TMI Tax Updates - e-Newsletter
November 2, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Indian Laws
Highlights / Catch Notes
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GST:
Transitional Credit - merely because there were no technical glitches in the GSTN with respect to the Petitioner’s TRAN-1 which was admittedly filed in time, the claim of the Petitioner, if it was otherwise eligible in law, cannot be rejected for no apparent fault on the part of the Petitioner. This cannot be the objective of the GST system or digitisation. - HC
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GST:
Provisional attachment of Bank Accounts - Section 83 of the GST Act, 2017 - the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. - In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. - HC
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Income Tax:
Capital gain computation - adoption of stamp duty value fixed by the DRO (Stamps) - The recomputation of the total sale consideration based on the higher value fixed by the Sub Registrar is for the purposes of computing Stamp duty is wholly erroneous. - HC
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Income Tax:
Taxation of intermediary services - Intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the intermediary services provided by the appellant to BTIN do not tantamount to FTS and accordingly, shall not be taxable in India. - AT
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Income Tax:
Disallowance of depreciation is use of BMW car by the director of assessee - The car in question was a business asset and depreciation had to be allowed on the same. The AO could have disallowed depreciation on the ground of personal user in respect of a particular item of depreciable asset. He could not have disallowed the entire claim of depreciation. - AT
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Income Tax:
Income declared in the survey carried out u/s 133A - Disallowance of salary to partners claimed u/s.40(b) - We are confronted with a situation, in which both the source and destination are business inasmuch as the source of the income is business and the destination of such income is again in the nature of business assets, that is, stock, cash and receivables. - As a fortiori, such an income will be considered as `Business income’ covered under Chapter IV-D of the Act forming part of book-profit for the purposes of allowing remuneration to partners. - AT
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Income Tax:
Liability for payment of arrears of salary - As a certain liability for the impugned assessment year. The assessee company can make provision for the certain liability which is certainly to be paid, therefore, the assessee company has rightly made provision for the arrears of salary in his books of accounts. - AT
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Income Tax:
Attributing income to the PE, under the DTAA - The income to the foreign branch from the credit given to its card holders outside India cannot be taxed in the hands of the Indian branch since it has not arisen in India and also it cannot be attributed to the assets and activities of the Indian branch, as is required by Article 7 of the DTAA. - AT
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Income Tax:
Validity of reopening of the assessment - A letter was filed by the assessee at the fag end of the assessment proceedings as the assessment order was finally passed on 3rd November, 2016. Therefore, this letter cannot be considered as an objection against the notice issued u/s 148 of the Act. Hence in the absence of any objection raised by the assessee, there is no question of disposal of the same by the AO. Accordingly, there is no merit or substance in ground of the assessee’s appeal. - AT
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Income Tax:
Characterization of income - Capital or revenue receipt - Section 41(1) of the IT Act particularly deals with the remission of trading liability whereas in that case, waiver of loan amounts to cessation of liability other than trading liability. In the case before us, the amount was written off by DUBAL and same was written back by the assessee to the statement of profit and loss account as an extraordinary item. - Addition confirmed - AT
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Customs:
Target Plus Scheme - Direction to the Respondents to issue balance/additional duty credit scrips - star export house - When one part of the benefit for a year was given, question of withholding of the remaining benefit for the same year does not arise. Exports are of the year 2005-2006. We are now in 2020. 14 years have lapsed in between. Such inordinate delay can only frustrate the very objective of the scheme. - HC
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Corporate Law:
Grant of Bail - Oppression and Mismanagement - appointment of Applicant as Director on the basis of forged director - It is alleged that Ex-Director without discussion with other Directors prepared forged documents and ousted his wife from the Directorship - Keeping in view the nature of the offence, procedural flaws in investigation, arguments advanced on behalf of the parties, spreading of novel corona virus in jails, evidence on record regarding complicity of the female accused, offences alleged being triable by Magistrate, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court, the applicant has made out a case for bail - HC
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Corporate Law:
Restoration of name of the Company in the Register of Companies - Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. - Tri
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (10) TMI 1217
Transitional Credit - submission of declaration in Form GST TRAN-1 on 27th December, 2017 in time - vires of Articles 14, 265 and 300-A of the Constitution of India - HELD THAT:- In this case, we are not examining the issue whether the Petitioner is entitled to VAT tax credit as claimed by the Petitioner which will be examined by the authorities. What we are concerned with is that despite the admitted successful filing of Form TRAN-1 by the Petitioner on 27th December, 2017, the request of the Petitioner for transitioning of credit has not been approved by the ITGRC merely on the basis that there were no technical glitches on the GSTN side. There is no further explanation or clarification or evidence on the issue by the Respondents. Even the learned Sr. Counsel for the Respondents has only reiterated this stand during his submission.
The whole objective of digitization is to convenience the tax payers and not to harass them. We are conscious that the GST system is still evolving in its implementation. We are of the view that merely because there were no technical glitches in the GSTN with respect to the Petitioner’s TRAN-1 which was admittedly filed in time, the claim of the Petitioner, if it was otherwise eligible in law, cannot be rejected for no apparent fault on the part of the Petitioner. This cannot be the objective of the GST system or digitisation. Such a situation cannot be countenanced as it would be wholly unfair and unjust - this is a fit case for invocation of our writ jurisdiction.
The Respondents are directed to consider the case of the Petitioner and after looking into the merits of the claim and physically or otherwise verifying the amount of VAT as claimed by the Petitioner take such actions as may be necessary for transitioning the credit of such amount into the Petitioner’s credit ledger/ electronic credit ledger within four weeks from the date of this order.
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2020 (10) TMI 1216
Grant of regular bail - Sections 132(1)(b)(c) of the Punjab Goods and Service Tax Act - HELD THAT:- The criminal trial for the offences under Section 132 of the PGST Act, 2017 as also the arrest under Section 69 are without jurisdiction, having no backing of the constitutional provisions - The petitioner has been in custody for a period of 4 months and 14 day. The trial will take time to conclude, especially due to prevailing situation of Covid-19.
The moot question of law regarding the stage of initiation of prosecution under the Finance Act is involved; complaint is triable by a Magistrate; the petitioner is not required for further custodial investigation - Thus, the petition is allowed and the petitioner is ordered to be released on regular bail to the satisfaction of the learned trial Court/Duty Magistrate, subject to him furnishing bail/surety bonds.
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2020 (10) TMI 1215
Confiscation of vehicle alongwiith the goods - owner/driver/person in charge of the goods conveyance Shri has not tendered any documents for the goods in movement - defective documents - E-Way bill not tendered - HELD THAT:- The writ applicant is engaged in the business of Tobacco etc. The writ applicant holds registration under the GST. The writ applicant received an order for supply of 14694 Kgs of Tobacco from a firm situated at Meghalaya running in the name of M/s. J.J. Exports & Imports.
A show-cause notice was issued to the writ applicant in Form GST MOV-10 calling upon the writ applicant to show-cause as to why the goods and the conveyance should not be confiscated under Section 130 of the GST Act, 2017. It appears that before the writ applicant could respond to the notice issued in Form GST MOV-10, the final order of confiscation in Form GST MOV-11 came to be passed on the very same date, i.,e, 25th July, 2020 - It appears from the materials on record and the facts recorded above that no opportunity of hearing was given by the authority concerned to the writ applicant to meet with the notice issued in Form GST MOV-10.
The matter is remitted to the authority concerned for giving an opportunity of hearing to the writ applicant - Appeal allowed by way of remand.
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2020 (10) TMI 1214
Removal of Provisional attachment of Bank Accounts - Section 83 of the GST Act, 2017 - HELD THAT:- Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a precondition to the formation of opinion. The use of the word “may” indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law.
In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.
The order of provisional attachment of the five bank accounts of the writ applicant under Section 83 of the Act is quashed and set aside - Application allowed.
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Income Tax
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2020 (10) TMI 1205
Taxation of intermediary services - taxable as ‘fees for technical services’ - appellant company is registered and incorporated under the laws of Sweden and is a non-resident and tax resident of Sweden - CIT-A observed that the said intermediary services rendered by the appellant to BTIN does not satisfy the ‘Make Available’ clause and does not amount to FTS - HELD THAT:- Technical or consultancy services rendered should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider.
Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology.
Provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service. In our considered view, payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. For this, we derive support from the decision of De Beers India Minerals Private Limited [2012 (5) TMI 191 - KARNATAKA HIGH COURT]
Intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the intermediary services provided by the appellant to BTIN do not tantamount to FTS and accordingly, shall not be taxable in India. Accordingly, Ground Nos. is 4 to 6 taken together, are allowed.
Existence of Permanent Establishment [PE] - DRP has enhanced the income of the appellant on account of PE in India - HELD THAT:- The undisputed fact is that the supplies made under the BS-02 agreement were off shore supplies - In the case of Ishikawajima Harima Heavy Industries Ltd [2007 (1) TMI 91 - SUPREME COURT] has categorically held that only such part of the income as is attributable to the operations carried out in India can be taxed in India. Same view was taken in the case of Nortel Networks India International Inc & Ors [2016 (5) TMI 373 - DELHI HIGH COURT].
Appellant does not have any place of business in India and all business activities with respect to offshore supplies are carried outside India. The equipment supply has been manufactured at overseas manufacturing facility of the appellant and sale of equipment has occurred outside India and payment has also been received by the appellant and outside India.
DRP was misdirected in considering the contract RS 02. This contract is between BTIN Bombardier Transportation, Germany and DMRC and for this contract, Bombardier Transportation Germany has raised invoices on BTIN for offshore manufacture and supply of equipment whereas the contract under consideration is between DMRC and Consortium the appellant and BTIN towards offshore supply train control and signalling equipment - Entire findings of the DRP are based on erroneous appreciation of wrong facts and on such erroneous appreciation of wrong facts, the DRP held that BTIN is the PE of the appellant in India without appreciating the true facts that the appellant has no place of disposal in India in the office of BTIN from where the appellant could have conducted its business in India.
Once the return of income is selected for scrutiny assessment the Assessing Officer calls for hard copy of the return along with computation of income - no AO could proceed in another assessment proceeding without looking into the returned income qua its computation.
As TPO has examined the international transactions and has accepted the same to be at ALP, we do not find any merit the additions made by the DRP. We accordingly, direct the Assessing Officer to delete the addition of income attributable to PE - Decided in favour of assessee.
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2020 (10) TMI 1213
TP Adjustment - ALP of the guarantee commission charges provided by the Respondent Co. - Disallowance u/s 36(1)(iii) - acquisition of business by way of investing into shares of that company through either Special Purpose Vehicle or directly cannot be considered to be ordinary event of the business and therefore, cannot be termed as expenditure incurred for the purpose of assessee’s business, which is providing ITES services - HELD THAT: Special Leave Petitions are dismissed on the ground of delay.
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2020 (10) TMI 1204
Unexplained cash credit u/s 68 - professional fees received - HELD THAT:- Action of the AO in treating the sum shown as income in the form of professional fees received as unexplained credit u/s. 68 of the Act cannot be sustained. There is no dispute with regard to the identity and capacity of VHPL. The genuineness of the transaction cannot be disputed merely on the basis that no services were rendered. The basic presumption u/s. 68 is that the sum treated as unexplained has to be assessee’s money. TDS has been deducted on the sum payable by VHPL. The AO himself has found that VHPL does not have employees and assessee catered to the needs of VHPL. In these circumstances, the addition of ₹ 6 lakhs u/s. 68 was not justified.
Disallowance of expenses - Rental expenditure treated as unexplained expenditure u/s. 69C - HELD THAT:- The assessee has explained that apart from the rent for godown of the previous year, which was allowed by the AO at ₹ 15,600, the balance amount of ₹ 2,11,542 was rent paid to accommodation provided to the assessee’s director. This fact is evidenced in the Notes to the Accounts at Point No.9. In these circumstances, the addition u/s. 69C of the Act was not justified.
Disallowance of depreciation is use of BMW car by the director of assessee - HELD THAT:- There is use of car by director of company for the purpose of business of assessee and this is not disputed. There is nothing to show that property was used only for personal purposes. The car in question was a business asset and depreciation had to be allowed on the same. The AO could have disallowed depreciation on the ground of personal user in respect of a particular item of depreciable asset. He could not have disallowed the entire claim of depreciation. Disallowance of depreciation on the ground that there was no business activity, cannot also be sustained, for the reasons which will be given later.
Employee cost was salary paid to 3 employees and had to be allowed as a deduction - no dispute that salary was paid to employees of the assessee. No valid justification for the comments and conclusions of AO in the order of assessment which was endorsed by the CIT(Appeals).
Whether lack of business activity can result in disallowance of expenses incurred by the assessee? - HELD THAT:- Business of assessee had not come to a complete halt and it was a going concern and expenses in question had to be incurred to keep the concern going. We are therefore of the view that the expenses in question should be allowed as a deduction.
Tribunal in the appeal of the revenue for AY 2009-10, on the aforesaid reasoning had upheld the order of CIT(Appeals) deleting the addition made by AO by way of disallowance of expenses. We are therefore of the view that the expenses claimed by the assessee should be allowed as a deduction and it has also to be held that income of ₹ 6 lakhs has to be regarded as operating business income.
Disallowance of expenses u/s. 14A - HELD THAT:- Disallowance u/s.14A as made by the assessee in computation of income has already been subsumed in total income declared by the assessee.
Since the total income of assessee has been computed by the AO in the order of Assessment with the starting point as loss declared by the assessee in the return of income, which also includes disallowance u/s. 14A, there was no occasion to further make a disallowance u/s. 14A.
Disallowance made by the assessee is greater than the disallowance made by the AO. In these circumstances, we hold that no separate disallowance u/s. 14A is warranted in the facts and circumstances of the present case.
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2020 (10) TMI 1203
Assessment u/s 153A - incriminating material found during search or not - HELD THAT:- Without there being a clear finding in respect of their being incriminating material/unaccounted money unearthed during the course of search, validity of assessment order passed under section 153A cannot be ascertained. Hence we feel it proper to remand the issue back to Ld.CIT(A) for fresh consideration on this aspect about validity of invocation of section 153A in the light of decision of CIT vs Sinhagd Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] - In the event assessee succeeds on this aspect then nothing remains to be decided on merits. But if assessee fails on this aspect, then the issue on merits should be decided by Ld.CIT(A) afresh, in accordance with law.
CIT(A) remanded certain issues to Ld.AO to consider in accordance with law. In our opinion after the amendment to section 251, Ld.CIT(A) cannot remand any issue to Ld.AO and has to decide it himself. Hence we set aside the orders of Ld.CIT(A) in both the years under consideration and remand entire issues alleged by assessee, with a clear direction that, he should 1st decide the legal ground raised by assessee as indicated hereinabove and thereafter decide the issue on merits if assessee fails in the legal ground.
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2020 (10) TMI 1202
Disallowance u/s 14A r.w.r. 8D - CIT(A) deleting the disallowance - HELD THAT:- CIT(A) has decided the issue on the basis of the decision of Hon’ble ITAT in the assessee’s own case for the A.Y. 2012-13 & 2013-14. It is specifically mentioned that the AO had recorded the similar reason while disallowing the expenditure to earn the exempt income in all the three years. The assessee filed an appeal before the CIT(A) who confirmed the order of the AO but the assessee filed an appeal before the Hon’ble ITAT in which the expenditure was restricted to the extent of expenditure which has been declared by assessee. CIT(A) has reproduced the judgment of the Hon’ble ITAT in his order. The CIT(A) has also discussed the several law including the India Advantage Securities Ltd [2015 (6) TMI 140 - BOMBAY HIGH COURT] and Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT]
The facts are not distinguishable at this stage.
Needless to say that the AO nowhere recorded the satisfaction to arrive at this conclusion of reasonable expenditure incurred to earn the exempt income. No books of accounts were examined in this regard. We nowhere found any illegality and infirmity in the order passed by the CIT(A) in question. - Decided against assessee.
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2020 (10) TMI 1201
Revision u/s 263 - prohibition by law within the meaning of Explanation 1 to Sec.37(1) on claiming sales promotion expenses as deduction u/s.37(1) - providing freebies by pharmaceutical companies is a natural corollary violation of the provisions of MCI Regulations, 2002 - HELD THAT:- When the order passed by the Pr.CIT-2, Mumbai, under Sec. 263 of the Act, dated 31.03.2017 had been quashed by the Tribunal, and thus, is no more in existence, therefore, the consequential assessment framed by the A.O under Sec.143(3) r.w.s 263 cannot be sustained and has to meet the same fate. In the backdrop of our aforesaid deliberations, we herein, finding no infirmity in the view taken by the CIT(A) who in our considered opinion had rightly vacated the assessment framed by the A.O under Sec.143(3) r.w.s 263, dated 29.09.2017, therefore, uphold his order. The Ground of appeal No.1 filed by the revenue is dismissed.
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2020 (10) TMI 1200
Exemption u/s 10A - As per AO assessee has bifurcated the expenditure against the domestic income as well as export income AND profit from domestic sale does not qualify either adjustment of loss from export business u/s 10A - assessee explained that it has entered into a Master Outsourcing Agreement with C&S, USA to provide ITES and also entered into an agreement called Master Outsourcing Agreement with GHCL - CIT-A allowed deduction - HELD THAT:- Provisions of section 10A(4) of the Act have been explained elsewhere. In our understanding of the present facts and law, as both the export sales and domestic sales were done by the same undertaking, therefore, profit or loss of the undertaking needs to be calculated as a whole and profit from domestic sales cannot be charged separately to tax and adjusted against loss from export business in the present case. We, therefore, do not find any error or infirmity in the findings of the CIT(A). - Decided against revenue.
Staff travel foreign expenses - assessee was required to give nexus between travelling expenses incurred and business receipts as a whole and the designation of the employees who made the travelling - HELD THAT:- As the company is in export of call centre services, setting up a successful international call centre requires up-to-date technology, quality assurance, data analysis and continuous training of employees, international level of communication, skills, continuous business development and for this purpose, the top management and the other related employees went abroad to gain knowledge of the call centres to have international standards. As mentioned elsewhere, this is the first year of the business. Therefore, it is more important for the appellant company to update its key employees with advanced technology. - Decided against revenue.
Legal and Professional Expenses - AO formed a belief that the assessee has claimed expenditure under this head, which does not have any business nexus, and purpose for payment of legal and professional expenses are not justified - HELD THAT:- Assessing Officer fell into error in holding that the expenditure under this head does not have any business nexus. As mentioned in the earlier ground that the Assessing Officer should not decide which expenses are necessary for the purpose of carrying on the business and it is for the business-man to decide. Moreover, legal and professional expenses are paid to professionals for their legal and commercial advice which are necessary for carrying on business.
As the genuineness of the expenses have not been questioned and the Assessing Officer has merely questioned the legitimacy of the expenses which, in our opinion, is not correct. It is for the business- man to decide which expenses are necessary to further its business.- Decided against revenue.
TP Adjustment - unutilised capacity - alternative TP study done by the assessee - HELD THAT:- As total available man hours for calling during the year was 1,93,440 and total billed hours were 1,01,851/-. Thus, the idle hours of calls 91,589 which makes unutilised capacity at 47.35%. In the subsequent years, capacity utilisation has been increased from 50% to 100%. We, therefore, do not find any infirmity in deciding this issue on unutilised capacity by the CIT(A).
Alternative TP study done by the assessee fulfils the requirements of TP regulations and is found to be correct. OP/TC with C&S USA is 11.20% which is more than the average OP/TP of the comparable companies at minus 6.89%. Assuming that the OP/TC of the comparable companies as per the TPO is correct, which is at 9.52%, the assessee’s OP/TC being 11.20%, we are of the considered view that the international transaction is at ALP and needs no further adjustment and accordingly, no interference is called for in the findings of the CIT(A) - Decided against revenue.
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2020 (10) TMI 1199
Income declared in the survey carried out u/s 133A - Disallowance of salary to partners claimed u/s.40(b) - income declared in the survey and also offered for taxation - whether the income offered by the assessee is covered u/ss 69/69A of the Act as held by the AO or can be classified as `Business income’ as claimed by the assessee? - HELD THAT:- Amount of investment is only a measure for quantifying the amount of addition. Raison d’etre for the addition is not giving any satisfactory explanation about the source of income, which was used for investment. If source is explained, there can be no addition on account of investment.
We are confronted with a situation, in which both the source and destination are business inasmuch as the source of the income is business and the destination of such income is again in the nature of business assets, that is, stock, cash and receivables.
As a fortiori, such an income will be considered as `Business income’ covered under Chapter IV-D of the Act forming part of book-profit for the purposes of allowing remuneration to partners.
As the assessee offered ₹ 50,25,997/- in the return of income by treating the same as part of business profit, in our view, the AO was obliged to consider it the same way at the time of computation of “book profit” by allowing claim of remuneration etc. We, therefore, overturn the impugned order and restore the assessee’s calculation of remuneration to partners etc. - Decided in favour of assessee.
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2020 (10) TMI 1198
Levy of penalty u/s 271(1)(c) - Reopening of assessment - estimation of income by the Assessing Officer - HELD THAT:- Where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty.
Additions made by the AO were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation, which is purely a question of fact and there is a concurrent finding of fact recorded - Decided in favour of assessee.
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2020 (10) TMI 1197
Benefit of exemption u/s.54B(1) - AO denied the assessee’s claim on the ground that the she did not deposit the amount of capital gain in the designated capital gain account maintained with a bank before the due date of filing return u/s.139(1) - HELD THAT:- It is more than clear that section 139 is to be read here as section 139(4) and not to be confined to section 139(1) alone. As per the facts obtaining in this case, it is observed that the time u/s.139(4) was available up to 31-03-2014.
The assessee opened a bank account under the designated Capital gain account scheme on 03-08-2013 and purchased a new property on 26-08-2013. It is evident that the assessee complied with the requirement of section 54B(2) seen in the light of the time limit as per section 139(4) of the Act.
It is relevant to take note of the judgment of Hon’ble Madras High court in the case of Venkata Dilip Kumar [2019 (11) TMI 416 - MADRAS HIGH COURT] held that the requirement of depositing in the capital gain account scheme u/s.54(2) is directory. If the amount is utilized within the stipulated period of two/three years while depositing in the capital gain account scheme, there can be no denial of exemption u/s.54 because the substantial requirement of purchasing new property was satisfied. Coming back to the facts of the instant case, it is seen that section 54B(1) requires purchasing of new agricultural land within the period of two years from the date of sale of earlier agricultural land. The original agricultural land in this case was sold on 12-10-2011. New agricultural land was purchased on 26-08-2013, which is well within the given period of two years from the date of transfer.
Assessee complied with the conditions for availing exemption u/s.54B. Therefore, set-aside the impugned order and direct to grant the benefit u/s.54B as claimed. - Decided in favour of assessee.
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2020 (10) TMI 1196
Estimation of income - unverified purchases - Book results have been rejected by invoking the provisions of section 145(3) of the Act and the G.P estimation @ 30% has been done and the trading addition has been made by the AO - HELD THAT:- Regarding the challenge to the rate of G.P estimated by the AO @ 30% as against declared by the assessee @ 13.82%, we find that in the first round of appellate proceedings, the matter has been considered by the Hon’ble High Court wherein in respect of appeal filed by the Revenue, the matter has been decided in favour of the assessee and the G.P rate as sustained by the Tribunal @ 17% has been confirmed and the matter has attained finality.
Similar is the finding recorded by the ld CIT(A). Therefore, the AO is directed to apply G.P rate of 17% and separate addition in respect of unverified purchases is hereby deleted. In the result, the grounds of appeal are disposed off.
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2020 (10) TMI 1195
Liability for payment of arrears of salary - Implementation of the 6th Pay Commission to his employees - Certain liability - HELD THAT:- Assessee company calculated his liability and made provision in his books of accounts and claimed as expenditure, which are placed in the record. The liability calculated by the assessee company was a fixed liability which was to be paid to its employees towards arrear salary which cannot be also taken back from the employees.
As a certain liability for the impugned assessment year. The assessee company can make provision for the certain liability which is certainly to be paid, therefore, the assessee company has rightly made provision for the arrears of salary in his books of accounts.
This is a necessary expenditure, which is required to be deducted from the profit of the assessee company for the impugned assessment year while calculating the taxable profit because the liability has been imposed by the State Government of Odisha.
Assessee has calculated exact figure which has to be paid in different instalments later on as per instructions from the State Government Odisha which actually has been paid to the assessee’s employees. Case laws relied on by the ld. DR are also not applicable in the present facts of the case. In view of this, we are of the opinion that the ld. CIT(A) is not justified in confirming the addition made by the AO in this regard. Accordingly, we set aside the impugned order passed by the CIT(A) and allow the grounds of appeal of the assessee.
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2020 (10) TMI 1194
Addition u/s 69 - investment not recorded in the books of accounts - HELD THAT:- We find that there is no specific finding which has been recorded by the ld CIT(A) regarding the source of investment being the unsecured loan taken from Shrishtianand Builders and Colonizers - AO in the remand report has also merely gone by the bank statement of Shrishtianand Builders and Colonizers and confirmed the genuineness of the loan transaction.
Where a loan transaction has been claimed to be entered into by the assessee, the necessary attributes of such loan transaction in terms of tenure, purpose, rate of interest, repayment and hypothecation/guarantee for availing such loan transaction needs to be substantiated by the assessee and which needs to be examined by the AO. Disbursement of loan and its utilization for making the aforesaid investment needs to be verified.
There is no finding recorded by either of the two authorities and the matter has been summarily decided. Such a finding clearly deserve to be set-aside and the matter needs to be examined a fresh as per law.
Unsecured loan transaction with M/s Grass Field Villa Pvt Ltd to be satisfactorily explained which we again found to be unacceptable - CIT-A referred to balance sheet, income tax return and bank statement of M/s Grass Field Villa Pvt Ltd and another firm by name of M/s Grass Field Farms and Resorts Pvt ltd to hold the transaction to be duly explained however, he has again failed to consider the necessary attributes of such loan transaction in terms of tenure, purpose, rate of interest, repayment and hypothecation/guarantee for availing such loan transaction and no finding has been recorded by him in this regard. Similar finding has been recorded by the ld CIT(A) regarding loan transaction with Mahender Kumar Meena which deserve to be set-aside to be examined afresh. During the course of hearing, the ld AR has sought to submit additional evidence by way of bank statement of Shri Ashish Choudhary in support of another unsecured loan transaction of ₹ 26,00,000/- which again needs to be verified.
Investment being made out of assessee’s own funds - No finding recorded by either of the two authorities as to the claim of the assessee regarding investment being made out of assessee’s own funds. Once the investment has been made during the year vide registered sale deed dated 21.11.2011 and the assessee claims the same to be made out of his own funds, then, it is incumbent on part of the assessee to corroborate the same with his books of accounts and the taxing authorities are required to verify the same and record a finding as to their satisfaction or otherwise of such claim being made by the assessee and whether the source of such investment has been found duly explained or not.
Source of investment through loan transaction as well as own funds in purchase of the aforesaid pieces of land through registered sale deeds dated 21.11.2011 including that of the stamp duty needs to be examined afresh. - Both the appeals of the Revenue and the assessee are allowed for statistical purposes.
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2020 (10) TMI 1193
Deduction u/s 80P(2)(a)(i) - interest income earned - assessee company was a Credit Co-operative society - Assessee not eligible for deduction in respect of the interest income earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. - HELD THAT:- As relying on Jawala Cooperative Urban Thrift & Credit Society Ltd. [2014 (12) TMI 1227 - ITAT DELHI] and Tumkur Merchants Souharda Credit Co-operative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT] assessee is entitled for the deduction u/s 80P(2)(d) in respect of the interest income earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. Accordingly, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. - Decided in favour of assessee.
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2020 (10) TMI 1192
Penalty u/s 271(1)(c) - unproved claim of purchases - HELD THAT:- Hon’ble Supreme Court in CIT-2 Lucknow Vs. U.P State Bridge Corporation Ltd. [2018 (8) TMI 766 - SC ORDER] observed, that where a claim of expenditure is neither found inaccurate nor could be viewed as concealment of income on the part of the assessee, then, merely because the said claim was not accepted or acceptable to the revenue, that by itself would not attract penalty under Sec. 271(1)(c).
In the case before us, as the revenue had failed to disprove to the hilt on the basis of clinching documentary evidence the authenticity of the claim of the assessee of having made purchases from the aforementioned parties, therefore, merely on the basis of the unproved claim of purchases no penalty under Sec. 271(1)(c) could have been validly imposed on it. - Decided against revenue.
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2020 (10) TMI 1191
Condonation of delay - delay of 654 days - HELD THAT:- As submitted that there has been a change in the management of the company and the present tax matter pertaining to the period prior to change of management, it was decided that the same would be handled by the erstwhile management, however, due to change of management and lack of diligence on part of ershwhile employees, the appeal could not be filed. It has been further stated that the matter came to light of the present management on 11.07.2018 when an enquiry was made by the Assessing officer for payment of outstanding demand and thereafter, the appeal papers were prepared and appeal was submitted before the Registry
As soon as it came to know of the old tax matter pertaining to the period prior to change of the management, it took steps and filed the present appeal. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal - in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication on merits.
Assessment u/s 153A - Addition u/s 40(A)(3) - HELD THAT:- Where the reassessment completed u/s 153A without any reference to the incriminating material, following the binding precedents as cited above including that of the Jurisdictional High Court, the addition made by the AO u/s 40(A)(3) is not sustainable and the same is hereby deleted. In the result, the additional ground of appeal is allowed.
Addition u/s 40A - cash payments - Contentions advanced by the ld AR that the provisions of section 40A(3) cannot be invoked in absence of any claim of the expenditure in the profit/loss account as the expenditure incurred on purchase of land has been carried forward as stock-in-trade to the subsequent year? - HELD THAT:- Said issue is no more res integra and is covered against the assessee by the decision of Attar Singh Gurmukh Singh [1991 (8) TMI 5 - SUPREME COURT] confirming the decision of Kanti Lal Purshottam & Co. v. CIT [1985 (1) TMI 31 - RAJASTHAN HIGH COURT] and Fakri Automobiles v. CIT [1985 (7) TMI 36 - RAJASTHAN HIGH COURT]
Whether genuine and bonafide transactions not covered within the sweep of section 40A(3)? -Identity of the persons from whom the purchase of various land parcels have been made by the assessee has been established and the source of cash payments is clearly identifiable in form of the withdrawals from the assessee's bank accounts and the said details were submitted before the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. The genuineness of the transaction has been established as evidenced by registered sale deeds wherein the payments through cheque as well as cash has been duly mentioned and lastly, the test of business expediency has been met as the initial payments as insisted by the sellers most of whom are farmers have been made in cash to secure the transaction.
As held in case of Smt. Harshila Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non- observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case. - Decided in favour of assessee.
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2020 (10) TMI 1190
Revision u/s 263 - Claim of cost of improvement - variance in the stands of the two sides, the assessee and the builder - HELD THAT:- Factors such as enquiry with the owners regarding the flooring, etc., and, equally, the nature and uniformity of the difference between the two sets of flats/duplexes, etc. would only complete the enquiry, establishing, completely missing, whether the stated modification was actually carried out and, if so, at the assessee’s instance, justifying payment of additional sum by him, at whatever value, to the Builder. Again, while the assessee claims marble flooring only in the bed rooms, the report says of it being in all the rooms. What does that mean: Has the Builder, in benevolence, provided marble even where not sought by the assessee? The inspection by the inspector, i.e., assuming so, is, thus, worthless and, in any case, farcical, if not a pretense.
The said report – which does not concern the cost aspect – is to be, thus, at the highest, ignored, and, in the least, considered a sham document. That is, to be, either way, rubbished.
Coming back to our earlier observation of the Builder having in fact, rather than confirming, refuted the assessee’s stand as to the payment thereto being toward cost of improvement. To clarify matters, there was in fact no enquiry by the AO with the Builder.
AO notes a complete variance in the stands of the two sides, the assessee and the builder, and yet chooses to ignore the same, stating (in the ON) the same to be rather a reason for re-examination in the case of the Builder. The same is incomprehensible as, firstly, it is his prime duty to consider the validity of the claims of the assessee – wholly un-evidenced and, two, the avoidance of tax, if any, is, as would be apparent from the foregoing, in the assessee’s case.
Assessee has reported receipt of ₹ 45 lacs by cheque/s, as against ₹ 40 lacs stated by the Builder, toward cash component of the consideration on transfer of land. But, then, the same would stand to be confirmed with reference to the latters’ books and, where accounted, as it, being by cheque/s, would presumably be, does not result in/lead to any loss of revenue. As such, the AO seeking, on the contrary, a re-examination of the Builders’ case, is perverse and, in any case, itself proves the need for verification to resolve the contradicting claims of the parties.
Non-examination of the sale deeds by the AO, stated to be incorrect by Shri Purohit - There is a tacit admission of the relevance of the said deeds, as well as their examination by the assessing authority. He, however, could not exhibit their production in the assessment proceedings, much less their examination. Even as much as a letter or communication, i.e., in reply to the queries/requisition dated 16.3.2015, has not been brought on record. How could, one wonders, the direction by the ld. Pr. CIT for their production and examination by the AO, under the circumstances, be regarded as unjustified or not valid in law.
The assessee’s case is, in view of the foregoing, both, wholly unproved and wholly unexamined, i.e., qua the two aspects referred to by the ld. Pr. CIT.
To say, therefore, that the AO has taken a possible, reasonable view in the matter, is, under the circumstances, a complete misstatement on facts. He has, in our view, acted with haste and without due application of mind, accepting the assessee’s version, wholly unsubstantiated, without as much as causing its substantiation, much less verification thereof and, in fact, on one aspect, in face of contrary evidence/material. - Decided against assessee.
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2020 (10) TMI 1212
Increase the professional fees for filing of income tax return of each companies under liquidation - HELD THAT:- Pursuant to the request letter dated 05.09.2020 to the Office of Official Liquidator regarding enhancement of professional fees for filing income tax return of various companies in liquidation from present rate i.e. ₹ 1300/- to ₹ 2500/- per company per assessment year, accordingly, learned advocate for the applicant has made a request to revise the professional fees.
Having heard submissions made by learned advocate Mr. Pathik Acharaya and after perusal of the order passed the Co- ordinate Bench on 03.05.2013, and having regard to provisions incorporated in Income Tax Act, prayer appears to be reasonable and deserves to be partly accepted.
Professional fees for filing income tax of each company in liquidation is fixed at ₹ 2000/-. Official Liquidator is permitted to make payment as per facts mentioned in para 4 to 6 of this report.
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2020 (10) TMI 1189
NRI expenses - Ad hoc & surmiseful addition of 20% - Assessee is a non-resident banking company which carries on the business of banking and other related activities through its branches in India in accordance with the provisions of Banking Regulation Act, 1949 - HELD THAT:- Revenue has allowed the complete expenses including the 20% expenses disallowed in the earlier years. Hence, this issue is no more res integra. The appeal of the assessee on this ground is allowed.
Disallowance of Expenses - Assessee interest income from foreign currency loans to its Indian customers, taxable u/s 115A(3) - AO held that under section 115A(3), no deduction is permissible for the income covered under the said provision and the corresponding expenditure is to be disallowed - HELD THAT:- As relying on own case we direct the AO to adopt the following method for working out the disallowance of indirect expenses incurred in relation to such impugned interest income.
i) Work out the ratio between the total revenue viz a viz the gross income earned by the assessee on foreign currency loan.
ii) Based on the above ratio the indirect expenses will be determined for four months for the purpose of disallowance u/s 115A of the Act.
Addition u/s 14A - Disallowance of Expenses on Tax Free interest are foreign currency Syndicated Term Loan AND Disallowance of Expenses out of Dividend Income - HELD THAT:- While there is no dispute regarding the disallowance of expenditure incurred in relation to exempt income under both the heads, the Act prescribes proper procedure of computing such disallowance u/s 14A(2). We find that the revenue has not invoked the procedure as specified under the said section wherein the AO has to record his dissatisfaction as to the correctness of the claim with regard to the accounts of the assessee. Owing to the procedural tumble, we hereby delete the disallowance made by the Assessing Officer.
Disallowance of Club Expenditure - HELD THAT:- The club membership fee is taken for promoting business of the bank and for better customer relationship. No asset of enduring in nature has been created. Hence, following the order of the ITAT for the assessment 1996-97 dealing with expenses of club membership fee and keeping in view the fact that no new asset has come into existence, we hereby delete the addition confirmed by the ld. CIT (A).
Disallowance of Fee for Technical Services u/s 37(1) - CIT-A confirmed part addition - HELD THAT:-Expenses have been incurred for Indian Banking business - on going through the Memorandum of agreement, tax report, notes to account and the details of the tax payment under Article 12 of the Indo-Australian Treaty and on going through the challans enclosed we hereby hold that the fees for access and user technology related to services for Credit Cards Services is meant for the business of the assessee’s in India and such expenses are allowable to be claimed by the assessee u/s 37(1).
Attributing income to the PE, under the DTAA - HELD THAT:- While the Assessing Officer is right that the income arising in India from transactions in India by using credit cards of foreign branches should be taxed in India, this income can only be the commission income received by the Indian branch and such commission income already stands included in the hands of the Indian branch acting as an Acquiring bank. The income to the foreign branch from the credit given to its card holders outside India cannot be taxed in the hands of the Indian branch since it has not arisen in India and also it cannot be attributed to the assets and activities of the Indian branch, as is required by Article 7 of the DTAA. - Decided against revenue.
Club expenses have been allowed as allowable business expenses by the ITAT from the assessment years 1992-93 to 1998-99.
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2020 (10) TMI 1188
Income accrued in India - taxing the receipts from TCL as 'Royalty' under Section 9(1)(vi) of the Act as well as Article 13(3)(a) of the India-UK Tax Treaty - HELD THAT:- As decided in own case [2018 (12) TMI 1321 - ITAT MUMBAI] the amounts received by the assessee from TCL for providing Satellite Telecommunication Services is not to be held as royalty in its hands. The Grounds of appeal Nos. 2 to 5 are allowed in terms of our aforesaid observations.
PE in India - Liaison Office (LO) of the assessee constituted its PE in India and that the Land Earth Stations (LES) constituted a PE of the assessee in India - HELD THAT:- A.O/DRP had in the aforesaid preceding years concluded that the LO and LES were to be treated as the PE on the assessee in India, remains the same, as are involved in the appeal of the assessee for the year under consideration, we therefore respectfully follow the aforesaid order of the Tribunal. Accordingly, in the backdrop of our aforesaid observations, we herein conclude that the assessee did not have any PE in India during the year under consideration. The Grounds of appeal Nos. 6 & 7 are allowed in terms of our aforesaid observations.
Computing of the income of the assessee attributable to its PE in India - profitability on an adhoc basis at 30% of its gross receipts from TCL by applying Rule 10 of the Income Tax Rules, 1962 - HELD THAT:- Since we have upheld the primary stand of the assessee that there does not exist any PE of the assessee in India, thus, the dispute in Ground of appeal No. 8 having been rendered as merely academic is dismissed as infructuos.
A.O levying surcharge, secondary education cess and higher secondary education cess over and above the tax computed at the rate prescribed under the India-U.K. tax treaty on the receipts of the assessee while calculating its income tax liability for the year under consideration - HELD THAT:- Tax computed at the rate prescribed under the India-U.K. tax treaty is not be subjected to any additional taxes in the form of surcharge or education cess. We thus set aside the view taken by the lower authorities and direct the A.O to recompute the tax liability of the assessee in terms of our aforesaid observations. The Ground of appeal No. 9 is allowed.
Granting TDS credit - HELD THAT:- As the adjudication of the said issue would require verification of the records, we therefore, restore the matter to the file of the A.O to verify the factual position. In case there is a short credit of TDS allowed to the assessee, then the credit for the balance amount shall be allowed by the A.O, as per law. Ground of appeal No. 10 is allowed for statistical purpose.
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2020 (10) TMI 1211
Disallowance u/s 14A read with Rule 8D - whether there is no exempt income received even if the investments have been made in the subsidiary company of the Assessee? - HELD THAT:- Tribunal found that the investments were made in by their assessee and this cannot be construed that investment is made for earning exempt income.
Tribunal rightly held that the provisions of Section 14A of the Act would not stand attracted. Therefore, the order passed by the Tribunal requires to be confirmed.- Decided in favour of assessee.
Section 43A Applicability - Assessee is acquiring the assets in India and in consequence of loan taken in Indian currency for acquisition of such asset which was converted into foreign currency loan increasing the liability as expressed in Indian Currency - HELD THAT:- Tribunal decided the said position against the Revenue in the assessee's own case [2020 (10) TMI 1164 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2020 (10) TMI 1210
Computation of the ALP - Reason for selection by CASS (Computer Aided Search Selection) - approval of the PCIT for reference of the matter to the TPO - HELD THAT:- The petitioners’ submission to the effect that the reason for selection of scrutiny by CASS only involves a numerical reconciliation is, in our view an over simplification of the reason stated for selection. Perhaps the officer might have been more detailed in the choice of words employed so as to specifically refer to the issue of total employee cost. Non-reference to this is not fatal as the reason for selection by CASS has been produced and placed on record by the Officer while seeking approval of the PCIT for reference of the matter to the TPO.
After the expiry of the interim protection by this Court on 29.03.2019 the Assessing Officer has issued a show cause notice dated 11.10.2019 in response to which the petitioner has replied on 23.10.2019 enclosing various details on the computation of the ALP as sought for by the Officer. The affidavit filed in support of the writ petition however, is silent in regard to these facts. The petitioner has thus not only cooperated and participated in the conduct of assessment but has also filed objections before the DRP that are pending disposal. WP disamissed.
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2020 (10) TMI 1209
Capital gain computation - adoption of stamp duty value fixed by the DRO (Stamps) - section 50C applicability - Whether the stamp duty value/guideline value as on the date of presentation of the sale document for registration is relevant for the provisions of Section 50C and not the enhanced value determined under the Stamp Duty Laws subsequently? - HELD THAT:- Sub Registrar entertained the document for registration, did not accept the value computed at ₹ 400/- per square feet for the purpose of calculating the Stamp duty payable under the Indian Stamp Act on the said deed of conveyance, but determined the value of the property at ₹ 555/- per Square feet. Unfortunately, the Assessing Officer, while reopening the assessment, took note of this figure namely ₹ 555/- per square feet and recomputed the total sale consideration.
The recomputation of the total sale consideration based on the higher value fixed by the Sub Registrar is for the purposes of computing Stamp duty is wholly erroneous. - Decided in favour of assessee.
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2020 (10) TMI 1208
Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.
In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India.
The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.
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2020 (10) TMI 1207
Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.
In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India.
The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.
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2020 (10) TMI 1206
Revision u/s 263 - order of reassessment proceedings cannot be treated as prejudicial to the interest of revenue - HELD THAT:- No question of law arising in the present appeals by the Revenue, as the learned Tribunal has clearly noted in its impugned order quoted above that the above capital gains have already been subjected to tax in the subsequent assessment years AY 1988-1999 to 2000-2001. He submitted that for the present assessment year AY 1997-98, even though the Assessing Authority himself has accepted that there were no transfer of land in the Joint Venture Agreement for development of the property had taken place in this AY 1997-98, still by resorting to Section 263, it cannot be said to be prejudicial to the interests of Revenue, as held by the learned Commissioner, which has been rightly set aside by the learned Tribunal by the impugned order and therefore, no question of law arises.
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2020 (10) TMI 1187
Deduction u/s 80P - whether assessee is eligible for deduction u/s.80P(2) and not engaged in banking business? - HELD THAT:- As decided in own case [2020 (8) TMI 361 - ITAT CUTTACK] Assessee society is eligible for deduction u/s. 80P(2)(a)(i) of the Act and the assessee will get the benefit of Circular issued by the CBDT No. 37/2016, dated 02.11.2016 as quoted above. Since we have allowed the legal ground of assessee, other grounds raised by the assessee on merits are for academic purposes. Thus, appeal of the assessee is allowed on legal ground.
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2020 (10) TMI 1186
Addition u/s 68 - addition made by the AO on account of credit balance appearing in the accounts of concerned two creditors having been found to be bogus - alternative recourse to sub-section (1) of section 41 suggested - HELD THAT:- Provisions of section 41(1) can be invoked only when trading liability incurred by the assessee is subsequently found to have seized to exist in the relevant year and the onus in this regard is on the AO to establish on evidence that there was indeed remission or cessation of such liability.
In the present case, this onus was not discharged by the AO and addition on account of balance appearing in the name of concerned two creditors was made by him u/s. 68 of the Act by treating the same as unexplained cash credit because of the failure of assessee to establish mainly the genuineness of said creditors. This position clearly apparent from record, we are of the view that recourse at this stage cannot be made to sub-section (1) of section 41 to confirm the addition made by the AO u/s. 68 as sought by the ld. DR.
Uphold the impugned order of CIT(A) restricting the addition made by the AO u/s. 68 thereby giving a which represented the opening balance and pertained to transactions of earlier year. - Appeal of Revenue dismissed.
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2020 (10) TMI 1185
Validity of reopening of the assessment - information received by the ITO Ward-2, Bharatpur that during the search and seizure operation under section 132(1) - jurisdiction of the AO - development of the Revenue Residency Scheme and allotment of the plots to the members - HELD THAT:- No substance in the objection raised by the assessee regarding validity of reopening of the assessment. As regards the jurisdiction of the AO who issued the notice under section 148, it is not in dispute that the ITO Ward-2 Bharatpur received the information and issued notice under section 148 was having territorial jurisdiction over the assessee. However, only after the assessee filed the return of income revealing her status as Salaried Person, the case of the assessee was transferred to the ITO Ward-3, Bharatpur who was having jurisdiction over the salaried assessees. No error or illegality in the initiation of proceedings under section 148 by ITO Ward-2, Bharatpur.
Non disposal of the objection against the notice under section 148 - Only a reply to notice issued by the AO dated 30.09.2016 and not the objections against the notice issued under section 148 dated 30.03.2016. Even otherwise, this letter was filed by the assessee at the fag end of the assessment proceedings as the assessment order was finally passed on 3rd November, 2016. Therefore, this letter cannot be considered as an objection against the notice issued under section 148 of the Act. Hence in the absence of any objection raised by the assessee, there is no question of disposal of the same by the AO. Accordingly, there is no merit or substance in ground no. 2 of the assessee’s appeal.
Addition on account of On Money paid by the assessee - addition made on the basis of the statement of 3rd party - HELD THAT:- A/R has given an evasive reply that those were not given to the assessee by the society. Thus in the absence of any contrary material, the facts brought on record by the AO which were duly supported and established by the seized material as well as the facts explained by Shri Madan Mohan Gupta in his statement cannot be disputed.
Assessee has not produced any documentary evidence to controvert the seized material and statement of Shri Madan Mohan Gupta. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT (A) confirming the addition - Decided against assessee.
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2020 (10) TMI 1184
Characterization of income - Capital or revenue receipt - disallowance received by the appellant from Dubai Almn. Company Ltd., towards advance against equity by treating the same as revenue in nature, only on the ground that the appellant has credited the same to P&L account - HELD THAT:- At the time of receipt of money and at the time of written back the amount received from DUBAL, it was revenue receipt and it never took the character of capital receipt as DUBAL took exit from the joint venture agreement before financial closure of the project and DUBAL did not claim or exercise any right or privilege against the assessee company regarding impugned amount.
The impugned amount written back to the statement of profit and loss account of the assessee is the amount funded additionally by DUBAL and same was never converted into equity shares upon occurrence of the financial closure of the project and thus, the impugned amount has been written back to the statement of profit and loss account by the assessee company is a revenue receipt and the liability against the assessee company stood ceased when the amount was written off by DUBAL without any claim in future. No hesitation to hold that the addition made by the AO and confirmed by the ld. CIT(A) is correct and sustainable.
Before we record our final findings and logical conclusion on the issue, we also feel it necessary and appropriate to consider the ratio of decisions relied upon by the assessee.
Section 41(1) of the IT Act particularly deals with the remission of trading liability whereas in that case, waiver of loan amounts to cessation of liability other than trading liability. In the case before us, the amount was written off by DUBAL and same was written back by the assessee to the statement of profit and loss account as an extraordinary item.
In the case of JSW Steel Limited [2017 (4) TMI 47 - ITAT MUMBAI] the issue before the Tribunal was whether the ld. CIT(A) erred in not reducing the net profit being waiver of dues while computing the book profits under section 115JB, wherein, the Tribunal held that the capital surplus on account of waiver of dues neither is taxable nor can be included in computation of book profit u/s. 115JB. This decision has also no application in the case at hand having distinguishable facts and circumstances. - Decided against assessee.
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2020 (10) TMI 1183
Revision u/s 263 - payment of commission to the related and unrelated parties - whether the order of the AO is erroneous and prejudicial to the interest of revenue? - HELD THAT:- Notice alongwith questionnaire was replied by the assessee regarding payment of commission alongwith required confirmations which shows that the commission payment has been made after deducting TDS @ 10% and it is not a case of Pr. CIT that payment of commission has been made by the assessee without making any TDS. This show cause notice and questionnaire issued by the AO and replied filed by the assessee alongwith relevant documents shows that the AO also made enquiry on the issue on payment of commission and TDS thereon and thereafter allowed the claim of the assessee pertaining to payment of commission. Therefore, it cannot be alleged that the AO has not made any enquiry before allowing payment of commission to the related and unrelated parties.
In reply to show cause notice u/s. 263 of the Act, the assessee categorically explained that the assessee earns commission from different companies on procuring order from Government Health Departments & Hospital & Municipal Corporation and the assessee being individual cannot move from one place to another place for enhancement of business.
Different persons received commission against work brought by them and these commission agents against receipt of commission provides services not only to procure orders but also see that proper delivery of goods are made in time and also look after that payments are received from the consignee in time. These facts have not been negated by the ld. Pr. CIT in any manner, thus, we hold that the payment of commission has direct nexus with the services rendered by the recipient of commission and it was paid against their contribution in the enhancement of business of assessee. Thus, it was to be held that the commission has been paid for the business purpose and the AO was right in allowing the same after due verification and examination through proper enquiry.
Introduction of capital - AO show caused the assessee regarding eight amounts including amount i.e. introduction of capital by the assessee and from the copy of bank statements, which shows that the assessee introduced capital by way of transfer through cheques on 27.3.2014 on 15.11.2013, to the firm Gandhi Agencies, which shows that ₹ 15 lakhs was introduced through banking channels. So far as which was introduced in cash is concerned, from the copy of balance sheet of the assessee as on 31.3.2013, it is clear that the assessee has cash in hand more than ₹ 8 lakhs, which was brought forward from financial year 2013-14 and apart from this, the assessee also received gifts from his daughter and mother.
From the copy of saving bank statement, we also notice that the assessee also withdrew ₹ 1 lakh on 31.12.2013 and the amount of cash in hand was amount withdrawn from the bank and amount of gifts is more than ₹ 13 lakhs which self-explained the source of ₹ 13 lakhs introduced in cash to the capital account by the assessee during the relevant period. Therefore, acceptance of explanation of the assessee by the AO in this regard is also justified, proper and reasonable, which cannot be held as erroneous and prejudicial to the interest of the revenue in absence of any other adverse materials brought on record during proceedings u/s. 263 of the Act.
AO had conducted sufficient and adequate enquiry on all three issues and it is not a case of no enquiry or insufficient enquiry. - Decided in favour of assessee.
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2020 (10) TMI 1218
Addition on account of provision for dam maintenance - allowable expenditure - assessee follows mercantile system of accounting as per which liability for expenses can be recognized and claimed only when the liability crystallizes - HELD THAT:- CIT-A observed that though the expenditure have been incurred by the assessee for dam maintenance, it was kept under provision account for settlement with the government against amounts receivable from the Government - CIT(A) relying on the decision of this Bench of the Tribunal in assessee's own case allowed the provision for dam maintenance. - Decided against revenue.
Disallowance of depreciation - assessee did not produce the details of the assets on which depreciation has been claimed @ 25% - HELD THAT:- Assessee company appearing before the Ld. A.O. vide its written submission explained that the miscellaneous assets as aforesaid have been considered as plant and machinery and accordingly the depreciation as provided under the I.T. Rules for the plant and machinery have been claimed by the assessee on such assets - A.O. without appreciation the explanation and observing that in absence of the break up of details of such assets not being furnished has disallowed the claim of depreciation on such assets. In this connection, it is pertinent to state here that during the previous year i.e., relevant to the Asst. Year 2004-05, no disallowances as called for on these assets. Since presently the assessee has explained the particulars of assets and their classification under the head plant and machinery, the assessee company is entitled for depreciation as claimed. Under the circumstances the disallowance on this account are not sustainable on fact and law - Decided in favour of assessee.
Addition towards provision for guarantee commission - not an allowable expenditure - CIT(A) held that the claim of guarantee commission is in accordance with the business requirement and as such allowable - HELD THAT:- As per letter No. SG-21/07/3810/F dt. 29.1.2008 relating to the Dy. Accounting General (Commercial) from the Addl. Secretary to the Govt. of Odisha, the guarantee commission could not be reduced since the guarantee amount given by the Government of Odisha has not been reduced. The appellant is required to pay the guarantee commission on the maximum amount of guarantee irrespective of the loan outstanding as long as the guarantee amount itself has not been reduced. In view of the same, the claim of guarantee commission is in accordance with the business requirement and as such allowable. The addition made by the AO in this regard is deleted - Decided against revenue.
Provision for Leave Encashment - HELD THAT:- Hon'ble Calcutta High Court in the case of Exide Industries Ltd. Vs. Union of India, [2007 (6) TMI 175 - CALCUTTA HIGH COURT] the Hon'ble Calcutta High Court has struck down the provisions of Section 43B(f) of the Act as being arbitrary and unconscionable. Thereafter the Hon'ble Apex Court in case of Exide Industries Ltd. [2009 (5) TMI 894 - SC ORDER] has stayed the operation of the judgment of Hon'ble Calcutta High Court. Considering the above position, the Tribunal on the similar issue in case of Ernst and Young P. Ltd. [2015 (3) TMI 931 - ITAT KOLKATA] has restored the matter to the file of AO for fresh adjudication - Respectfully following the order of the Tribunal and we restore this issue to the file of AO to examine and allow the claim of the assessee and we allow this ground of appeal of the assessee for statistical purposes.
Non-disclosure of dues from DOWR - HELD THAT:- Assessee has already conceded to the addition made by the AO for which the CIT(A) has upheld the action of AO. Accordingly, we do not see any good reason to interfere with the findings recorded by the CIT(A) in this regard.
Prior Period Expenses - HELD THAT:- As decided in [2017 (9) TMI 1902 - ITAT CUTTACK] we restore the matter to the file of AO who shall examine the genuineness and crystallisation of the expenses in the financial year and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information.
Non-disclosure of interest on advance to contractor - HELD THAT:- Assessee during the course of hearing submitted that since the advance was given to contractor for capital construction by the assessee, therefore, the same deserves to be allowed. In view of the above, we restore the issue to the file of AO and direct the AO to examine the nature of advance as to whether it was given during the period of construction before commencement of commercial production of the assessee. If it is found that it was given during the construction period for the capital asset construction, the assessee's contention may be accepted. Accordingly, this ground of appeal of assessee is allowed for statistical purposes.
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Customs
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2020 (10) TMI 1182
Target Plus Scheme - Direction to the Respondents to issue balance/additional duty credit scrips - star export house - HELD THAT:- It is evident that Petitioner has submitted the no dues certificate as prescribed. The quantum of claim of the Petitioner to the extent of ₹ 4,22,16,175.00 is also admitted by the Zonal Committee, Mumbai. However, according to the customs representative dues relating to non-submission of BRC are pending.
What is required to be submitted is a certificate certifying that no dues are pending against the government including its departments - Without entering into details, we can safely say that the word ‘dues’ means something which is payable. Shorn of semantics, the word ‘dues’ means something which a person has an obligation to pay e.g., a debt or a tax; something which is enforceable. Juxtaposing the word ‘dues’ with the word ‘government’, the expression ‘government dues’ would mean something which is payable to and enforceable by the government on account of a legal obligation or a contract. Therefore, the amount due has to be first quantified by following the due process and as explained by the Supreme Court in the context of the scheme it should be payable to the government and subsisting i.e., not paid.
The Target Plus Scheme is a beneficial provision with the objective to accelerate growth in exports by giving incentives to those export houses whose exports show an annual upward trend. Initially the benefits were graded i.e., 5%, 10% and 15% depending upon the percentage of incremental growth in exports. Petitioner fell within the 15% category for the year 2005-2006. Thereafter, by an amendment on 12.06.2006, the percentage of incentives was made uniform i.e., 5% which was given retrospective effect from 01.04.2005 - Petitioner is entitled to the balance 10% benefit for the same period for which the 5% benefit was granted being within the 15% category. When one part of the benefit for a year was given, question of withholding of the remaining benefit for the same year does not arise. Exports are of the year 2005-2006. We are now in 2020. 14 years have lapsed in between. Such inordinate delay can only frustrate the very objective of the scheme.
Respondents are directed to issue the necessary licence to the Petitioner for the balance/additional benefit of duty credit scrips for the amount of ₹ 4,22,16,175.00 for the year 2005-2006 under the Target Plus Scheme within a period of four weeks from the date of receipt of a copy of this judgment - Petition allowed.
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Corporate Laws
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2020 (10) TMI 1179
Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of all the petitioner companies to the proposed scheme, as well as no objections filed by the regional director, northern region, the official liquidator, and the income tax department and being satisfied in view of affidavit of undertaking filed by the transferee company, there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 & 232 of the companies act, 2013. The petitioner however remain bound to comply with the statutory requirements in accordance with law.
As a sequel, sanction is hereby granted to the scheme under section 230 & 232 of the Companies Act, 2013. The petitioner however remain bound to comply with the statutory requirements in accordance with law - Application allowed.
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2020 (10) TMI 1178
Restoration of name of the Company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored.
Appeal allowed.
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2020 (10) TMI 1181
Grant of Bail - Oppression and Mismanagement - appointment of Applicant as Director on the basis of forged director - It is alleged that Ex-Director without discussion with other Directors prepared forged documents and ousted his wife from the Directorship - HELD THAT:- This court finds that the dispute relates to the mismanagement of the affairs of the Pvt. Ltd. Company but the FIR has been lodged under provisions of IPC and procedure under Cr.P.C has been adopted in prosecution of applicant. The Companies Act, 2013 is a complete code which provides for the procedure of conduct investigation into the affairs of the company where allegations of fraud are made against the office bearers of the company. The allegations regarding the offences committed by the applicant should have been investigated under the provisions of companies act aforesaid.
Code of Criminal Procedure, 1973 is a code by itself as far as procedure for arrest, investigation and prosecution of the offence under Companies Act is concerned. The procedure provided under the Companies Act does not excludes the application of Cr.P.C completely. Section 212(6) excludes the applicability of Cr.P.C only for the limited purpose for treating the offence under Section 447 cognizable. Section 438 of the Companies Act makes it clear Section 212(14) of the Companies Act provides that the central government has to provide whether prosecution should be launched against " the companies and its officer or employees, who are or have been in employment in the company or any other person directly or indirectly connected with the affairs of the company." Therefore it appears that when the director of company is prosecuted the company should also be arrayed as an accused. Even if the argument of the learned counsel for the informant is accepted that the applicant was illegally inducted in the company as director by fabrication of resolution, even then the prosecution under Section aforesaid can be launched against the applicant under the provisions of Companies Act since Section 212 (4) Cr.P.C clearly provides "prosecution of any other persons directly or indirectly connected with the affairs of the company".
In the present case the entire investigation has been conducted by the Investigating Officer of the police and not by the Special Fraud Investigating Officer appointed under the Companies Act. First proviso to Section 212(6)(ii) provides that no person accused of any offence under Section 447 of the Companies Act shall be released on bail. The only exception is a person who is under age of 16 years or a woman or a sick or infirm person. The applicant in this case is a woman whose prayer for bail can also be considered under Section 437(1) Cr.P.C. In the present case there is no approval from the central government for Investigating Officer to investigate the offence alleged against the applicant under Section 212 of the Companies Act, 2013. Regarding criminal history of the applicant is appears that all the case have been lodged by or at the behest of her fellow directors who are part of the same company.
The Court is of the view that the applicant has made out a case for bail - bail application is allowed.
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2020 (10) TMI 1180
Rearrangement of Shareholding - Demand of sums towards transfer fee - non-utility penalty in respect of plots owned by the petitioner - whether by change of name from TAGROS Chemicals India Limited to TAGROS Chemicals India Private Limited would tantamount to change of name in the company and therefore invite levying of transfer charges? - HELD THAT:- What has been done is rearrangement of shareholding within the family without there being a change in the total shareholding of the company. No new separate legal entity has been created - keeping in mind the provisions of Section 23(3) of the Companies Act and Section 14 thereof, what has really happened is that the change in the name of the company is only by adding the word 'private'. As per Section 13(2) of the Companies Act, any change in the name of the company shall be subject to the provisions of sub sections (2) and (3) of section 4 of the Act and shall not come into effect except with the approval of the Central Government in writing. The proviso to the said section says that no such approval will be necessary when the only change in the name of the company is deletion therefrom or addition thereto of the word 'private' consequent on the conversion of any one class of the company to another class in accordance with the provisions of the Act. Thus, any change that is brought about in the name of a company by either deletion or addition of the word 'private' would not require written approval.
What appears to be the legal position from reading the aforesaid sections is that mere change in the name of company from public to private would not tantamount to a change in the constitution of the company since this is brought out only with a view for the purpose of complying with the requirements viz-a-viz the government under the Companies Act. There is no change in the constitution thereof. Accordingly, the stand of the corporation for levying of transfer fees is bad.
Non utility charges or penalty for non utilisation of plots - HELD THAT:- It is evident from reading the notification of the Ministry of Environment and Forests dated 25.08.2009 that the Government of India enforced a moratorium on construction due to the absence of environmental clearance. The moratorium was lifted only after 7 years by a memorandum dated 25.11.2016. No environmental clearance could be obtained and no permission for construction could be granted during this period and as a result of facts beyond the control of the petitioner, the plots remained unutilised. Therefore even the recovery of penalty and non utilisation charges are without authority of law. Merely because in one of the petitions, the petitioner has paid such charges which otherwise he was not obliged to pay in view of the moratorium, that itself would not result in ousting the petitioner from the merits of that petition.
The action of the respondent Corporation in demanding transfer fee and non utility penalty in respect of the plots is held to be illegal and contrary to law - Petition allowed.
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Insolvency & Bankruptcy
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2020 (10) TMI 1177
CIRP proceedings against the personal guarantors to corporate debtors - Transfer of the Writ Petitions filed before High Courts to this Court - vires of Section 95, 96, 99, 100, 101 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Writ Petitions that are pending in the High Courts pertaining to the challenge to the Notification dated 15.11.2019 and related issues have to be transferred to this Court. Transfer of the Writ Petitions to this Court would avoid conflicting decisions by the High Courts which are in seisin of the Writ Petitions. The Insolvency and Bankruptcy Code is at a nascent stage and it is better that the interpretation of the provisions of the Code is taken up by this Court to avoid any confusion, and to authoritatively settle the law. Considering the importance of the issues raised in the Writ Petitions which need finality of judicial determination at the earliest, it is just and proper that the Writ Petitions are transferred from the High Courts to this Court.
The Writ Petitions are giving rise to the above Transfer Petitions which are pending before the High Courts to this Court. The Registries of the High Courts are directed to transmit the records of the Writ Petitions forthwith.
Petition allowed.
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Indian Laws
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2020 (10) TMI 1176
Land acquisition - Whether the finding of the learned single Judge that the agreement executed by and between the writ petitioners and the District Collector could be treated as an award in terms of Act, 2013? - HELD THAT:- The determination was done in terms of the provisions of the Act, 2013 and it also takes in acquisition of land on the basis of agreement. Thus, the condition contained under the agreements granting liberty to the writ petitioners to make claims on account of the act 2013 cannot be said to be a totally strange or alien condition. To put it otherwise, the said condition makes absolute sense, since it really intended to protect the interest of the land owners which has a clear correlation with the objective of Act, 2013 for payment of adequate and fair compensation, apart from other provisions for rehabilitation and resettlement, for ensuring that the cumulative outcome of compulsory acquisition should be that, affected persons become partners in the developmental activities. Having acted upon the unilateral agreement executed by the writ petitioners in favour of the District Collector and paid the compensation in terms of that agreement and secured possession of the land accordingly, the District Collector cannot turn around and attack the agreement stating that the District Collector is not bound by unilateral agreement executed by the writ petitioners. Admittedly, it is an essential condition of the agreement that while re-determining the value of the land surrendered by the writ petitioners under the provisions of the Act, 2013 and the Rules framed thereunder, the petitioners are entitled to get further compensation or package offered by the Government over and above the compensation already fixed and further that they would be eligible to receive the same. If there was no intention to act upon that part of the agreement, the District Collector should not have accepted the agreement in toto.
Having not done so, the District Collector is not at liberty to resile from the said essential term of the agreements. Above all, the requisitioning authority is the Corporation of Kochi and at the end of the day further compensation if any to be paid, the financial sufferer is the said Corporation and accordingly, looking from that angle, the appellants cannot be strictly termed as aggrieved persons.
Yet another contention advanced by the learned Senior Government Pleader, Sri. Tek Chand, is that in terms of Annexure A3 judgment produced along with the writ appeal, the writ petitioners are not at liberty to make any claims in terms of the determination of compensation as per Act, 2013, since no income tax was deducted consequent to the purchase of the land by the Government in terms of the agreement offered by the writ petitioners. However, the said issue is guided by Section 96 of the Act, 2013 dealing with exemption from income tax, stamp duty and fees, which stipulates that no income tax or stamp duty shall be levied on any award or agreement made under this Act, except under Section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. Therefore, it is unequivocal that by virtue of the specific stipulation contained under section 96 of Act 2013, no income tax can be levied on any award or agreement. Which means, the appellants are not entitled to get any advantage on the basis of Annexure A3 judgment. Said so, we do not find any force in the said contention also.
The appellant have not made out any case, justifying interference in the judgment of the learned single Judge exercising the power under Section 5 of the Kerala High Court Act, there being no error in exercising the discretion conferred under Article 226 of the Constitution of India, or other legal infirmities - Appeal dismissed.
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2020 (10) TMI 1219
Approval of revised rates of license fees for the advertising hoardings in private properties - collection of license fees in garb of tax for the advertisement hoardings in the private properties - HELD THAT:- The petitioners have consistently paid the license fees on the advertisement hoardings in a private property as per the provision of Section 386(2) of the GPMC Act prior to 1992 onwards and at no point of time the petitioners have challenged the power to levy the license fees under the provisions of Section 386(2) of the GPMC Act. It is also pertinent to note that in the year 2012, the petitioners agreed for levy of the license fees by enhancing the rate by 10% every year after initial embargo of 5 years. Thus, the petitioners can be said to have waived the right to challenge the power to levy of fees for the license for outdoor advertising hoardings in private properties.
When an Article of Constitution is an enabling provision, it does not mean that the State is obligated to provide for such a statute and on that ground existing laws could be stuck down only on that premise - Section 386(2) of the GPMC Act is in operation since 1949 and the challenge thereto being ultra vires to the Articles of the Constitution would result in detriment to the public interest since the amount of license fee being collected by the Municipal Corporation along with the other amount collected by way of tax or otherwise are always being utilized for the benefit of people at large.
The Court should be conscious of the position as to the extent of public interest involved when the provisions operate the field as against the prevention of such operation. Even if the writ court is of the view that the challenge raised requires to be considered, then again it will have to be examined, while entertaining the challenge raised for consideration, whether it calls for prevention of the operation of the provisions in the larger interests of the public. An attempt has been made only to set out some of the basic consideration to be borne in mind by the writ court and the same is not exhaustive. In other words, the writ court should examine such other grounds for consideration while considering a challenge on the ground of vires to a statute or the provision of law made before it for the purpose of entertaining it and when such writ petitions are entertained, those petitions should be disposed of as expeditiously as possible and on a time-bound basis, so that the legal position is settled one way or the other.
On bare perusal of Sub-section-2 of Section-386 of the GPMC Act, it cannot be said that the Commissioner has excessive delegation because license fees which may be charged by the Commissioner shall come into effect only after the sanction of the Corporation and not otherwise. Thus, in effect sub-section-2 provides for procedure and limits in form of checks and balances to control the power conferred upon the Commissioner to levy the fees for the licenses to be issued as per Subsection-1 of Section 386 - It is also pertinent to note that Subsection-2 starts with the words “except as may otherwise be provided by and under this Act”, which means that it is an exception carved out from other provisions of the Act providing for any fees of license which may be issued under Sub-section-1 of Section 386. The Commissioner of the Municipal Corporation is therefore, empowered to levy fee at such rate from time to time which may be fixed but such power is subject to the sanction of the Corporation.
The fees to be charged as per the provisions of Sub-section-2 of Section 386 cannot be said to be having unbridled or unfettered power. It is also evident from the materials on record that the levy of fees to be charged for advertisement hoardings in private properties does not become effective immediately when the Commissioner proposes unless and until the same is approved by the Standing Committee which in turn is required to be approved and sanction by the Corporation as provided under Sub-section-2 of Section-386 of the GPMC Act.
The provisions of Sub-section-2 of Section 386 of the GPMC Act is constitutionally valid as per Etnry-5 read with Entry-66 of list-II of the VIIth Schedule and deletion of Entry-55 of list-2 cannot be said to have any effect on the power to levy fees as provided by Section 386(2) of the GPMC Act - the provisions which are inconsistent with any of the provision of part-IX of the Constitution of India including Article 243X would be required to be amended but the provision contained in Section 386(2) of the GPMC Act cannot be said to be inconsistent with any of the provision of part-IX of Constitution of India and therefore, Article 243ZF would not come into play in the facts of the case.
The submissions of the petitioner that provision of Sub-section-2 of Section 386 suffers from excessive delegation and provided for unguided and uncanalised power to the Commissioner as there is no procedure for limits for imposition of fees in absence of any guideline is concerned, it is settled position of law that the guidelines are required to be prescribed by legislature in case where there is levy of tax and not in case where there is imposition of fees.
If the State Government is of the opinion that execution of any resolution or order of the Corporation for any of other Municipal Authority or officer subordinate thereto for doing of any act, which is about to be done or has been done for and on behalf of the Corporation is in contravention of excess of powers conferred by the GPMC Act or any other law for the time being in force or such action is likely to lead breach of the peace etc., then the State Government may by order in writing suspend the execution of order or prohibit doing of any such act. Therefore, even the sanction of the Corporation as provided under Sub-section-2 of Section 386 is subject to the control of the State Government as provided under Section 451 of the GPMC Act. In view of the above, it cannot be said that there is excessive delegation by legislature upon the Commissioner for determination of the levy of the fees under Sub-section-2 of Section 386 of the GPMC Act.
These writ applications fail and are accordingly rejected subject to the right of the petitioners to challenge the quantum of license fees before the State Government as per the provisions of the GPMC Act in accordance with law. The respondent State Government is therefore, directed to consider such challenge if made by the petitioners without being influenced in any manner by what has been stated hereinabove and decide such challenge as expeditiously as possible.
Application disposed off.
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2020 (10) TMI 1175
Dishonor of Cheque - insufficiency of funds - offence punishable under Section 138 of the Negotiable Instruments Act - Whether the impugned order of conviction and sentence passed by the trial Court and confirmed by the First Appellate Court against the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act suffer any illegality, impropriety or incorrectness?
HELD THAT:- There cannot be any dispute that once the issuance of the cheque and signature of the accused on the cheque are admitted, the presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued towards discharge of legally recoverable debt arises. Then the burden shifts to the accused to rebut the said presumption by acceptable evidence.
The accused/DW.1 in his cross-examination has uneqivocally admitted that the notice - Ex.P3 was served on him. If Shivanna and the complainant colluded with each other to commit fraud on the accused and presented the cheque which contains huge amount, in the ordinary course at the first instance the accused should have replied Ex.P3 denying the contents or his liability. Thereby, there was a deemed admission of the contents of the notice. That circumstance went against the accused - Either by way of reply to the notice or in the cross-examination of PW.1, there was no denial of lending capacity of the complainant. Even in the evidence of the accused, there was no denial of the lending capacity. Therefore, the contention of the learned counsel for the petitioner regarding the lending capacity is apparently untenable.
Considering the material on record and the judgment of the Hon'ble Supreme Court in RANGAPPA VERSUS SRI MOHAN [2010 (5) TMI 391 - SUPREME COURT] regarding the presumption under Section 139 of the Negotiable Instruments Act, the Trial Court rightly rejected the defence of the accused and convicted him.
Revision dismissed.
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