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2022 (6) TMI 1414
Condonation of delay filing return - petitioner was required to upload a Form 10B alongwith return whereas because of an error on the part of Chartered Accountant erroneously Form 10BB was uploaded - whether mistake committed by CA should not be treated as a bonafide mistake? - HELD THAT:- Even assuming that pursuant to certain communications filed with the return and the petition, the petitioner had an opportunity to avail alternative remedy, fact remains that application for condonation of delay was indeed maintainable. This is not a case of respondent that said application was not maintainable because petitioner did not avail the alternative remedy. The application for condonation of delay was also not dismissed on this ground and for this reason.
This is trite that validity of an order of statutory authority must be seen on the basis of grounds mentioned therein and not for any other reason.
A Constitution Bench of Supreme Court in the case of Mohinder Singh Gill and another Vs. The Chief Election Commissioner, New Delhi and others [1977 (12) TMI 138 - SUPREME COURT] opined that when validity of an order of the statutory authority is called in question, the validity of order needs to be examined on the basis of grounds mentioned therein. The orders cannot be validated on the basis of counter affidavit or supplementary counter affidavit.
The reasons assigned in the order dated 15/09/2020 alone is to be seen for the purpose of condonation of delay. We find substance in the argument of learned counsel for the petitioner that the delay or mistake is on the part of Chartered Accountant was not taken into account at all in the said order.
Thus, we deem it proper to set aside the impugned order and remit the matter back before the CIT (Exemption), Bhopal to reconsider and decide the matter afresh in accordance with law.
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2022 (6) TMI 1413
Addition u/s 69A r.w.s.115BBE - assessee has not been able to explain any source qua the excess-cash - HELD THAT:- The assessee was found to be owner of money i.e. excess cash, the excess cash was not recorded in the books of account of any source (i.e. books of business in present case) maintained by the assessee and the assessee has himself admitted that the excess cash found from his premise is earned from undisclosed sources, therefore he is unable to give explanation of its source. Thus, we find that all ingredients of section 69A are satisfied from the material held on record i.e. the statement of assessee. Being so we do not have iota of doubt in the application of section 69A.
The impugned excess cash found by the revenue during survey proceeding attracted section 69A as well as section 115BBE of the act. Therefore, we agree that the lower authorities have rightly invoked / confirmed that the excess cash is taxable u/s 69A read with section 115BBE. The conclusions taken by lower authorities do not require our interference. Decided against assessee.
Unexplained stock - physical stock was found to be short - AO treated this short-stock as unaccounted sales out of books of account, estimated profit @ 10% and thereby made an addition - HELD THAT:- We observe that the difference is very nominal and it can happen despite of all care in carrying out physical verification as well as preparation of books. We observe that the tax effect on Rs. 9,962/- shall be very negligible. Hence in order to impart a justice and taking a holistic and practical view, the addition deserves to be deleted. Decided in favour of assessee.
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2022 (6) TMI 1412
Belated payment of employees’ contribution to ESI and PF - assessee deposited the said contribution before due date for filing of return of income under Income Tax Act - Due date of payment - Scope of amendment - HELD THAT:- While processing the return u/s 143(1) of the Act no disallowance towards contribution to employees’ PF and ESI is warranted as this issue is highly debatable in nature. Even otherwise we find that the issue in appeals is squarely covered by the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] Ratio of this decision squarely applies to the facts of the assessee’s cases. Also see case of CIT Vs. M/s. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT]
Hon’ble Supreme Court in the case of M.M. Aqua Technologies Ltd. [2021 (8) TMI 520 - SUPREME COURT] held that retrospective provision in a Tax Act which is for the removal of doubts cannot be presumed to be retrospective even where such language is used if it alters or changes the law as it earlier stood. The Amendments made to Section 36 and Section 43B by insertion of Explanations 2 and 5 respectively. In these Sections it is clarified that for the removal of doubts the provisions of these Sections were amended.
Tribunals in the cases of Raj Kumar [2022 (2) TMI 1224 - ITAT DELHI] held that the amendment brought in by Finance Act, 20 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees’ contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act
Thus we direct the Assessing Officer / CPC to delete the disallowance of employees’ contribution to EPF and ESI in all these cases as the contributions were remitted before the due date for filing of return of income. Grounds raised by the assessee are allowed.
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2022 (6) TMI 1411
Taxability of Consultancy Services as FTS - pre-requisites for deriving the benefit of the MFN clause in the Protocol to India’s DTAAs with certain countries - Issue decided in favour of assessee in its own earlier AY's - DR referring to CBDT Circular No.3/2022 has disputed the applicability of earlier orders of the Tribunal in the impugned assessment year - HELD THAT:- We find that in the case of GRI Renewal Industries SL [2022 (2) TMI 769 - ITAT PUNE] Tribunal considered the impact of CBDT Circular No.3/2022 held requirement contained in the CBDT circular No.03/2022 cannot primarily be applied to the period anterior to the date of its issuance as it is in the nature of an additional detrimental stipulation mandated for taking benefit conferred by the DTAA. It is a settled legal position that a piece of legislation which imposes a new obligation or attaches a new disability is considered prospective unless the legislative intent is clearly to give it a retrospective effect - it is ambiguously clear that there is no requirement of separate notification for importing the beneficial treatment from the agreement. Hence, in the facts of the case and the decision referred above, we find no merit in the arguments forwarded by the ld. Departmental Representative. The conditions set out in CBDT Circular 3/2022 would not apply in the impugned assessment year. Consequently, ground No.1 of the appeal is allowed.
Taxability of SAP Licence charges as royalty - HELD THAT:- We find that this issue is recurring. On identical set of facts, the Tribunal deleted the addition in preceding assessment years. The Tribunal in assessment year 2016-17 following the order in assessee’s own case in [2021 (1) TMI 323 - ITAT MUMBAI] deleted the addition as held receipt of software licence fees by the assessee, from its Indian subsidiary, is reimbursement of software licence fees paid by the assessee to a third party, and, therefore, it cannot constitute income taxable in the hands of the assessee. Decided in favour of assessee.
Taxability of IT Support Services as FTS/Royalty - HELD THAT:- The Tribunal in assessment year 2016-17 following the order of Co-ordinate Bench in assessment year 2015-16 deleted the addition as held 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 - we uphold the plea of the assessee on this point as well - income on account of Information Technology Services is also not taxable under article 12. Decided in favour of assessee.
Taxability of reimbursement expenses treated as FTS/royalty - HELD THAT:- Both sides are unanimous in stating that the DRP has not given any directions on this issue. DRP while considering objections of the assessee on Taxability of reimbursement of expenses as FTS/Royalty has dealt with the issue the directions. DRP has given finding without referring to the reimbursed expenses. Consequently, the issue raised allowed for statistical purpose.
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2022 (6) TMI 1410
Penalty u/s 271(1)(c) - unsecured loans received during the F.Y. 2003-04 - HELD THAT:- As decided in Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law.
In Mr. Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] - Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.
In the case of PCIT vs. Sahara India Life Insurance Co. Ltd.[2019 (8) TMI 409 - DELHI HIGH COURT]reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically.
The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows [2016 (8) TMI 1145 - SC ORDER]
Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, the penalty levied is hereby obliterated.
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2022 (6) TMI 1409
Seeking grant of Anticipatory Bail - FIR registered beyond the jurisdiction of this Court - whether this Court, in exercise of its powers under Section 438 of the Cr. P. C, is vested with jurisdiction to grant bail in a case that has been registered beyond its local limits of jurisdiction?
HELD THAT:- The above issue came up for consideration before this Court in the case of Mohan Singh Parihar vs. Commission of Police and Ors. [1982 (11) TMI 184 - JAMMU AND KASHMIR HIGH COURT]. This Court, after noticing the provisions contained in Section 497-A of the Jammu and Kashmir Cr. P. C, which is in pari materia with Section 438 of the Central Cr. P. C, as also the provisions contained in Section 6 of the J&K Cr. P. C, which is in pari materia with Section 6 of the Central Cr. P. C, observed that On the parity of the reasoning, the High Court and a Court of Session of which Section 497-A speak, must also mean the High Court and the Court of Session competent to try the accused seeking enlargement on bail.
On the basis of the aforequoted reasoning, the Court came to the conclusion that the High Court has no jurisdiction to grant anticipatory bail to a person against whom a case has been registered with a police station which is situated outside the local limits of its jurisdiction under the Code.
This Court does not have jurisdiction to entertain and decide the bail application which relates to an FIR that has been registered beyond the local limits of this Court even though the accused/petitioner may be residing within the jurisdiction of this Court - The petitioners in the instant case are not seeking transit bail but are seeking bail in anticipation of their arrest on a permanent basis, regarding which this Court lacks jurisdiction in view of the ratio laid down in the aforequoted judgment.
The petition is held to be not maintainable and the same is dismissed accordingly.
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2022 (6) TMI 1408
Classification of goods intended to be imported - vehicle-mounted computers - tablet computers - mobile computer - classifiable under heading 84.71 to be classified as ADP machines or not - HELD THAT:- These are portable devices used in enterprise environments to run mobile apps, capture barcodes, take photos and videos, and provide voice and data communications for workers and managers. These devices combine personal computer and scanning functions (applies to mobile computers and tablet computers) in a single device that can be outfitted with off-the-shelf or custom software applications that perform everyday tasks, such as monitoring deliveries, tracking assets, and managing inventory (except vehicle-mounted computer which do not have the capability of scanning). And because they run on familiar operating systems such as Windows/Android, they offer the same functionality of a desktop computer or laptop.
In respect of possible alternate heading 8517, there is a need to examine the features of these devices in the context of note 3 to section XVI of the tariff. Heading 8517 covers telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28 - the tablet computers are classifiable under heading 8471 and not under heading 8517 despite the fact that the product is having cellular connection functionality, considering its principal function as automatic data processing. Similarly, in this case, the principal function of the impugned devices is barcode scanning and data processing for monitoring deliveries, tracking assets and managing inventory. Therefore, these devices appear to merit classification under heading 8471 and not under heading 8517.
Cellular connectivity is essentially used for GPS and information sharing, where wi-fi is not available. Cellular connectivity is also used for making calls. However, as mentioned earlier, 18 out of 32 models do not have cellular connectivity. On a similar device, the TC77 series touch computer, which is a handheld mobile computer used for asset inventory management purposes, Singapore Customs ruled (ref. No. CRL21 1217-0036) that the product is classifiable under subheading 84713090. Therefore, notwithstanding the WCO classification advice to the contrary, it is my considered opinion that the devices under consideration are not classifiable as smartphones. They merit classification under subheading 84713090.
Thus, the 32 devices are classifiable under heading 8471 and more specifically, under subheading 84713090 of the first schedule to the Customs Tariff Act, 1975.
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2022 (6) TMI 1407
Revision u/s 263 - No enquiry v/s inadequate enquiry - suspicious Share transactions - HELD THAT:- In present case AO had not only made sufficient enquiries, but after satisfying himself, assessment was framed u/s 143(3). After receiving information relating to share transfer proper enquiries were made which is also evident from the office note exhibited elsewhere.
It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue.
Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous.
This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry.
Thus the order framed u/s 263 of the Act deserves to be set aside and that of the AO deserves to be restored. Decided in favour of assessee.
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2022 (6) TMI 1406
Classification of goods proposed to be imported - data projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350, Optoma ZX300 - classifiable under CTH 8528 69 00 or not - exemption to All goods of a kind solely or principally used in an automatic data processing system of heading 8471 - applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 1-3-2005 - HELD THAT:- These are marketed as data projectors only. From the product catalogues and information available on the websites, it is clear that data projectors are principally meant for use with an automatic data processing system. They are designed to project in places like conference rooms, business meetings, financial institutions, tradeshows, exhibition venues etc. with connectors matching that of a laptop/computer. They possess both indoor and outdoor projection capability. The projectors proposed to be imported by the appellant have got additional features such as an S-Video port, HDM1 port etc. along with the capability to adjust the aspect ratio in 3 models. The additional ports give additional utility in the form of an audio-video display and the ability to adjust the aspect ratio to 16:9/16:10 is for adaptability purposes. The differentiating features of data projectors compared to that of video projectors are discussed in table 1, which substantiates that the principal use of impugned goods, based on functions and features, is with automatic data processing machines. The presence of additional features cannot disentitle the impugned goods from classification under sub-heading 8528 62 00.
Reliance is placed upon COMMISSIONER OF CUSTOMS (I), ACC, MUMBAI VERSUS VARDHAMAN TECHNOLOGY P LTD [2013 (8) TMI 271 - CESTAT MUMBAI], where it was held that the projectors merely having additional function cannot be denied classification under CTH 8528 61 00 (erstwhile tariff heading for projectors capable of directly connecting to and designed for use with an automatic data processing system of Heading 8471). Therefore, the goods under consideration are classifiable under sub-heading 8528 62 00.
Sr. No. 17 of Notification No. 24/2005-Customs, dated 1-3-2005, as amended, exempts all goods of a kind solely or principally used in an automatic data processing system of 8471 and falling under Heading 8528 62. As the impugned goods are held as classifiable under sub-heading 8528 62 00 and are principally used in/with automatic data processing system they are entitled to the exemption.
The projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350 and Optoma ZX300 are classifiable under sub-heading 8528 62 00 of the First Schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of Sr. No. 17 of Notification No. 24/2005-Customs, dated 1-3-2005, as amended.
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2022 (6) TMI 1405
Miscellaneous Application that the Ground No. 4 in the original appeal in respect to addition on account of production development expenses has not been addressed which admittedly needs consideration by us. Hence, the application is allowed.
Registry is directed to list the matter for hearing on 24.04.2022 solely for consideration of the Ground No. 4 raised for A.Y. 2014-15. Since both the parties were present before the court when the matter was heard and the date fixed for hearing, services the notice to the respective parties by the Registry is hereby dispensed with.
MA filed by the Revenue is allowed.
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2022 (6) TMI 1404
Assessment u/s 153A - Absence of any incriminating material during the course of search - addition u/s 68 - HELD THAT:- CIT(A) has referred purchase/work contract and purchase invoices along with the statement recorded u/s 132(4) holding that because of contrary statements of employees, nature of invoices constituent incriminating material and such facts were not existed at the time of original assessment made in the case of the assessee. No reason to interfere in the decision of the ld. CIT(A), therefore, this ground of appeal of the assessee stand dismissed.
Disallowing film production related expenses - Confirming expenses claimed on account of film production as inflated and bogus - HELD THAT:- To sustain the disallowance it is necessary to have supporting evidences and documents, in the case of the assessee, basis of additions were only retracted statement of the employees which had no strong evidential value. There was no positive material on record brought by the A.O to substantiate that in fact assessee had inflated its expenses by overbilling. AO has only relied on the retracted statement and there was no independent material /evidences to substantiate the same.
A.O has not made further investigation to contrary prove the claim of occurrence of fire as claimed by the aforesaid party. We consider that the decision of ld. CIT(A) to sustain the addition of Rs.5 lac pertaining to the production expenses merely based on retracted statement was contrary to the surroundings facts and material and not justified, therefore, we direct the A.O to delete the addition.
Disallowance of Personal Expenses - A.O has disallowed payment made for J.W. Mariot Hotel Membership. -as claimed that hotel was used for holding meetings with the parties related to production of the films - HELD THAT:- We observe that the part of the hotel facility for personal use cannot be ruled out however, looking to the fact that the impugned addition was merely made on the basis of the retracted statement without fully linking with specific evidences, therefore we restrict such disallowance to 50% of Rs.2,81,265/-. Therefore, this ground of appeal of the assessee is partly allowed.
Expenditure towards production - HELD THAT:- The assessee has also produced ledger account and supporting documents before the assessing officer during the course of assessment proceedings to substantiate these facts that the said amount was not claimed as deduction in the books of the assessee during the year consideration, however the assessing officer failed to prove contrary. Revenue could not controvert the finding of the ld. CIT(A), therefore ,this ground of appeal of the Revenue stand dismissed.
Unsecured loan u/s 68 - loan taken from 5 parties pertaining to Sh.Bhanwarlal Jain Group - HELD THAT:- In the case of the assessee A.O has also failed to controvert the submission of the assessee supported with the relevant material. In the light of the facts and findings of coordinate bench in the Nemichand Jain case as supra, we find that the issue raised before the Tribunal in this year pertaining to the case of the assessee are similar to the case of Nemichand P. Jain. The A.O. had made the impugned addition merely relying upon the retracted statements and failed to corroborate the same with any relevant supporting evidence/material , therefore, addition to be deleted. Decided in favour of assessee.
Disallowance of bogus expenses - expenses as Recee expenses for the different films which comprising Air fare and Travelling Visa fees and Insurance Hotels etc - HELD THAT:- is observed that disallowance was made on doubtful basis without linking to specific seized material demonstrating that claim of the assessee is totally bogus. There is no material brought on record to support the complete disallowances of such expenses. As the nature of personal element cannot be ruled out therefore, we restrict the disallowance to the 50%.
Addition being salary paid to employee in cash - HELD THAT:- It is undisputed fact that lower authority has made impugned addition merely on the sole basis of retracted statement without corroborating the allegation of payment of the such salary in cash with any relevant evidence/supporting material .We don’t find any justification in the decision of ld. CIT(A). Accordingly, this ground of appeal of the assessee is allowed.
Payment towards foreign shooting expenses - HELD THAT:- A.O had not disproved the aforesaid material facts of incurring expenses by the assessee for shooting of the film at London and claim of tax rebate of Rs.3.65 cr. Therefore, we do not find any infirmity in the decision of the ld. CIT(A). Accordingly, this ground of appeal of the Revenue stand dismissed.
Accommodation entry provided by Viking Media Entertainment Pvt. Ltd. - Addition made on the basis of retracted statement of the employees of the assessee - HELD THAT:- During the course of assessment the assessee has submitted the entire document, agreement invoices, bank statement in support of genuineness of transactions. It is undisputed fact that assessee had made the film “Baaghi” on the basis of remake of the telgue film “Varsham”. The A.O has purely relied upon the retracted statement without disproving the correctness of the supporting documents furnished by the assessee. No merit in the appeal of the Revenue.
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2022 (6) TMI 1403
Classification of goods intended to be imported - Creative Touch 5-series Interactive Flat Panel (IFP) (Model-5652RK, 5752RK, 5862RK) - classifiable under CTH 8471 4190 or not - whether the impugned goods, namely Creative Touch 5-series Interactive Flat Panel can be considered as ADP machines? - HELD THAT:- The machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose between a number of such fixed programs. The digital data processing machines have storage capability and also stored programs which can be changed from job to job. Digital machines process data in coded form. A code consists of a finite set of characters (binary code, standard six-bit ISO code, etc.). The data input is usually automatic, by the use of data media such as magnetic tapes, or by direct reading of original documents, etc. There may also be arrangements for manual input by means of keyboards or the input may be furnished directly by certain instruments (e.g., measuring instruments) - Digital data processing machines may comprise in the same housing, the central processing unit, an input unit (e.g., a keyboard or a scanner) and an output unit (e.g., a visual display unit), or may consist of a number of interconnected separate units. In the latter case, the units form a "system" when it comprises at least the central processing unit, an input unit and an output unit.
Two of these units (input and output units, for example) may be combined in one single unit. Two or more of these systems may be interconnected, thus constituting, e.g., a local area network (LAN). These systems may include remote input or output units in the form of data terminals. Such systems may also include peripheral units, apart from the input or output units, designed to increase the capacity of the system, for instance, by expanding one or more of the functions of the central unit.
Open-source information as well as the submissions of the applicant portrays the subject item as an A10 which is a fully functional ADP machine that operates without restrictions. The AIO is equipped with hardware and software that allow it to perform, without artificial constraints, general computing tasks, where users are free to add or remove applications of their choosing
In a similar matter, the principal bench of CESTAT, New Delhi, in M/S. INGRAM MICRO INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS (IMPORT) , NEW DELHI [2022 (2) TMI 308 - CESTAT NEW DELHI] have held that goods would merit classification under CTI 8471 41 90 as claimed by the appellant and not under CTI 8528 52 00 as claimed by the department.
Thus, Creative Touch 5-series Interactive Flat Panel (IFP) (Model5652RK, 5752RK, 5862RK) merit classification under sub heading 8471 4190 of the first schedule to the Customs Tariff Act, 1975.
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2022 (6) TMI 1402
Assessment u/s 153A - Bogus exempt LTCG on sale of shares - incriminating material was found or not? - contention of the assessee is this that during the course of search no incriminating material was found from the premises of the appellant - CIT-A quashed proceedings initiated against assessee - HELD THAT:- We find that the assessee’s main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment and on the contrary addition has been made without due process of law has been taken into consideration in its proper perspective.
The ratio laid down in the case of Saumya construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] and CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has been applied rightly by the CIT(A) in the case in hand keeping in view of the particular fact that even the Ld. AO admitted the fact of not having any incriminating material found during the search of the assessee’s premises.
Quashing of the proceeding by the Ld. CIT(A) initiated u/s 153A against the assessee applying the ratio laid down by the judicial forums as indicated hereinabove is just and proper so as to warrant interference.Decided against revenue.
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2022 (6) TMI 1401
Allocation of the common expenses - CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses - assessee claiming deduction under section 10 (1) as engaged in the business of seed production, research, marketing of field and vegetable crops and wind power generation - HELD THAT:- It is pertinent to note that as rightly observed by the Ld. CIT(A) every methodology of estimation suffers from limitation and such limitations causing variations how to be smooth and on consistent application of the same principle.
CIT(A) was of the opinion that inasmuch as for the earlier assessment years the assessee adopted the basis of cost of goods sold as a reasonable method of apportionment of the agricultural and non-agricultural expenses out of the common expenses.
As both the cost of goods sold and also the turnover of different activities, to be the basis for allocation of the common expenses to have their own way and cess and variations, what is required is the following of the consistent method. Inasmuch as there is no dispute that the assessee has been consistently following the method by forgetting the common expenses on the basis of cost of goods sold, the rule of consistency demands that the same shall not be disturbed for a particular assessment year because it goes against the interest of Revenue. We, therefore, accept the reasoning adopted by the Ld. CIT(A) and hold that there is nothing wrong in the Ld. CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses.
Allowing the “provision for sales returns" - It is a fact that the assessee supplies seeds to its distributors located in the states of Kerala, Andhra Pradesh and Karnataka and after the season is complete the sales distributors identify the stock of seeds of various varieties which are not sold by the end of Ruby season of plantation.
No perversity in the findings of the Ld. CIT(A). In view of the seasonal nature of the business and also the short shelf life of the seeds, it is imperative for the assessee to take into account the quantity of unsold seats at the end of the year and the need to revalidate their further utility and to take them into stock in the next season. In the circumstances it cannot be said that the provision for sales returns is unascertained or unreasonable. With this view of the matter, we allow the contentions of the assessee and uphold the findings of the Ld. CIT(A).
Decided against revenue.
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2022 (6) TMI 1400
Fixation of the seniority of the Munsiffs (Batch of 2003) for promotion to the post of Sub-Judge in the State of Jammu & Kashmir (Now Union Territory) - whether the interse seniority of the Munsiffs appointed by way of direct recruitment on the recommendations of the State Public Service Commission should be fixed/ determined on the basis of the roster points or in terms of the order of their interse merit at the time of their selection?
HELD THAT:- The inter se merit list of the selected candidates can be prepared as a combined effect of several factors like written test, objective test, vivavoce and/or other parameters as may have been prescribed keeping in view the special requirement of service. Similarly, though not concerned in the present case, even in a case of promotion based on merit-cum-seniority, seniority by itself is not the only qualification for promotion to a selection post. If the criteria for promotion is merit-cum-seniority, the comparative merit has to be evaluated in which seniority will be one of the factors only. However, in the case of merit-cum-seniority even a junior most person may steal a march over his seniors and jump the queue for accelerated promotion.
The question as to whether the determination of inter se seniority would depend upon the filling up of the vacancies so far as the reserved categories are concerned, having regard to the roster points, in our opinion, is no longer res integra - In Ajit Singh v. State of Punjab, [1999 (9) TMI 989 - SUPREME COURT], a five Judge Bench of this Court has laid down the law that It deserves to be noticed that the roster points fixed at Level 1 are not intended to determine any seniority at Level 1 between general candidates and the reserved candidates.
Thus, the principle of law discernible from all the aforesaid decisions of this Court is that the roster system is only for the purpose of ensuring that the quantum of reservation is reflected in the recruitment process. It has nothing to do with the interse seniority among those recruited. To put it in other words, the roster points do not determine the seniority of the appointees who gain simultaneous appointments; that is to say, those who are appointed collectively on the same date or are deemed to be appointed on the same date, irrespective when they joined their posts. The position of law as discussed about could be said to be prevailing even while the High Court of Jammu & Kashmir decided by a Full Court Resolution to determine the seniority on the basis of roster points.
There is no jurisdictional infirmity or any other infirmity in the impugned judgment passed by the High Court warranting interference - Petition dismissed.
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2022 (6) TMI 1399
Deduction u/s 80IC - substantial expansion - period of deduction limited to 10 years - definition of “initial assessment year” as contained in section 80IC(8)(v) - 10th year of claim of tax holiday - HELD THAT:- Following the decision in case of Pr. CIT Vs. M/s Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] where the undisputed facts are that the assessee has started its business activity on 11.7.2005 falling between the period 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh and has carried out substantial expansion in the financial year 2011-12 and the year under consideration being the 10th year of claim of tax holiday, it shall be eligible for claim of deduction @ 100% and not 25% of profits and gains from its business as held by the lower authorities.
Therefore, respectfully following the decision of PCIT vs Aarham Softronics (supra) wherein as held that its earlier decision in case of Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT] doesn’t lay down correct law, the findings of the CIT(A) are set-aside and the matter is decided in favour of the assessee and against the Revenue and the grounds of appeal of the assessee are thus allowed.
Disallowance of claim of deduction u/s 80-IC on account of exchange rate fluctuation - as submitted by A/R that the difference in the foreign exchange rate is a part and parcel of income derived from eligible business and the same should be allowed - HELD THAT:- There is always a difference between the exchange rate at the time of booking of the invoices and the subsequent realization thereof at the time of receipt of payment and thus the exchange rate fluctuation is clearly flowing from the eligible business and, therefore eligible for deduction u/s 80-IC - As decided in case of DCIT vs. Ansysco [2016 (12) TMI 1764 - ITAT CHANDIGARH] wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction u/s 80-IC - Assessee is eligible for claim of deduction u/s 80-IC in respect of foreign exchange fluctuations. Basis the invoices placed on record and following the Coordinate Bench decisions referred supra, the claim of the assessee is allowed.
Disallowance of expenditure related to gifts, charity and donations - given the fact that the assessee was eligible for claim of deduction u/s 80-IC to the extent of 25%, the amount of disallowance was restricted to 75% - HELD THAT:- Where the claim of the assessee has been allowed @ 100% instead of 25% u/s 80IC, even where the whole of the expenses are disallowed on merits, the profits so enhanced and adjusted taking into consideration the disallowance will be eligible for 100% tax holiday and thus, the assessee shall be eligible for relief. In the result, the ground of appeal is allowed.
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2022 (6) TMI 1398
Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- On perusal of the balance sheet of the assessee as on 31.03.2016 we observed that the assessee has share capital and reserves and surplus as on 1.04.2015 at 145173.31 lakhs and whereas the investments during the year under consideration stood at 1957.39 lakhs.
In the case of South Indian Bank Ltd. Vs. CIT [2021 (9) TMI 566 - SUPREME COURT] it has been held that if investments in securities is made out of common funds and the assessee has availed non-interest bearing funds larger than the investments made in tax-free securities then in such cases disallowance u/s 14A cannot be made. On observing the balance sheet, we find that the assessee has sufficient own funds much more than the investments. Thus we delete the disallowance made under Rule 8D(2)(ii) made - Decided against revenue.
Disallowance relating to prior period expenses - CIT-A deleted the addition - HELD THAT:- For the assessment year 2009-10 [2014 (11) TMI 1174 - ITAT DELHI] accepted the claim of the assessee for netting off of prior period income against prior period expenses. Decided against revenue.
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2022 (6) TMI 1397
Disallowance u/s 40A(3) - cash payment to various suppliers exceeding specified limit - assessee could not prove that the cash payment was due to exceptional or under unavoidable circumstances - HELD THAT:- Upon perusal of documents, we find that that the assessee has not made cash payment directly to the suppliers but deposited the same directly into their bank accounts. In support, the assessee has placed on record bank deposit slips.
This is stated to have been done on the request of the suppliers and the suppliers themselves have furnished the bank account details to the assessee to ensure fast receipt of payment without delay. It could be also noted that genuineness of the payment or the existence of the suppliers is not under doubt. Assessee has placed on record complete details of suppliers along with their addresses, bank details with copies of deposits slips for each of payment transferred to them.
On the basis of all these documentary evidences, we are of the considered opinion that impugned disallowance is not justified on the facts and circumstances. Hence, by deleting the same, we allow the appeal.
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2022 (6) TMI 1396
Disallowing depreciation on Air and Water Pollution Control Machine - Assessee has claimed depreciation at 100% of the actual cost and not on the valuation as per valuation report - principle of consistency - HELD THAT:- While analyzing the entry we have to see the description of plant as a whole and not the description of various items – small and big which go to constitute the plant. We have no doubt that the plant installed was the plant of air and water pollution control which was admittedly put to use after 30th September.
On the very same plant and machinery the very same A.O. has allowed balance depreciation of 50% in A.Y.2014-15 and that order is final. In view of this fact, we see no reason for lower authorities to disallow depreciation for A.Y.2013-14 the year in question.
Here there is no question of arguing that principle of resjudicata is not applicable and hence the finding of A.Y.2014-15 cannot be said to be binding in A.Y.2013-14. On the same plant and machinery the same A.O. in one year allows depreciation at the prescribed rate of 100% and in another year on the same machinery the same A.O. totally disallows the depreciation. This is most inconsistent, and illogical. Applying the principle of consistency as is firmly established by the decision in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Quest Investment Advisor Pvt. Ltd. [2018 (7) TMI 479 - BOMBAY HIGH COURT] the depreciation as claimed by the Assessee in the year in question i.e. A.Y.2013-14 is allowable.
Disallowing Selling and Distribution Expenses - A.O. considered the expenses at higher side, therefore disallowed to the extent of 2.95% - CIT-A restrict the disallowance at 1% of such expenses - HELD THAT:- In the present case it is worth noting that, higher commission than what is claimed in this year has been allowed in earlier and later years - no justification to make disallow of 1% and thereby retain addition - CIT(A) has specifically mentioned that he has perused relevant copies of accounts and bills etc. and has not found any defect in the accounts. Similarly the department has always accepted the accounts which are duly audited. No defect of any nature has been pointed out or proved.
The claim of the Assessee, in our view, cannot be said to be unreasonable. There was neither any material or basis before ld CIT(A) to make an adhoc disallowance of 1% of expenses - Decided in favour of assessee.
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2022 (6) TMI 1395
Seeking grant of bail - Huge amount invested by the investors were deposited in the account of sister companies of the GIPL to which applicant was one of the Directors - Amounts so deposited in the accounts of sister companies of GIPL were diverted for another purposes to another person. Investors are still awaiting for their return of hard-earned money - HELD THAT:- As is evident from the record, applicant is not named in the F.I.R. He was not the Director, Office Bearer or Manager of the GIPL. He was Director of sister companies of GIPL. There is no evidence to show that the applicant at any point of time induced or propagate to invest money in the Bike Bot Scheme launched by the GIPL. Cheques said to have been issued in the matter were issued by one Karan Pal Singh. No amount has been credited in the personal account of the applicant. Thus, keeping in view the entire facts and circumstances of the case and comparing the same with the ingredients of alleged offences, the orders granting bail to co-accused Sanjay Goel, Satinder Singh Bhasin, Smt. Rekha, Dinesh Pandey and Vijay Kumar Sharma and also taking into consideration the settled principles of law for granting bail, without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail.
Let the applicant Manoj Tyagi involved in Case Crime Nos. 385 of 2019, 873 of 2019, 697 of 2019, 432 of 2019 and 362 of 2019 under Sections 409, 420, 467, 468, 471, 201, 120-B IPC, Police Station Dadri, District Gautam Budh Nagar be released on bail on furnishing each a personal bond and two heavy sureties in each cases in the like amount to the satisfaction of the court concerned subject to the conditions imposed - application allowed.
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