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2022 (8) TMI 1430 - ITAT JAIPUR
Correct head of income - transaction of selling rights in flats by the Appellant - capital gain of business income - magnitude of transaction - HELD THAT:- Assessee being Non-resident Indian having Indian origin, intend to have enduring house property for his long-term use, as capital investment. This intention based on the set of facts cannot be denied as the assessee is not regularly resides in India. He being not present in India no intention to enter into an option of having adventure in the nature of trade as he is already employed out of India. The sole purpose of his investment in India to have property for enduring benefit either to have the rental income or to have the capital appreciation over the period of time. For this intention he has added her wife’s name in all the investment which he made, this also support the contention of the investment not an adventure in the nature of trade. Had the intention of the assessee is to enter into an adventure in the nature of trade he might have done the transaction in his name only and as he is employed at such level, he could get the loan sanctioned his name only but he preferred it to have the time as also co-owner of the property based on his intention of investment as his retirement plan and assessee never changed his intention.
The property is purchased with a home loan so that both the investment and enduring benefit of the property achieved out of the income that he earns outside India. The investment made in India by the assessee in 2007-08 is owned and continue to hold for more than five and ten years with that intention only to hold it for capital investment. Merely, the assessee realised the price more then what he has invested cannot be the criteria the decide the nature of investment, the purpose and circumstance evidence to support the contentions is also required to be looked into.
Since, his intention was to stay in India and invested for long term and that is why he has even invested in the property which are under construction and even not registered in his name - The decision to sale the property before registration will not change the income arising out of the capital investment made by the assessee. The real purpose and intention of the assessee is not in the trade or adventure in the nature of trade/business as he wanted his family to be secured in a house in his origin country mother land. As regards the contention that the property is not registered and even the agreement is also not registered and allotment right is not the capital investment is not correct view taken by the department.
The revenue has not disputed presence of assessee in India for period of 22 days in the year under consideration and in last 5 years it is only 55 days. This information is already on the records and extracted in the assessment order at page 4. It is evident from the above that the stay of the assessee in the year under consideration is only to undertake the formality of the transaction that he has under taken in mother land India.
As income is considered as capital gain and revenue failed sustenance their action that why the contrary view should be adopted in the year under consideration when the department has on the same very assessee’s case on same fact accepted the income as income under the head capital gain and even revenue also failed to substantiate that with the view and as they substantiate there is a substantial revenue leakage too. Appeal of assessee allowed.
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2022 (8) TMI 1429 - MADHYA PRADESH HIGH COURT
Maintainability of the revision - dishonour of cheque - legally enforceable cheque or not - tripartite agreement executed towards settlement of all dues during pendency of the complaint case under Section 138 of the Negotiable Instruments Act - HELD THAT:- It is apposite to refer to the decision in the case of Bapuji Murugesan v. Mythili Rajagopalan, [2022 (7) TMI 2 - MADRAS HIGH COURT] wherein it has been held Applying the test as to whether non-passing of such order or accepting of any plea by the accused or the complainant, whether it would result in culmination of proceedings, the answer is again in the negative - thus, the revision against the interlocutory order is not maintainable.
Thus, in the case of Surinder Singh Deshwal [2019 (5) TMI 1626 - SUPREME COURT] Hon’ble the Apex Court has held that use of word “may” in Section 148 of the NI Act has to be read as “shall” and appellate Court must orinarily order depositing of minimum 20% of compensation or fine amount imposed by the trial Court.
The impugned order passed by the lower appellate Court does not suffer from any illegality, irregularity or perversity warranting interference by this Court in exercise of its revisional jurisdiction. Hence, the revision being devoid of merit, stands dismissed.
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2022 (8) TMI 1428 - ITAT BANGALORE
TP Adjustment - Comparable selection - Infosys BPO Limited (Exclusion) - HELD THAT:- The Bangalore Bench of the ITAT in the case of M/s.Fulcrum Fund Services (India) Private Limited [2019 (4) TMI 2095 - ITAT BANGALORE] has directed exclusion of this comparable for the assessment year in question. Thus we direct to exclude this company from the list of comparable companies.
Microland Limited (Exclusion) - The Bangalore Bench of the ITAT in case of M/s.Brady Company India (P) Ltd. (supra) had excluded Microland Limited from the list of comparables on functional incompatibility with ITES segment. The profile of the assessee in the instant case and profile of the assessee in case of M/s.Brady Company India (P.) Ltd. are similar, thus we direct the TPO to exclude Microland Limited as comparable. Accordingly, the appeal of the assessee is allowed on this ground.
Crossdomain Solutions Private Limited (Exclusion) - The Bangalore Bench of the Tribunal in the case of M/s.Vee Technologies Private Limited v. PCIT [2022 (3) TMI 1533 - ITAT BANGALORE] had excluded the above company from the comparable list on account of functional incompatibility - we direct the TPO to exclude Crossdomain Solutions Pvt. Ltd. from the comparable list. Accordingly, the appeal of the assessee is allowed on this ground.
Jindal Intellicom Private Limited (Inclusion) -The Bangalore Bench of the Tribunal in the case of M/s.Brady Company India (P) Ltd. [2022 (3) TMI 1528 - ITAT BANGALORE] had held Jindal Intellicom Private Limited is comparable company to ITES segment. Thus we direct the TPO to include Jindal Intellicom Limited in the list of comparables. Accordingly, the appeal of the assessee is allowed on this ground.
Interest on delayed receivables - Tribunal has considered only the receivables as may be due beyond the credit period allowed under the agreement between the assessee and its AE as an international transaction, we are of the considered opinion that the same is a tainted transaction and therefore cannot be considered as a benchmark.
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 out 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 will 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 earlier.
TP adjustment on interest on outstanding receivables - 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.
We note from the TP order that benchmarking has been undertaken to find ALP rate i.e. 300 basis points has been considered as mark-up and the same represents ceiling rate on ECB and Trade Credits as per RBI Circular.
AR is seeking consideration of 2% benchmark merely on the basis of the rulings cited during the course of hearing and no benchmarking exercise has been carried on by the assessee. The ruling in the case of CIT v. Aurionpro Solutions Ltd. [2017 (6) TMI 1087 - BOMBAY HIGH COURT] has been rendered for assessment year 2007- 2008 and the mark-up have been arrived considering the facts relevant to that assessment year. Hence, the same cannot be considered relevant to the assessment year in question as seven years have elapsed.
Given the variability of interest rate on a time-to-time basis and in the interest of natural justice, we direct the TPO to provide a fresh opportunity to the assessee to justify 2% mark-up and determine the appropriate mark-up to be charged over and above the LIBOR rate. It is ordered accordingly. In the result, ground is allowed for statistical purposes.
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2022 (8) TMI 1427 - ITAT HYDERABAD
Condonation of delay filing appeal before ITAT - delay of 1529 days - limitation to file the appeal against the impugned order - assessee challenged the action of the Ld. CIT(A) in remanding the matter to the file of the learned Assessing Officer, for which the assessee waited for consequential orders to be passed - HELD THAT:- A plain reading of the grounds and the additional grounds raised in this appeal clearly shows that the assessee’s grievance relate to the reopening of the assessment with the issuance of notice under section 148 of the Act on 27/3/2012 and the orders of the Ld. CIT(A) in disallowing the interest paid subsequent to 4/12/2014. Insofar as this grievance is concerned, the assessee is clear as to the state of affairs by 14/8/2013 itself. The assessee need not wait till the consequential orders are passed. Whether or not the demand is stated to be nil in the consequential order dated 17/2/2014, it has nothing to do with the impugned order passed directing the learned Assessing Officer to disallow the interest paid subsequent to 4/12/2014. The disallowance in the impugned order is very clear and loud. Merely because a subsequent point of time the learned Assessing Officer passed an order dated 14/2/2014, it does not mean that the assessee has a good case.
Even if we believe that the orders dated 14/2/2014 and 17/2/2014 received by the assessee on 14/3/2014 were capable of misleading the assessee, still the assessee cannot harp on that point because the impugned order was clear in its import that the interest for a period subsequent to 4/12/2004 was clearly directed to be disallowed by the Ld. CIT(A) on 14/8/2013 to challenge which, the appeal time was only available till 5/9/2013. Assessee cannot have the benefit of any confusion that is likely to arise subsequent to this 5/9/2013, because the cause of action for the grievance of the assessee is the order dated 14/8/2013 and, as a matter of fact, is not at all the order dated 10/3/2017 rectifying the order dated 17/2/2014 under section 154 of the Act.
Assessee had forgotten one basic thing before citing the orders dated 14/2/2014, 17/2/2014 and 10/3/2017 as a reason for the mistaken impression not to prefer the appeal, that the original limitation to file the appeal against the impugned order expired long before these orders. The facts pleaded by the assessee to justify the delay in filing the appeal are wholly irrelevant and illogical. It is nothing but a drowning man trying to catch a straw. Law of limitation does not permit such unacceptable conduct on the part of the parties.
There is no sufficient cause made out by the assessee to condone the delay and the reasons stated for the delay are not at all relevant insofar as this appeal challenging the order dated 14/8/2013 is concerned. We, therefore, decline to condone the delay - Decided against assessee.
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2022 (8) TMI 1426 - ITAT DELHI
Deduction u/s 80IA (4) - Claim denied by AO but allowed by CIT(A) - HELD THAT:- We find that CIT(A) in his order has reproduced the findings of Co-ordinate Bench of Tribunal in assessee’s own case for A.Ys. 2011-12 & 2012-13 [2019 (2) TMI 1429 - ITAT DELHI], [2018 (11) TMI 1322 - ITAT DELHI] wherein it was held that assessee was eligible for deduction u/s 80IA(4) of the Act.
Since the facts are identical to that of earlier years, the assessee is eligible for claiming the deduction. Revenue has not pointed to any distinguishing facts of the case in the year under consideration and nor has placed any material to demonstrate that the order of Delhi Tribunal in assessee’s own case for A.Ys. 2011-12 & 2012-13 has been set aside/stayed/over ruled by the Higher Judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A) and thus dismiss the grounds of the Revenue.
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2022 (8) TMI 1425 - SC ORDER
Dishonor of Cheque - stand of the petitioner is that although, he was a Director of the said partnership firm, he has since retired from the Firm at the time the alleged cheques were issued and dishonoured - vicarious criminal liability - HELD THAT:- No case is made out against respondent No.2/ Smt.Sarita Harish Kanchan in all the Petitions. The Special Leave Petitions against respondent No. 2 are accordingly dismissed.
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2022 (8) TMI 1424 - DELHI HIGH COURT
Smuggling - Ganja - contraband item - HELD THAT:- The applicant is allowed to be released on bail on filing a bail bond in the sum of Rs.50,000/- with two sureties of the like amount to the satisfaction of the learned Trial Court with directions imposed to the applicant - application allowed.
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2022 (8) TMI 1423 - BOMBAY HIGH COURT
Dishonour of Cheque - legally enforceable debt or not - cheques given as security - execution of cheques giving rise to statutory presumption under Section 118 and 139 of Negotiable Instrument Act - HELD THAT:- The learned Sessions Judge while allowing the revision application preferred by respondent Nos. 1 and 2 has observed that the contract which is forbidden by law is void contract. In cases of money lending business without license, the provisions under Section 138 of Negotiable Instruments Act are not attracted. According to the complainant huge amount of Rs. 4,50,000/- was parted to the accused. There was a Memorandum Of Understanding (MOU) dated 22.02.2014 between M/s. Monika Sumit Ujjain as the lender and M/s. Saga Infra as the borrowers. As per MOU it can be gathered that the transactions was without license. Post dated cheques were given by way of security.
There are no reason to interfere with the impugned order - Criminal Revision Application stands rejected.
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2022 (8) TMI 1422 - SUPREME COURT
Seeking grant of Anticipatory Bail - grant of interim relief and staying the further proceedings of respective criminal inquiry cases against the respondents – accused - HELD THAT:- It appears that the learned Single Judge seems to be of the opinion that after giving reasons, the High Court can grant an interim stay of further investigation in a petition seeking quashing of the criminal complaint filed under Article 226 of the Constitution read with Section 482 Cr.P.C. The High Court has not properly appreciated the principles and the law laid down by this Court in the case of M/s. Neeharika Infrastructure Pvt. Ltd. [2021 (4) TMI 1244 - SUPREME COURT]. What is emphasized by this Court in the case of M/s. Neeharika Infrastructure Pvt. Ltd. is that grant of any stay of investigation and/or any interim relief while exercising powers under Section 482 Cr.P.C. would be only in the rarest of rare cases. This Court has also emphasized the right of the Investigating Officer to investigate the criminal proceedings.
There shall not be any interim relief during the pendency of the aforesaid special criminal applications. The Investigating Officer is directed to complete the investigation at the earliest and preferably within a period of three months from today and file appropriate report/charge sheet before the concerned Criminal Court having jurisdiction.
Appeals are Allowed.
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2022 (8) TMI 1421 - CALCUTTA HIGH COURT
Validity of Look Out Circular (LOC) issued against the petitioner - HELD THAT:- Upon hearing learned counsel for the parties, it transpires from the records that a similar LOC against the husband of the petitioner was quashed in a writ petition by this Court. Despite the children of the petitioner having indefinite leave to remain in the UK, the issuance of LOC cannot be used as a handle to obtain / enforce a prospective award against a person on anticipation, before it is actually passed by any competent judicial forum.
In the present case, although the petitioner has been declared as a willful defaulter and there may be certain contentions which can be validly raised by the bank against the petitioner, such issue is entirely the subject matter of any award, if passed by a competent judicial forum. As of today, since no order has been passed against the petitioner from any such competent forum in respect of repayment of any quantum of money and keeping in view of the antecedents and attending circumstances of the petitioner, there is no scope of sustaining the LOC against the petitioner, which would not only have the effect of truncating the professional career of the petitioner but also be an unnecessary harassment and fetter on her personal liberty without there being any money award of a competent judicial forum against the petitioner.
The LOC issued against the petitioner cannot be sustained.
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2022 (8) TMI 1420 - BOMBAY HIGH COURT
Review of own assessment order - F-Form not issued - It is petitioners’ case that the Apex Court in AMBICA STEELS LTD. VERSUS STATE OF UP. AND OTHERS [2009 (3) TMI 550 - SUPREME COURT] has in very clear terms expressed that when a certain State, within whose jurisdiction the transferee is located, is not issuing form F, then in such an eventuality it would be open to the Assessing Officer to complete reassessment proceedings on its own merits after examining the transaction between the parties, keeping in mind the circumstance that the assessee is not in a position to obtain form F for no fault of his.
HELD THAT:- Petition be listed for final hearing on 29th September 2022.
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2022 (8) TMI 1419 - ITAT AHMEDABAD
Disallowance of prior period expenses - tax advantage accrued to the assessee or not? - HELD THAT:- Coordinate Bench in [2022 (7) TMI 1442 - ITAT AHMEDABAD] for A.Ys. 2010-11 & 2011-12 has set-aside the identical issue to the file of the Ld. AO. as held there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of AO for examining the issue de novo after verifying facts as may be considered necessary and expedient in accordance with law. The AO shall bear in mind the ratio laid down in the case of Adani Enterprises Ltd [2016 (7) TMI 1564 - GUJARAT HIGH COURT] while adjudicating the issue - This ground is allowed for statistical purposes.
Addition of 15% of Capital Grants as against 10% offered by assessee - HELD THAT:- We find that on the identical issue as submitted the Ld. A.R. [2022 (7) TMI 1442 - ITAT AHMEDABAD] wherein held as per provisions of section 43(1) of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. DR could not point out any mistake in the above submission of the assessee, which we find is in accordance with law - set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh after verifying the proportionate amount of grant relating to different asset, and applying the actual rate of depreciation which relate to these assets. Thus, this ground of appeal of the assessee is allowed for statistical purpose.
Correct head of income - interest on loans to staff and other advances - “other income” or "business income" - HELD THAT:- As decided in Odisha Power Generation Corporation Ltd. case [2022 (3) TMI 539 - ORISSA HIGH COURT] Assessee offered an explanation regarding interest income earned by it, from advances given to its employees as well as provision of electricity and water charges collected from water through its employees and contractors for facilities in the township, receipt from transit hostel, sale of scrap, insurance claim etc.
The facilities were given to its employees for better conditions of employment. This was to improve the overall efficiency of the undertaking which is devoted to the single purpose of generation of power. The Court, therefore, has no difficulty in accepting the submission of the Assessee that the interest received on advances and loans given to its employees are receipts in normal course of carrying its business and should be considered as income derived from its essential business activities. Likewise, the late payment by GRIDCO for the electricity supplied, is sought to be made up by GRIDCO by issuing bonds on which the Assessee earns interest. This also therefore, has a direct nexus with the essential business activity of the Assessee - thus we direct the Ld. AO to consider the issue afresh upon examining the same in regard to the head of income upon considering the relevant evidence - This ground is allowed for statistical purposes.
Nature of expenses - guarantee fees paid to the Government of Gujarat - revenue or capital expenditure - HELD THAT:- We have carefully considered the decision passed by the Coordinate Bench in .[2022 (7) TMI 1442 - ITAT AHMEDABAD] no reason to interfere of the order passed by the Ld. CIT(A) in deleting the guarantee fees paid to the Government of Gujarat - The ground preferred by Revenue is, therefore, fails and thus, dismissed.
Claim of raising finance for specialized job allowable as Revenue expenditure.
MAT - addition of Prior Period Expenses made while computing Book Profit computed under Section 115JB - HELD THAT:- No adjustment on account of prior period expenses is to be made in the net profit of the company for arriving at the book profits u/s 115JB.
Treatment of Government Grant u/s. 115JB - assessee company has received capital grant which was transferred to the Reserve & Surplus account - CIT was of the view that the same should have been reduced from the cost of assets and since the same has not been done, the company has claimed excess depreciation thereby offering lesser Book Profits - HELD THAT:- We find that the ld. Principal CIT has ignored the fact that the grant in question was received in terms of the Financial Restructuring Plan from the Government and the company has accounted Government Grants in terms of the mandatory Accounting Standard (AS)-12 on "Accounting for Government Grants" prescribed by the ICAI -Considering the accounting treatment in the light of the Accounting Standard-12, we do not find any error on facts or in law. Therefore, to this extent the findings of the Id. Principal CIT are reversed.
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2022 (8) TMI 1418 - ITAT DELHI
Taxability of foreign income in India - Taxability of revenue from sale of software Royalty receipts - HELD THAT:- As decided by ITAT in assessee’s own case for AY 2012-13 [2022 (4) TMI 966 - ITAT DELHI] sale of software products does not give rise to royalty income as laid down in Infrasoft Ltd. case [2013 (11) TMI 1382 - DELHI HIGH COURT] which have now further been affirmed by the Hon’ble Supreme Court of India in the case of Engineering Analysis Centre of Excellence P. Ltd. [2021 (3) TMI 138 - SUPREME COURT]
Taxability of cloud based service receipts - treating subscription to cloud base service as royalty - HELD THAT:- As decided in own case [2022 (4) TMI 966 - ITAT DELHI] the cloud base services do not involve any transfer of rights to the customers in any process. The grant of right to install and use the software included with the subscription does not include providing any copy of the said software to the customer. The assessee’s cloud base services are though based on patents / copyright but the subscriber does not get any right of reproduction. The services are provided online via data centre located outside India.
The Cloud services merely facilitate the flow of user data from the front end users through internet to the provider’s system and back. The ld. AO has fallen in error in interpreting it as licensing of the right to use the above Cloud Computing Infrastructure and Software - Thus the subscription fee is not royalty but merely a consideration for online access of the cloud computing services for process and storage of data or run the applications.the Bench is of considered view that the ld. Tax Authorities below had fallen in error in considering the subscription received towards Cloud Services to be royalty income.
Hence respectfully following the precedent from coordinate Bench, we set aside the order of Revenue authorities and decide the issues in favour of the assessee.
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2022 (8) TMI 1417 - ITAT DELHI
Allowable business expenses - Disallowance of expenses which do not pertain to the project but are in the nature of selling cost and general administration cost - expenses disallowed as assessee has not routed these expenses through P&L account and claimed directly in the computation - assessee was allotted by land by NOIDA, land acquired by the assessee is the stock-in-trade of the business and construction work has started during the year - CIT(A) confirmed the action of the AO holding that the construction has not been started, the approvals were pending, the land has not been fully paid for and it becomes apparent that the project is an infantile stage. Therefore, the CIT(A) held that the business could not be said to have been “setup” or “commenced”.
HELD THAT:- Noida Authority-Interest and Late registration charges - The assessee was allowed 16 half yearly installments to pay the amount of Rs. 302.31 Cr. to NOIDA and in case of default interest @ 14% compounded half yearly leviable for the default period on the defaulted amount. The balance sheet also reflects cost of land of Rs. 387.25 Cr. which has been capitalized. Since, the interest is attributable to the cost of land, the interest expenditure is not allowable as per Section 36(1)(iii).
Similarly, the registration charges and the fee/penalty/damages/price for late registration amounts to an integral part of cost of acquisition of land has also to be allotted to the “cost of project” and to be treated as part of capital work-in-progress. Hence, we hereby affirm the order of the CIT(A) on these two issues.
Advertisement Expenses, Brokerage & Commission - The project cost in relation to a project comprises of cost of land and cost of development rights, borrowing cost, construction and development cost. In relation to land, the entire cost of land and development rights, stamp duty registration charges and other incidental expenses have to be capitalized. With relation to the borrowing cost, the interest directly related to the project is to be capitalized.
All the direct costs relating to the construction and development of the specific project have to be capitalized. The construction cost includes conversion cost, municipal sanction fee, expenses incurred, site labour cost, cost of material, cost of hiring plant & machinery, cost of designs and claims of the third party. The general administrative cost, advertisement, brokerage, selling cost, depreciation of the vehicles and office expenditure are part of the revenue expenditure and need not be capitalized.
There is difference between commencement of the business and setting off of the business. All the expenses incurred pre-commencement are to be treated as pre-operative expenses and the expenses incurred which do not form the part of the “work in progress” (WIP) like office expenses, salaries, advertising, brokerage and commission which are incurred for running of the business operations and to bring revenues to the company are to be treated as revenue expenditure.
Hence, we hereby affirm the order of the ld. CIT(A) on account of the disallowance on Noida Authority-Interest and Late Registration Charges (LRC) and hold that the disallowance affirmed by the CIT(A) on account of Advertisement Expenses and Brokerage & Commission are liable to be obliterated.
Appeal of the assessee is partly allowed.
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2022 (8) TMI 1416 - ITAT MUMBAI
Computation of capital gain - FMV determination of shares - Determination of intrinsic value of shares, particularly in the case of the closely held private limited companies - Whether fair market value of the 225 equity shares held by the assessee in Somani & Co Pvt Ltd as on 1.4.1981, should have been taken at face value (i.e. Rs 100 each) or at the break-up value (i.e. Rs 3,833)- as certified by the approved valuer ?- HELD THAT:- The shares were acquired before 1st April 1981 and that the assessee had the option to substitute its cost of acquisition by the fair market value as on 1st April 1981. The assessee has filed a Government Approved Valuer report evidencing its fair market value of the land held by the SCPL, and, taking into account the same, computation of the fair market value as on 1st April 1981 on the basis of the intrinsic value of the SCPL shares.
The intrinsic value of shares, particularly in the case of the closely held private limited companies, is, in our considered view, a reasonable method of ascertaining the fair market value of the shares. The mere fact that the shares were issued after 1st April 1981 also at face value cannot negate its fair market value. When shares are issued by a company at face value, it does essentially imply that the market value of shares already issued does not exceed the face value of these shares; the reasoning adopted by the Assessing Officer is simply fallacious and proceeds on the unrealistic assumption that the issue price of the shares reflects their fair market value.
In any event, if the Assessing Officer had any doubts on the correctness of valuation, it was open for him to refer the matter to the Departmental Valuation Officer, but that exercise has not been done, and the relevant financial period is more than a decade old. No other issues are raised by the authorities below with respect to the method adopted for the valuation of shares in question.
We uphold the plea of the assessee, and direct the Assessing Officer to adopt the valuation of Rs 3,833 computed by the assessee on the basis of the fair market value of the net assets. The assessee gets the relief accordingly.
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2022 (8) TMI 1415 - DELHI HIGH COURT
Recovery proceedings - attachment orders - real owner of property - objection regarding the maintainability of the present petition - alternate statutory remedy available to Petitioner under Section 15T read with Section 28A of the SEBI Act, 1992 and Rule 26 of the Second Schedule to the Income Tax Act, 1961 - HELD THAT:- Writ would lie before this Court only there is a jurisdictional error in the impugned order. The Court is however unable to agree. The Petitioner’s primary objection, is that the attached property belongs to Kuber Floritech Ltd. [Petitioner] and not Kuber Planters Ltd., against whom the recovery certificate has been issued.
SEBI was not satisfied with Petitioner’s claim on merits and therefore this Court does not find any jurisdictional error to entertain the petition. Moreover, as pointed out by Ms. Anand, Rule 11 of the Second Schedule of the Income Tax Act, 1961, applicable to the proceedings under dispute, provides complete mechanism of investigation by the Tax Recovery Officer for adjudication of any claim or objection to attachment or sale of any property in execution of a certificate. The aforesaid Rule is a complete code in itself.
Moreover, as acknowledged by the Petitioner and recorded in the order there is an alternate statutory remedy, available with the Petitioner under Section 15T read with Section 28A of the SEBI Act, 1992 and Rule 26 of the Second Schedule to the Income Tax Act, 1961.
The Court is not inclined to entertain the present petition. Dismissed along with other pending applications.
All the rights and contentions of the parties are left open. The Court has not examined the merits of the case and, in the event, the Petitioner were to take recourse to alternate statutory remedy, the concerned authority shall adjudicate the claim of Petitioner, uninfluenced by any of the observations made above.
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2022 (8) TMI 1414 - ITAT CHENNAI
Depreciation on ATMs - to be treated as computers or plant and machineries - @15% or 40% - HELD THAT:- We find that an identical issue has been considered by the Tribunal in assessee’s own case for the assessment year 2015-16 & 2016-17 [2020 (3) TMI 802 - ITAT CHENNAI] wherein, the Tribunal by following earlier decision in assessee’s own case held that the assessee is entitled for 60% depreciation on ATM machines.
Computation of depreciation - Facts remains that once the assessee is entitled for 60% of depreciation on ATM machines, the AO has to work out the depreciation right from the beginning at 60% to compute WDV. Accordingly, we direct the AO to allow 60% of depreciation and work out the opening WDV and compute the correct depreciation to be allowed for the impugned assessment year.
Cessation of liability u. 41(1) - Addition made as assessee could not justify with necessary evidences - Even before the ld. CIT(A), the assessee could file any evidence to justify the existence of the liabilities - HELD THAT:- As considering the fact and circumstances of the case and also the plea of the ld. Counsel for the assessee, we confirm the addition made towards the disallowance of cessation of liability u/s 41(1) of the Act and reject the ground taken by the assessee.
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2022 (8) TMI 1413 - NATIONAL ANTI-PROFITEERING AUTHORITY
Profiteering - purchase Of flats in the Respondent's project Town - it is alleged that the Respondent had not passed on the benefit of ITC to him by way Of commensurate reduction in prices implementation Of GST w.e.f. 01.07.2017 - contravention of provisions of Section 171 of the Central Goods and Services Tax Act, 2017 - levy of interest and penalty - HELD THAT:- Based on the discussion and the figures of turnover and ITC for the Pre GST & Post GST Period, there are no reason to differ with the DGAP findings that in the instant project “Tinsel Town” the additional benefit which accrued to the Respondent in terms of Section 171 of the CGST Act, 2017 was 6.52% of the turnover. This benefit was required to be passed on to the recipients; however, the same was not done by the Respondent commensurately. The amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 2,03,03,720/-.
Further. it has been claimed by the Respondent that he had already passed on substantial amount of GST ITC to the homebuyers in accordance with the requirements of Section 171 of the CGST Act, 2017 which come out to be Rs. 58,35,648/- this fact has also been endorsed by the DGAP and accordingly the profiteering amount which is still required to be passed on comes out to be Rs. 1,45,28,245/-.
Interest - HELD THAT:- This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/Customers commensurate with the benefit of ITC received by him. ‘The Authority directs the Respondent to return/pass on/refund the profiteered amount along with interest as prescribed to each homebuyer/recipient of supply along with interest @ 18% p.a, as prescribed from the date the profiteered amount was collected until the date of such return/passing on/refund. The names of such homebuyers along with unit number, profiteered amount and the benefit already passed on.
Levy of penalty - HELD THAT:- The Respondent has denied benefit of [TC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he had thus resorted to profiteering, Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 31.03.2019 and therefore, appears to be liable for imposition of penalty under the provisions of Section 171 3 (A) of the above Act. However, the provisions of Section 171 (3A) have been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.17.2017 to 31.03.2019 when the Respondent had committed the violation and hence, the penalty under Section 171 (3A) cannot be imposed on the Respondent for such period. Accordingly. notice for imposition of penalty is not required to be issued to the Respondent.
The Authority finds that there exists reason to investigate other projects for the purpose of determination of profiteering, Accordingly, this Authority as per the provisions of Section 171 (2) of the above Act take suo-moto cognizance of the same and in terms of Rule 133(5) of the said Rules, directs the DGAP to conduct investigation in respect of the other projects executed under the said registration and submit Report to this Authority for determination whether the Respondent is liable to pass on the benefit of ITC in respect of the other projects/towers to the buyers or not as per the provisions of Section 171 (1) of the above Act.
This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules. 2017.
Application disposed off.
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2022 (8) TMI 1412 - ITAT BANGALORE
TDS u/s 195 - Disallowance of legal and professional fees made u/s 40(a)(i) - HELD THAT:- In order to bring the impugned payments within the Article 12 of India- USA DTAA, the services should have been “made available” technical knowledge etc to the assessee herein. In the instant case, the assessee has only availed professional services of non-residents in connection with tax compliances and the technical knowledge has not been “made available”. Since the make available clause fails, the impugned payments cannot be taxed as Fee for Included services under Article 12 of the India-USA DTAA. In this view of the matter, there is no necessity to refer to Article 15 also. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance of legal and professional fees made u/s 40(a)(i) - Thus direct the AO to delete the disallowance of legal and professional charges.
TP adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee and with extraordinary events need to be deselected from final list.
Infosys BPO - Considering the financial report that there was extraordinary events occurred during the financial year we direct AO/TPO exclude this company as comparable.
Excel Infoways Ltd (Seg) (IT/BVPO) company as engaged in software testing, verification and validation of software and also on the basis that it had huge turnover and was engaged in providing KPO services. should be excluded from the final list of comparable companies.
TCS E-serve Ltd. company be excluded on the basis that it was engaged in software testing, verification and validation of software and also on the basis that it had huge turnover and was engaged in providing KPO services.
BNR Udyog Ltd., (Seg) (Medical Transcription) - RPT filters applied by the TPO is a 25% but the RPT turnover ratio works out to 49.60%, therefore, on the basis of RPT filter, the assessee cannot be considered as good comparable for the relevant assessment year. Therefore, the AO/TPO to is directed to exclude this comparable for computation of ALP.
Informed Technologies Pvt. Ltd. - TPO has considered it while calculating PLI and the ld.AR has also requested for inclusion of this company vide written synopsis cited supra and it is not clear why the assessee has raised this issue before us. However, while calculating the PLI of the assessee company, if this company has not been considered in the final set of comparable for computation, then the AO/TPO shall consider it for calculating PLI.
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2022 (8) TMI 1411 - TELANGANA HIGH COURT
Seeking grant of Regular Bail - twin conditions under Section 45 of Prevention of Money Laundering Act fulfilled or not - HELD THAT:- As seen from the order of this Court in SHRI KHAGESH KACHHWAL VERSUS DIRECTORATE OF ENFORCEMENT, HYDERABAD ZONE [2022 (8) TMI 1410 - TELANGANA HIGH COURT] the grounds on which Accused No.1 was granted bail apply to the present petitioner also, for which reason, this Court is of the view that the relief of bail can be extended to this petitioner on the same conditions imposed upon Accused No.1, therefore, the petitioner/accused is granted bail subject to the conditions imposed.
Bail application allowed.
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