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2022 (8) TMI 1450 - CESTAT AHMEDABAD
CENVAT Credit - denial on the grounds that the same was availed on the basis of fake and fictitious invoices issued by non-existent units - recovery of refunded rebate amount - submissions not discussed separately - violation of principles of natural justice - HELD THAT:- In the present matters Ld. Commissioner has passed the impugned common orders on the basis of common findings without discussing the submission separately of each Appellant and their involvement. Therefore the entire matter needs to be reconsidered by the adjudicating authority.
Appeal allowed by way of remand, directing the Adjudicating authority to decide the matter afresh and pass the order accordingly.
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2022 (8) TMI 1449 - ITAT BANGALORE
TP Adjustment - Interest on receivables - adoption of the LIBOR rate - TPO held hat CUP is being applied and therefore interest that would be charged by an unrelated party for lending a loan in open market is being applied - submissions was limited to the adoption of the LIBOR rate against Indian interest rates (14.47% being return on BBB rate Bonds), as trade receivables where USD-denominated - HELD THAT:- Adoption of LIBOR plus appropriate markup is considered appropriate benchmark for international transaction of USD-denominated trade receivables as against the use of the rate of interest prevalent in India. With respect to the mark-up that has been charged over and above LIBOR, it is well accepted that such arbitrary numbers cannot be adopted without it being backed by a benchmarking exercise, which is a mandate of the law.
Ruling in the case of M/s. Bioplus Life Sciences Private Limited [2022 (2) TMI 1402 - ITAT BANGALORE] pertains to the different financial year. Moreover, during the course of the TP assessment, the assessee has pressed for mark up of 300 to 400 basis points over and above the LIBOR rate and the same cannot be brought down to 200 basis points merely on the basis of the strength of ruling given in different case considering the facts of that case. Given the variability of interest rate on a time-to-time basis, we direct the TPO to determine the appropriate mark up to be charged over and above the LIBOR rate.
Interest has been imputed for the entire year on the receivables instead of the remaining delayed beyond six months - We find merit in the submission of the learned DR that the period mentioned in the agreement between the assessee and AE should not be considered for the purpose of benchmarking and even to determine whether trade receivable constitutes an international transaction.
The very purpose of undertaking benchmarking exercise is to compare the tainted transaction, i.e., the transaction between two related parties/AEs, with that of transactions that are carried on by independent parties on arm’s length basis.
If we consider the period allowed in the agreement to benchmark the transaction which is also the subject matter of the same agreement, it would lead to absurd results. We accordingly direct the AO / TPO to determine the credit period allowed by the comparable companies and treat only such trade receivables that are outstanding beyond the arm’s length credit period, as international transactions. Once the above exercise has been done, we direct computation of interest for the delayed realization of trade receivable over and above the arm’s length credit period till the date of its realization or the financial year end, whichever is later.
Transfer pricing adjustment relating to ITES segment - Comparable selection - HELD THAT:- TCS E-Serve Limited is to be de-selected on the basis of application of high turnover filter. Companies with turnover of above Rs. 200 crores cannot be compared with companies with turnover of less than Rs. 200 Crores.
Infosys BPO Limited - company with a turnover of Rs. 1290 crore cannot be comparable to the assessee company, which has a turnover of Rs. 79 crore. Respectfully following the ruling of the coordinate Bench of the Tribunal in the case of M/s. Fulcrum Fund Services (India) Private Limited [2019 (4) TMI 2095 - ITAT BANGALORE] we direct the AO/TPO to exclude this company from the list of comparables.
Universal Print Systems Limited - TPO has selected the pre-press BPO segment - We note that the AO / TPO has selected the BPO segment.
ITAT in the case of M/s. XL Health Corporation India Private Limited [2018 (4) TMI 82 - ITAT BANGALORE] has not considered / adjudicated the availability of segment information. In the interest of natural justice, we deem it appropriate to remand the matter back to the file of AO /TPO to examine the applicability of the ruling as referred above in the view of the availability of segment information. If the segment information is not reliable or if the company fails employee / any filter at a segment level, we direct the TPO to exclude this as comparable. It is ordered accordingly.
Excel Infoways Limited (Segment) - As submission of the learned AR that the company Excel Infoways Limited fails the employees filter and has unreliable data. This contention of the assessee, which is elaborated at para 21 (supra) was not raised before any of the authorities. Therefore, for necessary verification of the matter, the issue of exclusion of Excel Infoways Limited is restored to the files of the TPO. The TPO is directed to examine the contentions raised, which mentioned supra, and shall verify whether Excel Infoways Limited satisfies the employees cost filter.
Negative Working Capital Adjustment - assessee is a captive service provider, which is entirely funded by the AE and it does not have any borrowings - HELD THAT:- The nature of the assessee, its arrangement with its AE and financial particulars to allow the relief on the basis of which the above rulings have been rendered, are not forthcoming from the documents available on records. There is no whisper in the orders of the lower authorities with respect to these factual aspects. As the issue requires examination of various facts, we direct the AO/TPO to consider the same in the light of the jurisdictional rulings on negative working capital adjustment in the case of captive service providers and allow the relief to the assessee. Accordingly, ground 9.5 is allowed for statistical purposes.
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2022 (8) TMI 1448 - GUJARAT HIGH COURT
Validity of faceless assessment - Denial of natural justice - non providing an opportunity of hearing to the assessee so as to enable him to give explanation for proposed addition - HELD THAT:- There is a mandatory provision to provide an opportunity of hearing to the assess by issuing a show-cause notice along with the draft assessment order, which in the facts of the case was issued on 18thSeptember, 2021 calling upon the assessee to furnish the reply before 23.59 hours of 21st September, 2021. Though the assessee prayed for adjournment on 18thSeptember, 2021, without considering the same, the impugned assessment order was passed on 21st September, 2021. Thus, there is clear violation of principles of natural justice by the respondent authority contrary to the provisions of Section 144B.
Section 144B(1)(xii) provides that on receipt of show-cause notice, the assessee may furnish his response to the National Faceless Assessment Centre and as per clause (xiv), the assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. However, the respondent authority without giving any opportunity of hearing to the petitioner by not considering the request for adjournment, passed the impugned assessment order.
Thus it can safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B for Faceless assessment. Appeal of assessee allowed.
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2022 (8) TMI 1447 - SUPREME COURT
Cancellation of appointments - result of the main examination dated 21st April, 2020 of the 6th Combined Civil Services Examination, 2016 - minimum marks for qualification - HELD THAT:- The main examination is comprising of 6 papers, total marks would be 1050 and candidate has to appear in all the papers of the main examination. This could be one construction that qualifying marks in paper-I is 30% but in other subject papers, it may be 40% or as fixed for the respective category and whether it has to be aggregate or qualifying marks in each paper is indeed not clear and ambiguity is there in the conditions of advertisement, of which a detailed reference has been made. At this stage, we take assistance of Rule 16 of the scheme of Rules, 1951 read with the proviso which gives a different indication.
This Court in N. SURESH NATHAN VERSUS U.O.I. [1991 (11) TMI 257 - SUPREME COURT] while examining the recruitment rules for Assistant Engineers in the Public Works Department and taking into consideration the procedure which has been followed by the department for sufficiently long time observed that the construction of the scheme of rules which is in consonance with long standing practice prevailing in the concerned department is untenable to require upsetting it and if the past practice is based on one of the possible constructions which can be made of the rules upsetting the same could not be appropriate.
In the instant case, the view which has been adopted by the Commission and that has been considered and held by the High Court in the impugned judgment may be better circumscribed but both are equally possible views and either of the one could not be ruled out or outrightly negated.
In the given situation, when one possible view has been acted upon by the Commission and pursuant to which the recommendations were made and after approval of the State Government, candidates have been appointed and are working for almost 2 years by this time, it will be unjust for this Court to now permit the Government to take a U-Turn in compliance of the impugned judgment, and nonsuit the candidates who are working for sufficiently long time.
It is well known that punctuation marks by themselves do not control the meaning of the statute when its meaning is otherwise obvious. The ordinary rule is that punctuation mark is a minor element in the interpretation of statute, more so, when it is a case of subordinate legislation. On going through the scheme of the Rules 1951, proviso to Rule 16 has to be read in conjunction to both Clause (a) and (b) and not to clause (b) in particular as being observed by the High Court in the impugned judgment.
The impugned judgment of the High Court dated 23rd February, 2022 is hereby quashed and set aside - appeal allowed.
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2022 (8) TMI 1446 - ITAT MUMBAI
Income taxable in India - royalty receipts - India- UK Treaty - HELD THAT:- As we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2017-18 [2017 (4) TMI 1109 - SUPREME COURT] and decided the issue in favour of the assessee to hold that the impugned payment made by the Branch to the H.O. towards reimbursement of cost of data processing cannot be held to be covered within the scope of expression “royalty” under Article12(3)(a) of the India Belgium DTAA. Accordingly, the conclusion drawn by the learned Commissioner (Appeals) is affirmed.
DRP erred in holding that a unilateral amendment of the term 'process' under the Act would get imported into the definition of 'royalty' given under Article 13 of India-UK tax treaty.
Land Earth Station ('LES') constitutes a PE of the assessee in India or not? - As decided in assessee own case [2020 (10) TMI 1188 - ITAT MUMBAI] assessee did not have any PE in India during the year under consideration.
Non granting the TDS credit - Considering the overall merits on the submissions made by the assessee we are inclined to remit this issue back to the file of Assessing Officer with a direction to verify the records submitted by the assessee on merit and verify the same. It is needless to say that assessee may be given a proper opportunity of being heard. In the result the issue under consideration is remitted back to the file of Assessing Officer for statistical purpose
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2022 (8) TMI 1445 - ITAT RAIPUR
Deduction u/s.80IA denied - adopting the domestic purchase price of electricity by CSEB as the “market rate” and justifiably scaled down the assessee’s claim for deduction to NIL - transfer of goods and services is a specified domestic transaction referred to section 92BA - assessee company had sold power to CSEB at the rate of Rs. 1.88 per unit, but had sold/transferred the same to its steel division and associate concerns at a higher value, i.e, at the rate of Rs. 4.30 per unit - TPO proposed a downward adjustment and advised a revision of the assessee’s claim for deduction u/s. 80IB and AO reduced the assessee’s claim for deduction u/s. 80IA(4)(iv) to Rs. Nil - HELD THAT:- As decided in own case MAHENDRA SPONGE AND POWER LTD [2015 (6) TMI 1243 - ITAT RAIPUR] as relying on case of CIT Vs. Godawari Power & Ispat Ltd. [2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] found favor with the claim of the assessee and observed, that the “market value” of the power supplied by the assessee to its steel division was rightly computed by considering the rate at which power was available in the open market, namely, the price that was charged by the electricity board.
The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market.
AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. Decided in favour of assessee.
Disallowance u/s.14A r.w.r. 8D - As per CIT(A) assessee had own funds to make investment in shares and the A.O had not made out a case that the investment in exempt income yielding assets was made out of interest bearing loans - HELD THAT:- As in own case [2022 (8) TMI 440 - ITAT RAIPUR] i.e AY 2013-14, as the assessee company during the year under consideration also had not earned any exempt income, therefore, on the said count itself no disallowance of any part of expenditure could have been made u/s.14A of the Act. Therefore, the order passed by the CIT(Appeals) on this score is upheld. Thus, the Grounds of appeal raised by the revenue are dismissed.
Delayed payment of PF /ESIC - HELD THAT:- As the facts and issue involved in the aforesaid order of the Tribunal in the case of Ind Synergy Ltd [2022 (4) TMI 36 - ITAT RAIPUR] remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance made by him u/s. 36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC.
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2022 (8) TMI 1444 - ITAT AHMEDABAD
Income from other sources - sale of scrap, interest and other income - assessee is an eligible undertaking under section 80IA/80IE - HELD THAT:- We find that issue on hand is covered by order of the coordinate bench of this tribunal in the own case of the assessee for A.Y. 2010-11 held if an item whose sale was linked with the business of the assessee, and cannot be assessed as an income from other sources, then that receipt deserves to be included in the eligible profit - we allow this ground of appeal partly, and direct the AO to include a sum in the eligible profit for grant of deduction under section 80IE of the Act.
Thus, respectfully following the order this tribunal in the own case of assessee above , we set aside the finding of the learned CIT(A) to the extent of amount of exclusion of income on account of scrap sale whereas we uphold the finding of the learned CIT(A). With regard to the exclusion of interest and other income as discussed above, we hold that such income is not eligible for deduction under section 80-IE of the Act. Thus, the ground of appeal raised by the Assessee is hereby partly allowed.
Deduction u/s 80IE - HELD THAT:- We find that issue on hand is covered by the order of the coordinate bench of this tribunal in the own case of the assessee for AY 2010-11as held that Revenue failed to demonstrate that machineries exceeding 20% of the total value of the plant & machinery were old machinery. Therefore, considering the facts on this fold of grievance of the Revenue, we do not find any error in the order of theCIT(A). Assessee is entitled for deduction under section 80IE.
Quashing the book result u/s 145(3) - HELD THAT:- As before rejecting the books of accounts, the AO must record the specific reasons for rejecting the books of accounts. Such satisfaction has to be established and substantiated based on facts and figures, which further depends on the circumstances of each case. Mere minor mistakes/typological errors/absence of stock registers/ lower GP may not ipso facto amount to incorrectness/incompleteness of accounts in terms of section 145(3) - But the case would be different where the above-mentioned mistakes are coupled with other findings. In the given case, AO has rejected the book results for the reason that the assessee has not provide certain details asked for during the course of assessment and the assessee diverted in its expenses in books of parent company to claim higher exemption under section 80IA - However the AO did not make any estimate of NP or GP.
In this connection we found that the assessee has maintained proper books of account and furnished details as required by the assessee except certain detail with respect to that the assessee has submitted either those required detail not applicable in its case or some detail are at factory premises will be submitted at later stage if required. In these documentary evidence no defect was pointed out by the AO. Therefore, without bringing any corroborative material on record suggesting specific defect in the books of account the book result cannot be rejected merely for not providing certain detail which AO requires to verify.
Without prejudice to the above, we also note that the AO after rejecting the books accounts has proceeded to disallow or recomputed the deduction under section 80IA of the Act on various different grounds. In other words, the AO has relied upon the same set of data/figures as shown by the assessee for making allowances or disallowances. As such, there was no iota of doubt on the genuineness of the other income and the expenses was brought on record by the AO. To our mind, once the books of accounts have been rejected, the AO has to estimate the profit and he has no right to make any individual addition or deletion to the total income of the assessee.
Disallowances of deduction u/s 80IE made on account of apportionment of selling & distribution expenses, R&D expenses, royalty expenses, managerial fee and remuneration to partners SPIL - HELD THAT:- As issue on hand is covered by order of the coordinate bench of this tribunal on own case of the assessee for A.Y. 2010-11 no justification at the end of the AO to estimate 8% of the turnover as fee required to be paid for use of logo, trademark etc. The assessee has already paid 5% of turnover as remuneration to SPIL for extending facility, sale and distribution, R&D, use of logo etc - as assessee has already paid remuneration at 5% of the turnover which has been accounted in the accounts. No further adjustment was required. This stand of the assessee in the case of SPI has been approved. We find that the finding of the CIT(A) is on this line, and we do not see any reason to deviate from the order of the ITAT, Amristar Bench on this issue - also supplementary deed was a contract amongst the partners to decide the terms either prospective or retrospective. Therefore, remuneration to the partners cannot be disallowed by the AO with help of section 40b of the Act. Explanation 4 to section 40b talks of working partner to whom remuneration can be paid. Apart from the above, ld.CIT(A) further observed that in a revised return assessee itself disallowed this expenditure suomoto. Once this amount has been added back, then the AO is not justified to add back it again.
Deduction u/s 80-IB in respect of interest on delayed payments in question allowed and direct the AO to delete the additions.
Deduction u/s 80IB on account disallowances of expenses under section 43B - HELD THAT:- As decided the issue in favour the assessee. As in A.Y. 2010-11 allowed the claim of the assessee on the consequential higher amount eligible foe deduction under section 80IB.
Deduction under section 80IB on account allocation of R&D expenses - HELD THAT:-As in own case of the assessee for A.Y. 2010-11 held no disallowance is called for because clause 7-B of the partnership deed specifically provides for remuneration for technical assistance in the manufacturing activities and R&D facilities were included in the same. The Ld. CIT(A) has further based its findings on the ground that the notional disallowance on account of R&D expenses has been made by the AO on similar lines as have been made in respect of royalty, management fees and selling and distribution expenses and the said pounds were found not tenable by the Tribunal.
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2022 (8) TMI 1443 - ITAT AHMEDABAD
TP Adjustment - Addition on account of Corporate Guarantee provided to Associated Enterprises - Whether international transaction? - HELD THAT:- As in view of the discussion and latest development, we are of the opinion that the extension of corporate/guarantee to AEs is an international transaction and needs to be benchmark and in view of several order of the tribunal as referred above 0.5% of commission on the value of corporate/ bank guarantee will serve the justice to both the assessee and the Revenue. However in the case on hand, we have set aside the issue to the file of the AO for fresh adjudication in light of consistent view taken by the Tribunal in own case of the assessee for earlier Assessment Years with direction to decide the issue a fresh as per the outcome of appeal filed by the Revenue before Hon’ble Gujarat High court [2017 (8) TMI 933 - GUJARAT HIGH COURT] in own case of the assessee. But we are also conscious to latest development on the issue on hand as discussed above. Therefore, we direct the AO to also consider the judgment of Hon’ble Madras High court [2020 (12) TMI 516 - MADRAS HIGH COURT] at the time of fresh adjudication. Hence, the ground of appeal raised by both the assessee and Revenue is hereby allowed for statistical purposes.
MAT computation - denying the deduction of remuneration received from partnership firm while computing book profit under section 115JB - HELD THAT:- The definition of the income as discussed above under clause (ve) of section 2(24) of the Act has also made reference to the income chargeable to tax under clause (v) of section 28 of the Act. Thus, there remains no ambiguity to the fact that the amount of remuneration not allowed as deduction in the hands of the partnership firm cannot be made subject to tax in the hands of the partner. Thus, once the receipt is not taxable then the same cannot be made subject to tax under the provisions of MAT while calculating the profit under section 115JB of the Act. In view of the above, we do not find any reason to uphold the finding of the learned CIT-A. Accordingly we reverse the same and direct the AO to delete the addition made by him. Thus, the ground of appeal raised by the assessee is hereby allowed.
Nature of expenses - repairs and maintenance expenses - Revenue or capital expenses - HELD THAT:- As held by the CIT-A with respect to all the additions confirmed that all the fixed assets can function independently which has been controverted by the ld. AR for assessee based on cogent and documentary evidence. Accordingly, following the order of the coordinate bench, we hereby dismiss the ground of appeal of the assessee.
Bogus purchases - AO during the assessment proceedings found that the assessee has claimed certain expenses by way of purchase of the material from the parties based in Mumbai, the VAT registration of which were cancelled by the Maharashtra VAT Department, thus the AO treated the same as bogus in nature - HELD THAT:- There was no clue or information available with the income tax Department suggesting that the assessee has made bogus purchases. The entire thrust of the Revenue was based on the fact that the other parties were held as bogus by the Maharashtra VAT department. To our understanding, based upon the information received from the 3rd party, until and unless it is confronted to the assessee, no adverse inference can be drawn. There can be various reasons for the cancellation of the registration such as non-payment of VAT by the party, non-filing of VAT return, non-maintenance of requisite records but nothing brought on record suggesting that for what reason, the other parties registration were cancelled.
Assessee has made the payment through the banking channel which can be verified from the submissions made by it before the authorities below. This fact has nowhere been doubted by the revenue. It is also significant note that considering the large volume of the business of the assessee, it is unexpected that the assessee having such high scale of business will indulge in such kind of practices for the purchase of 51,712./- only. In view of the above and after considering the facts in totality, we are not inclined to uphold the finding of the authorities below. Thus we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal raised by the assessee is hereby allowed.
Disallowance of business promotion expense incurred in connection with doctors - AO was of the view that the above expenditure are not allowable under explanation 1 to section 37(1) of the Act as the same is incurred in violation of guideline issued by the Medical Council of India - HELD THAT:- We find that the issue on hand is covered in favour of the assessee by order of this tribunal in own case of the assessee for A.Y. 2010-11 [2019 (4) TMI 868 - ITAT AHMEDABAD]. However we find that recently Hon’ble Supreme Court in case of Apex Laboratories (P.) Ltd. [2022 (2) TMI 1114 - SUPREME COURT] held that freebies provided to the doctor by the assessee engaged in pharmaceuticals business are covered under the explanation to section 37(1) of the Act being expenditure incurred which is prohibited by the law.
Hence we deviate from the finding of the coordinate bench of this tribunal in own case of the assessee for earlier years and held that the assessee is not entitled to claim the deduction of the impugned expenses.
Deduction of the cess paid - HELD THAT:- As per amendment under the provisions of section 40(a)(ii) of the Act wherein an explanation has been inserted with retrospective effect i.e. assessment year 2005-06 there remains no ambiguity to the fact that the assessee cannot claim the deduction of the cess by treating the same as revenue expenditure. Thus, we do not find any merit in the additional ground of appeal raised by the assessee.
TP Adjustment on account of interest free loans to AE - HELD THAT:- We find that the issue on hand is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2008-09 held that there is no dispute that the AE is a 100% subsidiary of the appellant company and the appellant company in its capacity as sole owner of the subsidiary ny subscribing to share capital is beneficiary of all the gains of the subsidiary company. Merely, because allotment of shares is delayed and in books share application money is reflected as advance for share application money till the allotment would not alter the characterization to the prejudice of assessee’s position anyway. In our considered view, the percentage of ownership is the only material factor which remains at 100% prior to allotment and also post allotment. As the assessee is the only shareholder in it’s 100% owned subsidiary company SPG BVI it should not make any difference merely because part of the share application money is converted into equity shares and the balance were allotted in subsequent assessment years. We, therefore, do not find any merit in the submissions of revenue in this behalf.
Upward adjustment under the provision of Transfer Pricing on account of investment in 0% OFCD of the AE - HELD THAT:- As decided in the own case of the assessee for the AY 2008-09 as per the agreement, the interest was payable only if the conversion option was not exercised on the expiry of 5 year period. If at any time during the 5 year period conversion option was exercised and the loan was converted into equity, no interest accrued or become payable - funds were provided by the Assessee as per RBI guidelines and in the immediately next year, the entire loan given to subsidiary was converted into equity shares and since the Assessee has converted the loan into equity in the immediate next year, there was no question of taxing notional interest. Assessee had not granted interest free loan but invested in optionally convertible loan with a clause of interest in case, Conversion option was not exercised and further held the Assessee's transaction with subsidiary was at arms length. Decided against revenue.
Upward adjustment on account profit attributed to the product “Pantoprazole” and other product - HELD THAT:- As decided in the own case of the assessee for AY 2008-09 no merit in the findings of the First Appellate Authority in accepting the application of PSM as the MAM , in our understanding of the facts TNMM is the MAM on the given facts and the same is accepted as such. We set aside the findings of the ld. CIT(A) and direct to delete the addition.
Disallowance of weighted deduction u/s 35(2AB) - AO was of the view that benefit under section 35(2AB) is only available for the expenditure incurred in product registration in India whereas assessee incurred Trademark registration and overseas product registration charges outside India - HELD THAT:- Similarly the issue of eligibility of weighted deduction under section 35(2AB) of the Act, on expenses related to building repair, municipal tax, brokerage expenses and lunch and refreshment expenses is also covered in favour of the assessee by the order of this tribunal in own case of the assessee for A.Y. 2007-08 [2017 (4) TMI 1434 - ITAT AHMEDABAD]
Disallowances of selling and distribution expenses pertaining to sister concerns - HELD THAT:- As we find that the issue on hand is covered in favour of the assessee by order of this tribunal in the own case of the assessee for A.Y. 2007-08 [2017 (4) TMI 1434 - ITAT AHMEDABAD] expenditure is allowable if it is incurred for the purposes of the business of the assessee and not for the purposes of earning profit. As per the agreement between the assessee company and the partnership firm, the assessee had assisted the partnership firm in carrying on its business by using its network for marketing the pharmaceuticals products successively. Thus, it cannot be said that the expenditure incurred by the assessee are not for the purposes of its business. Since the assessee is holding 95% in the partnership firm it becomes the duty of the assessee to promote the business of the partnership firm, in the capacity of the majority stake holder. Incidentally, the revenue authorities have not brought anything on record which could suggest that the expenditures have not been incurred for the purposes of business. Be it assessee’s business or the business of the partnership firm where the assessee is a majority stake holder. Therefore, in our considered opinion, the expenditures incurred by the assessee company deserves to be allowed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As per A.Y. 2007-08 [2017 (4) TMI 1434 - ITAT AHMEDABAD] Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A of the Act.
MAT computation for disallowance u/s 14A - We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of Jayshree Tea Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT]
Determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB - As there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore, in the given facts & circumstances, we feel that ad-hoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the adhoc disallowance of Rs. 20 lacs as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restricted the disallowance 1% of the exempted income in other cases involving identical facts and circumstances in order to comply the clause (f) to Explanation-1 of Sec. 115JB of the Act. But we note that the assessee in the present case has earned exempted income more than Rs. 1000 crores and the disallowance will be worked out at ₹10 crores which appears not in commensurate as per the mandate provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore, we are of the view that the ad hoc disallowance as discussed above will render justice to the assessee and the revenue.
Disallowances of R & D expenditure incurred on behalf of partnership firm - HELD THAT:- As decided in own case AY 2009-10 bearing ITA No. 1663 & 1666/Ahd/2016 [2017 (9) TMI 1804 - ITAT AHMEDABAD] an expenditure is allowable if it is incurred for the purposes of the business of the assessee. Finding that the assessee is having 97.5% share in the profits of the firm SPI, we do not find any merit in the disallowance made by the A.O. and confirmed by the First Appellate Authority.
Re-characterization of remuneration received from the firm - HELD THAT:- We find that the issue on hand is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2008-09 - No doubt, the profits of the partnership firm are exempt u/s. 80IB(4) of the Act. Even, if the partnership firm had not charged Rs. 40.12 crores as remuneration to the appellant company, the profits of the firm would have increased by this amount. Since the assessee is holding 97.5% share in the profits of the partnership firm, this amount of 40.12 crores would have otherwise come to the assessee in the firm of share of profit which again is exempt from taxation u/s. 10(2A) of the Act. Therefore, in our considered opinion, the allegation that it is a case of tax evasion is ill-founded. The fact of the matter is that such payments were never re-characterized as royalty in earlier assessment years and the action of the First Appellate Authority in the year under consideration is nothing but based upon assumptions and presumptions. No addition can be sustained which are based upon assumptions, surmises or conjectures.
Addition made on account of foreign exchange gain - HELD THAT:- We find that the issue on hand is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY the 2007-08 [2017 (4) TMI 1434 - ITAT AHMEDABAD] held that profits accrued to the assessee is not in the course of any trading activity but on account of appreciation on account of hedging in forex even if the same has been held for investment purposes. Therefore, such gains have to be treated as capital receipt.
Disallowance for the weighted deduction claimed u/s 35(2AB) of the Act on account of expenses not approved by the DSIR - HELD THAT:- As decided in [2017 (8) TMI 933 - GUJARAT HIGH COURT]. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive the assessee's claim of deduction under section 35(2AB) of the Act. However, in facts of the present case, it would be open for the Assessing Officer to verify the actual expenditure incurred by the assessee.
Upward adjustment on account of on account of product development services to AEs. - HELD THAT:- Price charged by the assessee from the associated enterprises at cost +10% is treated as at arm length price and therefore no adjustment is warranted. Hence, we reverse the order of the authorities below and direct the AO/TPO to delete the addition made by him considering the principles of consistency. Hence, the ground of appeal of the assessee is allowed.
Downward adjustment in TP on account of power supplied to domestic AE - what should be the rate of the electricity generated by the assessee and supply for captive consumption? - HELD THAT:- We set aside the finding of the learned CIT (A) and direct the AO to delete the downward adjustment in transfer pricing report in pursuance to the finding of this ITAT in the case of Gujarat Fluorochemicals Ltd. [2018 (8) TMI 857 - ITAT AHMEDABAD] DR at the time of hearing has not brought anything on record contrary to the arguments advanced by the ld. AR for the assessee. Thus the ground of appeal of the assessee is allowed.
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2022 (8) TMI 1442 - ITAT MUMBAI
Disallowance u/s.14A of the Act r.w.Rule 8D(2) - primary objection of the ld. AR is that the ld. AO directly resorted to proceed with computation provisions of Rule 8D without recording any objective satisfaction having regard to the accounts of the assessee in terms of Section 14A(2) - HELD THAT:- We hold that the ld. AO had not recorded any objective satisfaction with cogent reasons having regard to the accounts of the assessee as to why the voluntary disallowance made by the assessee in the return of income is incorrect.
In fact, we find that the assessee before the ld. AO had furnished a detailed written submission in this regard as to why the computation mechanism provided in Rule 8D(2) of the Rules would not be applicable by referring to each and every expenses debited in the profit and loss account and had also justified the basis of voluntary disallowance made by it in the return of income.
Admittedly, AO had not recorded any objective satisfaction as to why the voluntary disallowance made by the assessee is incorrect before proceeding to apply computation mechanism in Rule 8D(2)(iii) of the Rules in the instant case. This issue is no longer res-integra in view of the decision of this Tribunal in assessee’s own case [2022 (6) TMI 1119 - ITAT MUMBAI] wherein this Tribunal had elaborately discussed the very same issue of disallowance u/s.14A of the Act made under identical circumstances and deleted the disallowance made by the lower authorities.
We further find that this issue is also settled in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] and Godrej & Boyce Manufacturing Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] It is also pertinent to note that this decision of the Hon’ble Bombay High Court has been further affirmed by the Hon’ble Supreme Court [2017 (9) TMI 1689 - SUPREME COURT] Thus we direct the ld. AO to restrict the disallowance u/s.14A as suo moto under normal provisions of the Act.
Disallowance of expenses u/s.14A while computing book profits u/s.115JB - We find that the Special Bench of Delhi Tribunal in the case of Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] had categorically held that computation mechanism provided in Rule 8D(2) of the IT Rules cannot be imputed in Clause (f) of Explanation 1 to Section 115 JB (2) - the actual expenses incurred by the assessee for the purpose of earning exempt income had to be disallowed in terms of Clause (f) of Explanation 1 to Section 115JB (2) - The assessee had voluntarily disallowed the same at Rs.5,55,969/- under normal provisions of the Act u/s.14A of the Act. The same sum is to be disallowed while computing book profits u/s.115JB of the Act also. The computation of book profits u/s.115JB made by the assessee is not on record and hence, the ld. AO is directed to verify the fact as to whether has been disallowed by the assessee while computing book profits u/s.115JB of the Act. If it is so done then, no further disallowance is warranted.
Benefit of carry forward of long term capital loss - HELD THAT:- As gone through the entire income tax return form filed at the time of filing revised return. From the above narration, it could be seen that failure to reflect the long term capital loss figure in the schedule of carry forward of losses in the income tax return is purely not attributable to the assessee as it is an automatic pick of figure from Column B-9 in the IT return which is to be done by online system. So, this is purely a technical glitch in the income tax e-filing system, for which assessee could not be faulted. In fact, this was brought to the knowledge of ld. CIT(A) in the statement of facts itself. But the ld. CIT(A) had conveniently stated that assessee had not claimed this long term capital loss in the revised return which is factually incorrect as is evident from the above narration of facts. Thus direct the ld. AO to allow the benefit of carry forward of long term capital loss to subsequent years.
Short TDS credit in respect of income offered by the assessee - HELD THAT:- TDS credit should be granted to the assessee for the year in which income is offered. It is not in dispute that the income relatable to the TDS component of Rs.5,05,620/- has been duly offered by the assessee during the year under consideration. Hence, the assessee would be eligible for TDS credit of Rs.5,05,620/- in A.Y.2014-15 i.e. year under consideration. The ld. AO is directed accordingly. The ld. AO is further directed to ensure that assessee had not claimed this TDS credit of Rs.5,05,620/- in the A.Y.2015-16 based on form 26AS. This direction is given in order to protect the interest of the Revenue by not giving double credit of TDS to the assessee.
Taxes deducted by four payers but the TDS was not remitted by the payers to the account of the Central Government - As merely because the deductor had not remitted the TDS to the account of the Central Government having deducted the taxes from the amounts due to the assessee, assessee cannot be deprived or denied of its legitimate credit. This is a clear case of default committed by the deductor against whom the department is entitled to take suitable action as per law. The assessee cannot be denied TDS credit for no fault of it.
Revised claim made by the assessee during the course of assessment proceedings and the same was not claimed by way of a valid return of income cannot be entertained - Action of the AO in not computing short term or long term capital gain / loss submitted by the assessee during the assessment proceedings - We find that the decision of the Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT] clearly enables the appellate authorities to consider the claim made by the assessee even if it is not made by way of a valid return of income but claimed during the course of assessment proceedings. What is required to be seen is whether the claim of the assessee is legitimate or not?
We further find that in the case of CIT vs. Pruthvi Brokers and Shareholders [2012 (7) TMI 158 - BOMBAY HIGH COURT] had clearly considered this issue and had directed the ld. AO to grant deduction accordingly. Since, no finding on facts has been given by the lower authorities in this regard and since the workings of capital gains submitted by the assessee had not been verified by the ld. AO, we deem it fit and appropriate to remand this issue to the file of the ld. AO for denovo verification. If the workings submitted by the assessee is found to be correct, then the contention of the assessee is required to be accepted and total income of the assessee is to be re-computed accordingly as per law. The ground No.2 raised by the assessee is allowed for statistical purposes.
Disallowing interest u/s.36(1)(iii) - assessee has given an amount as loan to employee welfare trust created for the welfare of the employees of the assessee admittedly interest free - AO held that the said loan is not meant for the purpose of business of the assessee and accordingly, proceeded to disallow proportionate interest u/s.36(1)(iii) - HELD THAT:- We find that this loan was given in earlier year by the assessee. It is not the case of the Revenue that the said lending has been given out of borrowed funds of the assessee. When interest free loan has been given in earlier year and no disallowance of interest has been made in the year in which lending was made, that lending is deemed to have been accepted as meant for business purposes of the assessee. The said finding cannot be disturbed by the Revenue in the subsequent assessment years. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Hon’ble Karnataka High Court in the case of Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA HIGH COURT]. Hence, we have no hesitation in directing the ld. AO to delete the disallowance of interest made u/s.36(1)(iii) of the Act in the facts and circumstances of the instant case. Accordingly, the ground raised by the assessee is allowed.
Disallowing the provision made for expenses on the ground that they represent unascertained liability - disallowance made while computing book profits u/s.115JB of the Act - HELD THAT:- The consistent practice followed by the assessee is that the provisions as and when made as on 31st March of each year are being reversed on first April of the subsequent year by offering it to tax and the actual expenses based on the final invoice submitted by the vendor are booked as expenditure of that year. It is not in dispute that the reversal of provision for expenses made by the assessee in subsequent year has been accepted by the Revenue when income is being offered thereon. Similar practice has been followed by the assessee while making reversal of provision of earlier year expenses during the year under consideration by offering it to income, which fact is also accepted by the Revenue. In these circumstances, we have no hesitation to hold that provision for expenses which have been made based on an agreed contract or based on proforma invoice for which services had already been rendered to the assessee by the vendors, becomes a provision made on a realistic and rationale basis and cannot fall within the ambit of unascertained liability
As relying on M/S. EDELCAP SECURITIES LIMITED [2021 (10) TMI 445 - ITAT MUMBAI] we direct the ld. AO to allow the deduction for the said provision for expenses both under normal provisions as well as in the computation of book profits u/s.115JB of the Act. Accordingly, the ground Nos.3 & 4 raised by the assessee are allowed.
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2022 (8) TMI 1441 - ITAT MUMBAI
Revision u/s 263 - income taxable in India - no enquiry v/s inadequate enquiry - whether income received by the assessee from its services in India are neither taxable under Article-12 of the India – Netherlands DTAA as they are not in the nature of Royalty or FTS? - As per CIT no adequate enquiry has not been conducted by the AO in assessment proceedings - HELD THAT:- The case of the assessee is that the services rendered by the assessee are mainly in the nature of support services. Since, the services rendered does not “make available” any technical services, the services are not taxable in line with Article-12 of the India-Netherlands DTAA. AO applied his mind on the same and formed an opinion that fee received by assessee is not taxable in India as ‘Fee for Technical Services’.
AO has taken a possible view based on the facts and supported by legal jurisprudence. Thus, it is evident that the AO had made enquiries and after examining the documents on record passed the assessment order. Since, the assessment was completed u/s. 143(3) of the Act the presumption is that the Assessing Officer has examined all documents on records before passing the order, even though elaborate discussion is not made in the order.
In the instant case, as has been pointed earlier the AO made enquiry. The assessee in response to the questionnaire issued by Assessing Officer furnished details. AO after examining the documents furnished by assessee passed the order. Hence, the instant case is not that of lack of enquiry by the AO. Therefore, the ratio of the decisions relied upon by the Revenue would not apply in the facts of the present case.
In the light of the facts discussed above, we hold that the CIT has erred in exercising jurisdiction u/s. 263 of the Act. Decided in favour of assessee.
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2022 (8) TMI 1440 - TELANGANA HIGH COURT
Sale/e-auction - Recovery of outstanding dues - whether sub-section (8) of Section 13 of the SARFAESI Act can restrain the secured creditor from realising the outstanding dues from the borrower after notice for public auction is issued?
HELD THAT:- A Division Bench of this Court in Concern Readymix [2018 (12) TMI 1982 - TELANGANA HIGH COURT] noted the changes that were made to the SARFAESI Act by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 including the substitution of sub-section (8) of Section 13 of the said Act. Thereafter the Division Bench compared and analysed sub-section (8) of Section 13 as it stood before the amendment and as it stands post amendment. This Court noted the distinction between the unamended and the amended sub-section (8) of Section 13 holding that The first distinction between the unamended and amended sub-section (8) of Section 13 is that before amendment, the facility of repayment of the entire dues along with the costs, charges and expenses, was available to the debtor at any time before the date fixed for the sale or transfer. But after the amendment, the facility is available upto the time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty. The second distinction is that the unamended sub-section (8) did not provide for the contingency when the dues are tendered by the borrower before the date of completion of the sale or lease but after the issue of notice. But the amended sub-section (8) takes care of the contingency where steps have already been taken by the secured creditor for the transfer of the secured asset, before the payment was made. Except these two distinctions, there is no other distinction.
After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale if the dues are paid before issuance of notice for public auction. Thereafter it has been held that a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor. Payment of the amounts mentioned in Section 13(8) ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the SARFAESI Act. Redemption comes later - this Court emphasised that the right of redemption is not lost immediately upon the highest bid made by the purchaser in an auction is accepted.
On a careful application of Sections 35 and 37 of the SARFAESI Act, it is evident that the situation contemplated under Section 13(8) of the SARFAESI Act does not exclude application of Section 60 of the Transfer of Property Act, 1882. As explained by this Court in Concern Readymix, a restriction on the right of the mortgagee to deal with the property post issuance of notice for public auction is not the same as the right of redemption available to the mortgagor.
In so far the present case is concerned, admittedly the bid amount of the petitioner was Rs. 57.00 lakhs. Though the auction was conducted on 16.03.2021 and payment was made by the petitioner within the stipulated period, there is clear dispute between the parties as regards issuance of sale certificate by respondent Nos. 1 and 2 in favour of the petitioner. However, admittedly there is no registration of any sale certificate - In this case, we have already come to the conclusion that third respondent had not lost the right of redemption upon publication of notice for auction sale. If that be the position, then it should be left to the discretion of the secured creditor as to which course of action would be more beneficial to it. Evidently, the OTS with the third respondent is much more beneficial to the secured creditors i.e., respondent Nos. 1 and 2 and as has been explained such a course of action is not restricted or extinguished by Section 13(8) of the SARFAESI Act.
Right to property is a valuable right. Though no longer a fundamental right, it is still a constitutional right. The interpretation which we have adopted subserves such a right. That apart, third respondent had not lost the right of redemption upon publication of notice for auction sale; his right of redemption would have been lost only upon the sale certificate getting registered which admittedly has not taken place. Therefore, the action of respondent Nos. 1 and 2 in accepting the higher OTS amount of the third respondent though after publication of notice for public auction and auction is justified and cannot be faulted.
The writ petition fails and is accordingly dismissed.
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2022 (8) TMI 1439 - ITAT SURAT
Addition u/s 68 - unexplained cash credit - Onus to prove - HELD THAT:- It is clear, that if AO is not satisfied and ask additional evidences from assessee, assessee is duty bound to produce, further details or persons for verification. The assessee cannot take plea that he has submitted some papers and his onus has been discharged. It is duty of assessee to provide further explanation and material as required by AO.
We note that AO has conducted the field inquiry and issued notices under section 131 of the Act on the address provided by the assessee, however these notices were returned back, as the parties were not existed on the given address. In these circumstances, burden shifts on the assessee to produce these parties before the Assessing Officer or to provide new address, if address has been changed, however assessee has failed to do so. Similarly, if Assessing Officer at any stage of probe reaches to a dead end, and inform assessee about the same, it is duty of assessee to help him and provide whatever is asked. This position of shifting of onus from assessee to Assessing Officer & Assessing Officer to assessee is tricky one, which depends on the facts of the case.
We note that assessee has proved creditworthiness and genuineness, however assessee failed to prove identity of these parties from whom unsecured loan had been received, therefore we are of the view that one more opportunity should be given to the assessee to plead his case before the Assessing Officer to prove identity of these parties.
Hence, we set aside the order of the CIT(A) and remand the matter back to the file of Assessing Officer for limited purpose to examine the ‘identity’ of the parties, and to decide the matter in accordance to law after giving opportunity of being heard to the assessee. Appeal of the Revenue is allowed for statistical purposes.
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2022 (8) TMI 1438 - DELHI HIGH COURT
Refund as determined under the Direct Tax Vivad Se Vishwas Act, 2020 (‘VSV Act) - Petitioner also seeks payment of interest @ 9% per annum on delayed payment from the date of adjudication till the date of payment.
Admittedly, the petitioner was granted final certificate in Form-5 dated 05th April, 2021 under VSV Act setting forth the particulars of the taxes refundable towards the full and final settlement of tax arrears - Though the due amount has been refunded to the petitioner during the pendency of the present proceedings, the petitioner seeks payment of interest on account of delay in payment.
HELD THAT:- This Court is of the view that refund due and payable to the assessee is a debt-owed and payable by the revenue. There is no provision in the VSV Act prohibiting award of interest on delayed refund. Consequently, this Court is of the opinion that the VSV Act does not authorise the respondent to either delay or withhold the payment of the refund.
As far as the issue of deceased assessee having two PAN numbers is concerned, this Court finds that the petitioner had initially filed a writ petition as the petitioner’s application for refund was not being entertained on the ground that the deceased assessee had two PAN numbers. Predecessor Division Bench of this Court vide order dated 25th January, 2021 resolved the said issue by directing the respondents to entertain the petitioner’s application for refund on one of the two PAN numbers. Consequently, the said issue had been resolved prior to the issuance of the final certificate determining the refund amount.
Further, in pursuance to the final certificate, the respondents asked for a No objection Affidavit from the surviving legal heirs on 31st August, 2021, which was furnished on the next day i.e. 01st September, 2021. Consequently, this Court is of the view that there was no delay in furnishing the No Objection Affidavit of the other surviving legal heir.
As far as the technical issue at CPC is concerned, this Court is of the view that the same cannot enure to the benefit of the Tax Department.
As held by the Supreme Court in Tata Chemicals Limited [2014 (3) TMI 610 - SUPREME COURT] the State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Consequently, this Court is of the view that the petitioner is entitled to interest on the refund amount which was delayed beyond the period of ninety (90) days from the date of determination of the refund amount i.e. 05th April, 2021.
As directed that the respondents-revenue shall make payment of simple interest @ 5% per annum on delayed refund amount w.e.f. 05th July, 2021i.e. beyond the period of ninety (90) days from the date of determination of the refund amount on 05th April, 2021 till date of payment i.e. 11th February, 2022. Let the said payment be made within eight weeks.
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2022 (8) TMI 1437 - NATIONAL ANTI-PROFITEERING AUTHORITY
Profiteering - purchase of flat in project Laxmi - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price of flat - contravention of section 171 of CGST Act - HELD THAT:- It is clear from a plain reading of section 171(1) that it deals with two situations. One relating to the passing on the benefit of reduction in the rule of tax and the second pertaining to the passing on the benefit of ITC On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post-GST period, hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to june-2017) was 1.61% and during the post-GST period (July-2017 to October-2020), it was 9.88% for the project "Laxmi Apartment's". This confirm that, post-GST the Respondent has been benefited from additional ITC to the tune of 8.27% [9.88% (-) 1.61%] of his turnover for the said project and the same was required to be passed on to the customer/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to the customers/flat buyers/recipients as Rs. 6,33,70,091/- (which includes an amount of Rs. 57,557/- in relation to Applicant No 1) for the project "Laxmi Apartment".
The Authority finds no reason to differ from the above detailed computation of profiteered amount by the DGAP or the methodology adopted by it. The Authority finds that the Respondent has profiteered an amount of Rs. 6,33,70,091/- (Rupees Six Crore Thirty Three Lacs Seventy Thousand Ninety One only) during the period under present investigation. This includes an amount of Rs. 57,577/- in relation to Applicant No 1. Therefore given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the customers/flat buyers/recipients commensurate with the benefit of additional ITC received by him.
The Respondent has denied the benefit of ITC to the buyers of his flats in contravention of the provisions of section 171(1) of the CGST Act, 2017. We hold that the Respondent has committed an offence by violating the provisions of section 171(1) during the period from 1-7-2017 to 31-10-2020 and therefore, he is liable for imposition of penalty under the provisions of section 171(3A) of the above Act - there exists reason to investigate Respondent's other projects, if any, for the purpose of determination of profiteering Accordingly this Authority as per the provisions of section 171(2) of the CGST Act, 2017 read with rule 133(5) CGST Rules, 2017 directs the DGAP to conduct investigation in respect of Respondent's other projects if any under the same GSTIN: 06AAFCO088311Z8.
Accordingly this Order having been passed today fails within the limitation prescribed under rule 133(1) of the CGST Rules, 2017.
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2022 (8) TMI 1436 - NATIONAL ANTI-PROFITEERING AUTHORITY
Profiteering - benefit of the input tax credit has been passed on in terms of section 171 of the Central Goods and Services Tax Act, 2017 to the recipients in respect of construction service supplied or not - HELD THAT:- The Authority has carefully considered the Report of the DGAP and the other material placed on record and finds that the DGAP, in pursuance to this Authority's Interim Order dated 21-10-2019, has not investigated the matter pertaining to the project M "Ireo Rise" which was executed by the Respondent (M/s. Puma Realtors Pvt. Ltd.) in terms of section 171 of the CGST Act, 2017 and the Rules made thereunder so as to determine whether there has been any profiteering by the Respondent therein.
The DGAP furnished his Report dated 28-10-2021 to this Authority, stating that the Respondent had provided some documents/information that were not enough to conclude as to whether the Respondent had benefitted to the additional ITC in post-GST and if yes, then the said benefit of ITC has been passed on by him to the recipients by a commensurate reduction in price as per provision of section 171 of the CGST Act 2017 and Rules made thereunder. Further, the DGAP had observed that a Corporate Insolvency Resolution Process (CIRP) was initiated against the Respondent under Insolvency and Bankruptcy Code 2016 (IBC) vide Order dated 17-10-2018 by the National Company Law Tribunal (NCLT), New Delhi. The said CIRP had been concluded by NCLT vide its Order dated 1-6-2021 whereby the Resolution Plan filed by the M/s. One City Infrastructure Pvt. Ltd was duly approved and subsequently implemented.
This Authority finds that, section 171 of the CGST Act, 2017 and the Rules made thereunder cast a three fold responsibility on this Authority viz. to ensure that that there shall be no profiteering in case of reduction of tax rates or availability of ITC to suppliers, to determine profiteered amount and to ensure that the profiteered amount so determined is returned/passed on along with interest to each recipient of such supply.
The order dated 23-3-2020 is restored and in continuation of the subsequent orders dated 8-3-2021, 27-4-2021 and 23-9-2021, it is directed that the period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.
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2022 (8) TMI 1435 - ITAT MUMBAI
TP Adjustment - comparable selection - HELD THAT:- Exclusion of following 10 comparable companies Accentia Technologies Ltd, Mold-Tek Technologies Ltd, E-clerk Services Ltd, Vishal Information Technology, Asit C Mehta Financial Services Ltd., Bodhtree Consulting Ltd., Infosys BPO Ltd., Wipro Limited, Maple E Solutions Ltd. and HCL Comnet Sys & Serv Ltd. Accordingly, we direct the AO/TPO to determine the ALP of the transactions by taking into account the remaining 15 companies.
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2022 (8) TMI 1434 - MADRAS HIGH COURT
Offence u/s 276 CC - allegation of Clear case of willful and deliberate commission of default of the accused by not furnishing the return of income for the Assessment Year 2014 – 2015 within the due time allowed under Section 139 (1) - Petitioner submitted that sanction suffers from non application of mind - respondent further submitted that once cognisance has taken against a person by the trial Judge, the High Court cannot be said to have erred in leaving the question of validity of sanction open for consideration by the trial Court - HELD THAT:- A perusal of the sanction order would indicate that the reply of some other assessee has been considered and no show cause notice has been issued to the assessee whereas, some other assessee's reply has been taken note of while considering the case of the petitioner.
It is the admitted case of both sides that charges have not been framed and that the respondent has let in only pre-charge evidence and thus the petitioner would be entitled to file an application for discharge under Section 245 of Cr.P.C. In the event any discharge petition is filed, it is open to the trial Court to consider the same, on its own merits.
In such a view of the matter, this Court is not inclined to grant the relief as sought for by the petitioner, since the cognisance has already been taken. Accordingly, this Criminal Original Petition is dismissed. However, it is made clear that the respondent Department cannot substitute any new sanction order, in the name of additional documents, the respondent is not entitled to create/file any other document to show that sanction has been given.
As petitioner requested this Court to dispense with the presence of the petitioner. Taking into consideration, the facts and circumstances of the case, the presence of the petitioner before the Trial Court is dispensed with, except for receipt of copies, answering the charges, questioning under Section 313 Cr.P.C., or on any other date as may be required by the trial Court. They shall be represented by a counsel, who shall cross examine the witnesses on the same day, when they are examined in Chief.
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2022 (8) TMI 1433 - NATIONAL COMPANY LAW TRIBUNAL GUWAHATI
Seeking extension of the Corporate Insolvency Resolution: Process period by 30 days - CIRP was initiated on 23-11-2021 and 270 days are going to expire on 20-08-2022 - HELD THAT:- It has been submitted that a resolution with regard to extension of CIRP was approved with 87.26% voting by the Members of Coc - The period of CIRP extended for a further period of 30 days beyond 270 days.
The prayer of the present application is allowed.
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2022 (8) TMI 1432 - ITAT CHANDIGARH
Addition on account for cash deposits in Bank account - purchaser admitted that the advance was paid as mentioned in the agreement to sell but did not agree to the payment of the total amount mentioned as a sale consideration - HELD THAT:- As assessee i.e; the seller as well as the purchaser acted in accordance with the contents mentioned in the agreement to sell and the assessee received the amount on behalf of the co-owners and himself, out of the said amount, cash was deposited in the bank on the next day of getting the sale deed registered.
The contents mentioned in the agreement to sell i.e; the payment of advance money of Rs. 40,00,000/- for sale of 12 Acres agricultural land, were accepted by the seller as well as the AO as genuine then there was no reason to doubt the genuineness of other part of the agreement to sell i.e; the 12 Acres of land was sold @ 21,00,000/- per Acre for a sum of Rs. 2,52,00,000/- which was sufficient to explain the deposit of Rs. 2,05,50,000/- on 04/01/2011 i.e; the next day of registration of sale deed. We therefore considering the totality of the facts as discussed hereinabove deem it appropriate to delete the impugned addition made by the AO and sustained by the Ld. CIT(A).
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2022 (8) TMI 1431 - ITAT AMRITSAR
Revision u/s 263 - bogus purchase was informed from the Sales Tax order - PCIT had issued notice for setting aside the order of assessing authority passed u/s 148 - HELD THAT:- As per the ‘office note’ it is confirmed that the books of accounts and relevant documents are verified by the assessing authority during the assessment proceeding and no such bogus purchase was found in the books of the assessee. Revenue authorities was unable to substantial any nexus with the sellers and assessee. The proper verification was made during assessment proceeding with the proper application of mind.
So, the assessment order cannot be called as erroneous. The assessee had complied the notice U/s 263 - But ld PCIT unable to comply the same in the order u/s 263. Both in reopening u/s 148 & revision U/s 263 the same issue, bogus purchase cannot be enquired multiple time.
As in the case of CIT versus Paramjit Kaur [2007 (8) TMI 323 - PUNJAB AND HARYANA HIGH COURT] held that the existence of material must be real and it must also have nexus with the believe that income, escaped assessment.
It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the ld. AO's order was erroneous and prejudicial to the interest of the revenue within the terms of section 263.
Once the impugned issue was considered and examined by the AO Commissioner cannot set aside the order without recording a contrary finding. This will be contrary to Section 263 - Therefore, we are of the considered opinion that the impugned action of the PCIT u/s 263 of the Act was patently illegal and is liable to be quashed.
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