the assessee has challenged filter applied by the Ld. TPO it has to be considered in the light of the financials of Interglobe by providing an opportunity of being heard to the assessee. This comparable is also remitted back to the Ld. TPO to decide afresh.
Kelton Tech Solutions Ltd. (Kelton) - Since there is a no estopple against the statute the assessee can challenge its own comparable if wrongly chosen inadvertently. Since this comparable fails TPO’s own filter of export sales to total sales ratio it needs to be reconsidered by the Ld. TPO after providing opportunity of being heard to the assessee. So this comparable is also remitted back to the Ld. TPO to decide afresh after providing opportunity of being heard to the assessee.
Nihilent Analytics Ltd. (Nihilent) - This company cannot be a valid comparable vis-à-vis assessee, who is a low risk entity working on cost + markup model. Hence, Nihilent is ordered to be excluded as a comparable.
Nihilent Ltd. - As segmental financials are not available it cannot be a valid comparable vis-à-vis assessee which is a routine software development service provider working on cost + markup model, hence ordered to be excluded.
Dun and Bradstreet Technologies & Data Services Pvt. Ltd. (Done & Bradstreet) - As perused a transfer pricing study of the assessee available at page A305, A412 & A413 of the paper book supported with relevant financials. Dun & Bradstreet is into providing vide area of sources such as D&B analytic services, risk management solutions, sales and marketing solution services, supply management solution etc. It has also come on record that the assessee has earned abnormally high margin of 58.19% as is evident from the annual report of Dun & Bradstreet and as such is not a valid comparable vis-à-vis assessee who is a routine software development service provider to its AE working on cost + markup model, hence order to be excluded.
Infobeans is also ordered to be excluded as a comparable being not a comparable to the assessee.
Maveric Systems Ltd. (Maveric) - TPO is directed to reconsider Maveric as a comparable in view of its segmental reporting and by bifurcating the turnover between product or service categories by providing opportunity of being heard to the assessee.
SagarSoft India Ltd. (SagarSoft) - Since it is a factual aspect, which needs to be examined at initial level, Ld. TPO may verify the same to reconsider SagarSoft as a comparable after providing opportunity of being heard to the assessee.
IT Enabled Support Services (ITES) Segment - Manipal Digital Systems Pvt. Ltd. (Manipal) - Since the assessee has relied upon information drawn from the website of the assessee and has not brought on record complete annual reports we direct the Ld. TPO to re-examine this comparable in the light of the objections raised by the assessee by providing opportunity of being heard to the assessee.
MPS Ltd. (MPS) - Activities of MPS are akin to a IT service provider and not an ITES service provider. So we direct to exclude MPS from the final set of comparables.
Claim for working capital adjustment in all the four segments - HELD THAT:- Assessee is entitled for working capital adjustment. The Ld. TPO is directed to verify the computation furnished in transfer pricing study and detailed working capital adjusted margin computation furnished by the assessee and accordingly provide the working capital adjustment to the assessee in view of the settled principle laid down by the Tribunal, in order to provide level playing field for assessee as well as comparable company.
Claim for Proportionate Adjustment - HELD THAT:- We have perused the judgments rendered by the Hon’ble Bombay High Court in the case of Hindustan Unilever Ltd. [2016 (7) TMI 1245 - BOMBAY HIGH COURT] and Tara Jewels Exports Pvt. Ltd. [2015 (12) TMI 1130 - BOMBAY HIGH COURT] relied upon by the Ld. A.R. for the assessee which are on the identical issue. This settled legal position has not been controverted by the Ld. D.R. for the Revenue having been decided against the Revenue in number of cases by the Hon’ble Bombay High Court. The ratio of the judgment (supra) is “margin arrived at by the Ld. TPO to be applied to determine the arm’s length price also applied to the transactions entered by the assessee with non AE also, leading to the enhancement of sale consideration qua the transactions with non AE also which is not a level playing field”. So in order to arrive at the correct result proportionate adjustment needs to be extended to the AEs. So the Ld. TPO is directed to grant the proportionate adjustment
Rectification of mistake - Correct working of adjustment for subscription and service segment - HELD THAT:- TPO shall dispose of the application moved by the assessee under section 154 of the Act after verifying the working brought on record by the assessee to arrive at the correct adjustment made in this case within a period of three months.
Revenue recognition - unearned revenue qua subscription services - HELD THAT:- When due taxes have been deducted and paid to the Income Tax Authorities while making such payment to Red Hat US in terms of the agreement entered into between the assessee and the Red Hat US in accordance with the consistent revenue recognition policy adopted by the assessee, upheld by the Tribunal in assessee’s own case for earlier years, addition made by the Ld. AO/DRP on account of unearned revenue qua subscription services is not sustainable in the eyes of law.
Addition on account of employee stock option plan (ESOP) expenses - AO proposed the disallowance on the grounds inter alia that assessee has failed to submit copies of email exchange, resolution of board of directors and minutes of meetings wherein the decision to cross charge was taken - HELD THAT:- Since it is the case of the assessee that the Ld. DRP has failed to appreciate the additional evidence brought on record by the assessee and the AO has failed to examine the “recharge agreement” and “internal memorandum prior to the execution of recharge agreement” and has never sought “valuation report” or the “incentive plan”, we are of the considered view that this issue is required to be remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee.
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2022 (2) TMI 1282 - MEGHALAYA HIGH COURT
Levy of penalty imposed on the directors of the company owning the manufacturing unit for perceived evasion of excise duty - HELD THAT:- The orders of penalty imposed on the present appellants stand set aside and these matters are also remanded for a fresh consideration by the Appellate Tribunal upon answering the issues indicated in the order pertaining to Central Excise Appeal No.4 of 2019.
Application disposed off.
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