GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (5) TMI 820 - ITAT DELHI

2015 (5) TMI 820 - ITAT DELHI - TMI - Remittances made by NIPL to Nokia Corporation for software downloads are 'sums chargeable to Tax' as laid down in S 195 - whether NIPL can be held to be an "assessee in default" for non-deduction of tax thereon as per law - validity of survey - denial of natural justice - Held that:- On examination of the entire scheme of the Act, we are of the considered opinion that the plea advanced by ld. counsel for the assessee deserves to be rejected for the simple re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. Further, we find from the case laws relied by ld. Special Counsel that survey was carried out for TDS purposes even prior to introduction of sub-section (2A) to section 133A and Hon’ble Supreme Court has also taken cognizance of the same. We, accordingly, hold that the survey could be conducted even prior to insertion of subsection (2A) of section 133A.

Authorization to DDIT, Chennai for conducting the survey - Held that:- There is no requirement under this section read with rules .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with the CBDT Notification no. S.O. 1189(E) dated 3-12-2001. Thus it cannot be said that DDIT, Chennai was not duly authorized to carry out the survey. A bare reading of section 133A(1) makes it clear that survey can be carried out at the place where business or profession is carried on irrespective of the fact whether the place of business or profession is separate from its registered office. The object of survey is to gather information in regard to the proceedings under the Act which is enum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e has also submitted that the statement of ex-employee Mr. Jintendra Agarwal, auditor, being not present at the time of survey, could not be recorded. In our opinion, this plea deserves to be rejected at the very outset, because once the powers are exercised u/s 131(1A) in order to gather the information, the designated authorities could issue summons to any person. DDIT is one of the designated authority and, therefore, no irregularity/ illegality can be imputed.In view of above discussion, we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sbursement made out of such account’s or on the strength of havala entries, by which the bogus commission and trading income said to have been reintroduced in the books of the assessee. These aspects are only secondary, subordinate and were used to buttress the main matter connected with the amount of addition. The violation or otherwise of any rule of natural justice must be a matter of substance not of mere form. Natural justice should always be used for the furtherance of the cause of justice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or evidence used is of collateral nature. Having regard to the facts and circumstances of the case, we are of the opinion that there was no denial of the principles of natural justice.

The employees, whose statements were relied by AO, were highly technical persons, controlling the entire manufacturing operations and, therefore, it cannot be accepted that they were not aware of various technicalities of the entire manufacturing process. The replies given by them have not been dispute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owever, keeping in view the submissions of ld. Sr. Counsel, noted above, in order to impart substantial justice to both the parties, we are of the opinion that a supplementary report should be submitted by AO on various issues pointed out by ld. Sr. Counsel in his written submissions placed on record, if necessary, after seeking clarifications from employees - ITA no. 3532/Del/2013 - Dated:- 22-5-2015 - SHRI S.V. MEHROTRA AND SHRI A.T. VARKEY, JJ. For The Appellant : Sh. P. Kaka Sr. Adv.; Sh. Vi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of Finland and, therefore, is a foreign company. The assessee is an Indian company, having its registered office at Delhi and corporate office at Gurgaon and manufacturing plant at Chennai. The assessee has three SEZ undertakings, namely, Nokia Enterprise Solutions Hyderabad, Nokia Technology Platform Bangalore and Nokia CDMA R&D Unit Mumbai. 2.1. Survey u/s 133A was conducted on the Gurgaon Corporate office and Chennai factory premises of assessee on 8-1-2013. The AO has passed order u/s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

compiled year-wise by the employees of NIPL. The invoices raised by Nokia Corporation for software payments were also found and impounded during the course of survey at factory premises at Chennai. 2.2. He has further observed that in course of survey it was found that since commencement of operation at its manufacturing facility in Chennai i.e. FY 2006-07 to 2011-12, NIPL had been making payments for software to Nokia Corporation to the tune of US $ 3,36,26,31,484/- for use in its manufacturin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wnloads made by NIPL under the agreement for use in manufacturing. The AO, inter alia, has observed as under: It was thus required to be examined whether these were in the nature of royalty and whether they fall within the purview of section 9 (1)(vi) of Income Tax Act 1961 and the India Finland Double Taxation Avoidance Agreement. Payments for software are typically characterized as Royalty both under the Act and DTAAs as the confer "use simplicitor" or "right to Use" of pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

yments made for purchase of raw material and spare parts. Although the invoices clearly mentioned software imports, the software imports had not been reflected in Col. no. 9 of Form 3CEB of NIPL for intangibles. The software imported was reported as clubbed with tangibles. II the above facts indicated that preparation of invoices "manually by employees of NIPL on behalf of Nokia Corporation OYJ was a deliberate endeavour with the purpose of camouflaging payment for use/right to use the soft .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed on his detailed examination of how the transaction was executed which has been considered in para 3.2 of his order. The AO took into consideration the various e-mails, agreements, invoices and statements recorded during the course of survey and concluded that payments made to Nokia Corporation were towards royalty, as agreed by both parties, in the nature of royalty or not. 4. At the outset both the parties requested that first the decision be rendered on the preliminary issue concerning the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es the income-tax authorities to conduct survey in regard to TDS proceedings. In this regard ld. Sr. Counsel referred to proviso to sub-section (3), which restricts the impounding of books or other documents and also to take inventory of cash, stock or other valuable articles or thing. He submitted that the authorities impounded lap tops, mobile phones allotted to Mr. Prakash Katama and Mr. Rahul Sood without authority. Moreover, the statements of employees present at the time of survey could no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r, in the present case since the employees of the company had fully cooperated with the income-tax authorities during survey, afforded opportunity to the Income-tax authorities to examine documents, therefore, there was no question of any non-cooperation on the part of employees and, therefore, summons u/s 131 could not be issued. 5.2. He submitted that all the employees did their very best to answer various queries raised by Income-tax authorities and provided clarifications. He pointed out tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ateshwara Tourist Home (P) Ltd. V. ADIT (Inv.) (1988) 233 ITR 736. 5.4. Ld. Sr. Counsel further submitted that statements of eight employees were recorded on oath, even though there is no such requirement u/s 133A of the Act and there are judicial precedents, which state that income-tax authorities are not authorized to record statements on oath during survey proceedings u/s 133A of the Act. In this regard he relied on the decision of Hon ble supreme Court in the case of CIT Vs. S. Kadar Khan So .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cuments collected pursuant to the summons cannot be used against assessee in any legal proceedings. 5.7. Ld. Sr. Counsel further submitted that since the assessee filed its returns at New Delhi and is being assessed to tax under Circle 13(1), New Delhi, any proceeding under the Act pertaining to NIPL could be taken by the appropriate jurisdictional officer having territorial jurisdiction over NIPL. He referred to page 1 of PB Vol. I, wherein the summons u/s 131 dated 11-1-2013 addressed to Shri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

various reasons. 5.8. Ld. Sr. Counsel further submitted that the entry of Director of Income-tax (Investigation), along with 10-12 Income-tax department s officials as well as Mr. Sastry K. Pendyala, from CFSL into the factory premises of NIPL at Sriperimbudur, Chennai, was illegal inasmuch as DIT(Inv.), did not produce any warrant for entry into the premises for inspection and did not indicate the reason for his entry into the factory. 5.9. Ld. Sr. Counsel further submitted that DDIT(Inv.) styl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the territorial areas of whole of India. However, in respect of other provisions of the Act, he could perform his functions relating thereto in respect of Tamilnadu and Pondicherry except Mahe and Yenam. Therefore, the Director of Income-tax (Inv.), Chennai could not carry out survey u/s 133A in respect of assessee, whose jurisdiction lay with AO at Delhi. Therefore, the ld. DDIT (Inv.) Chennai had no territorial jurisdiction over NIPL u/s 131 of the Act. 5.11. Thus, in sum and substance, Ld. Sr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cision of Hon ble Kerala High Court in the case of Paul Mathews & Sons v. CIT 263 ITR 101. 5.12. Ld. Sr. Counsel further submitted that if evidence has been collected by breach of fundamental right of privacy of employee, then the said evidence cannot be used against the assessee, because it is not a question of exercise of irregular jurisdiction but inherent lack of jurisdiction. 5.13. Ld. Sr. Counsel further submitted that the decision of Hon ble Supreme Court in the case of Pooran Mal Vs. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1. … Article 21 was invoked by submitting that the privacy of the appellant s conversation was invaded. Article 21 contemplates procedure established by law with regard to deprivation of life or personal liberty. The telephonic conversation of an innocent citizen will be protected by Courts against wrongful or high handed interference by tapping the conversation. The protection is not for the guilty citizen against the efforts of the police to vindicate the law and prevent corruption of p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Krishnadas Shankarraon Abhare (Dr.) Vs. State of Maharastra, wherein it has, inter alia, been held that statement recorded by unauthorized person is not an admissible evidence. He also relied on the decision of Hon ble Kerala High Court in the case of Mammu and Another Vs. Asstt. Collector Central Excise, 1984(17) ELT 54 (Ker.). 5.16. Ld. counsel submitted that revenue s entire case is based on the submissions recorded during survey proceedings and subsequently by issuing summons to various e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the revenue at any stage of the proceedings. Ld. Sr. Counsel further submitted that assessee was given very limited time to file its responses during the assessment proceedings (time of one or two days only was given between the hearings, and most of these hearings were indicated to be the final hearing). Further AO passed the order without waiting for the final CFSL Report. This was contrary to the judgment of the Hon'ble Supreme Court in Bharti Cellular [2010] 193 Taxman 97 (SC) and the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

before the Income Tax Officer are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at. The assessee has a right to inspect the record and all relevant documents before he is called upon to lead evidence in rebuttal. This right has not been taken away by any express provision of the Income Tax Act. This principle has also been re-emphasized by the Hon'ble Supreme Court in Dhakeshwari Cotton Mills v. Commissioner of Income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. CIT: 96 ITR 97 (All). In this case, the assessing officer had purportedly obtained information and recorded statements of certain persons which were used against the assessee during the assessment proceedings. The assessee opposed this and asked for an opportunity to cross-examine the witnesses whose statements the assessing officer was relying on. The assessing officer agreed to issue commission for cross examination of witnesses but did not hand over the statements of these witnesses to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

justice, the assessing officer should have given the statements of the witnesses to the assessee and,thereafter, afforded him an opportunity to cross examine these witnesses. This principle has also received recognition in another decision of the Hon'ble Allahabad High Court in the case of Moti Lal Padampat Udyog Ltd. v. CIT: (2007) 293 ITR 565. Ld. Sr. Counsel further submitted that in a recent decision of the Hon'ble Mumbai Bench of the Tribunal in the case of Ingram Micro, (India) Ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

upon, no opportunity was provided by the AO or CIT(A) to the assessee to cross-examine such witnesses so that the veracity and context of these statements could be established. He submitted that neither the persons whose statement are relied on by the AO/CIT(A) nor the additional statements of the persons filed by the department before the Tribunal have been permitted to be cross examined despite request to crossexamine them by the assessee. The assessee was not provided adequate opportunity to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee has to be afforded the opportunity to cross-examine the witnesses, in the interest of the principles of natural justice. Ld. Sr. Counsel relied on following decisions :- New India Assurance Company Ltd. v. Nusli Neville Wadia: (2008) 3 SCC 279. - State of Kerala v. K.T. Shaduli Grocery Dealer Etc: (1977) 2 SCC 777 - Tribunal (TM) in Sunil Agarwal v. ACIT: (2002) 76 TTJ (Del) 748 - CIT v. Virgin Securities & Credits: 332 ITR 396 (Del) and - CIT v. SMC Share Brokers Ltd: 288 ITR 34 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the survey or during the assessment proceedings. In addition most of the additional statements now being relied upon are of ex-employees. He submitted that in view of the decision of Hon ble Supreme Court in Kishinchand Chellaram v. Commissioner of Income-tax 125 ITR 713 the burden is on the department to produce these witnesses and not the assessee. He submitted that in any event the right of the assessee to cross-examine witnesses is not dependent on its relationship with the witnesses, but .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see s right to cross-examine witnesses, the Tribunal opined that the right to cross-examine cannot be denied on the ground that such right only exists when a third party is involved or a party not known to the assessee or a hostile witness is involved. Further, he placed reliance on the decision of the Mumbai Bench of the Tribunal in Smt. Madhu Gupta v. DCIT, Mumbai: ITA No. 8504 of2004. The Tribunal ruled in favour of an assessee's right to cross-examine its own employees where their statem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch are placed on record. 6. Ld. Spl. Counsel Shri G. Dave vehemently opposed the submissions advanced by ld. representatives of the assessee. 6.1. At the outset Shri Dave submitted that the Tribunal being creature of statute has no power to look into the validity of survey. Shri Dave referred to section 253 of the I.T. Act, which enumerates various orders which can be assailed before Tribunal by way of appeal. He pointed out that none of the action taken by DDIT has been enumerated in section 25 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Officers conducting survey is denied. In ground No.3, it is stated that learned CIT (A) erred in law by holding that the learned DDIT, Chennai had territorial jurisdiction over the appellant under section 131 of the Act. In ground No.4, it is appealed that learned CIT(A) erred in holding that the statements of employees recorded under section 133A as well of employees, ex-employees and auditors recorded under section 131had evidentiary value. In no other ground there is any challenge to the cond .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assailed. He pointed out that the AO was not competent to examine, the correctness or otherwise, of the acts performed by the DDIT(Inv.), Chennai, while conducting survey u/s 133A of the Act, as the latter was acting at the instance of Addl. DIT(Inv.), Chennai on the basis of authorization issued. He submitted that both the authorities i.e. DDIT (International Taxation), New Delhi, making order u/s 201/201(1A) of the Act and the DDIT (Inv.), Chennai, conducting the survey u/s 133A of the Act, a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay in other judicial forum like filing a writ petition before the Hon ble High Court of Delhi but never made any such allegation which now it was raising. He pointed out that an analogy may be drawn from the decisions given in the context of challenge of validity of search u/s 132 before the Tribunal, wherein it has been held that while hearing of appeal against an order of assessment, the ITAT cannot question the validity or otherwise of any administrative decision for conducting search, as sam .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f section 133A, the DDIT(Inv.), Chennai was only an authorized person. 6.6. Without prejudice to aforementioned arguments ld. Special Counsel submitted that survey u/s 133A of the Act at Chennai and Gurgaon were authorized by the Addl. Director of Investigation, Chennai and Addl. Director of Income-tax (International Taxation), New Delhi separately. He filed before us authorization issued by these authorities. Ld. Spl. Counsel also filed notification issued by the CBDT notifying the territorial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(no.2) Act, 2014, authorizing the survey for ensuring compliance of TDS provision, Ld. Spl. Counsel submitted that sub-section (2A) does not curtail the powers of authorities who can conduct survey otherwise under the provisions of subsection (1) of the Act but additionally provides restrictive power to certain designated officers under sub-section (1A), who were functioning only for the purpose to ensure TDS compliance and defaults committed there under. Ld. Spl. Counsel referred to the explan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted out that prior to the insertion of subsection (2A) to section 133A, survey for ensuring or checking compliance for provisions of TDS could be done, is proved from the following decisions: - Reckitt Coleman of India Ltd. 252 ITR 550 (Cal.); - Reckitt Coleman of India Ltd.251 ITR 306 (Cal.); - CESC Ld. Vs. ITO 272 ITR 513 (Cal.); - Karnataka Rural Infrastructure Dev. Ltd. 51 Taxmann.com 497 (Kar.); - CIT Vs. Kingfisher Airlines ITA no. 165 of 2012 (Kar). 6.9. As regards the plea of the ld. cou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Kamal & Co. 308 ITR 129 (Raj.); - Smt. Kusum Lata Singhal v. CIT 185 ITR 56 (SC); - Dr. Pratap Singh v. Director of Enforcement 155 ITR 166 (AC); - ITO Vs. U.K. Mahapatra & Co. 186 Taxman 181 (SC). 6.10. As regards the plea of ld. counsel for the assessee that in course of survey u/s 133A statements could not be recorded on oath and if so, recorded, have no evidentiary value, ld. Spl. Counsel submitted that Hon ble Bombay High Court in the case of Dr. Dinesh Jain Vs. ITO 363 ITR 210 co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

impugned order has recorded that the addition of income is based not only on the statement of the appellant-assessee but also based on "page 17". The case law relied upon by the appellant in the matter of CIT v. S. Khader Khan Son [2013] 352 ITR 480 (sq arising from the decision of the Madras High Court in CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad) proceeded on the fact that the authorities did not accept the retraction made by a deponent of a statement made on oath during the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and not applicable to the present facts. (ij) In view of the above, we do not find that question (A) raises any substantial question of law. Accordingly, we do not entertain question (A)." 6.11. With reference to above decision ld. Spl. Counsel pointed out that in the present case also, the conclusion drawn by AO regarding nature of payment made by assessee to Nokia Corporation is not solely based on statements of employees but on other evidences. The statements have been used as corroborat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

133A(3)(iii) though cannot be treated as independent evidence like evidence recorded u/s 132(4), it has corroborative value in assessment and can be used by the Department as well as by the assessee also, if it helps an assessee. 6.13. As regards the plea of assessee that when survey ended on 9-1-2013, where was the question of invoking of section 133A(6), ld. Spl. Counsel pointed out that DDIT resumed inquiries from 17th January to February 2013. He pointed out that these proceedings were taken .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ivery Procedures , therefore, her statement on 24-1-2013 was necessitated. He further submitted that since the genuineness of these documents required inquiries in view of the attendant circumstances in which these were produced and documented, the DDIT (Inv.), Chennai made enquiries by recording the statements of all the seven technical personnel responsible for downloading of the software on 7-2- 2013. He submitted that in any proceedings the statements recorded are need based and sometimes fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng any such plea in the course of his arguments. Ld. Special Counsel extensively referred to the submissions of assessee on various dates and pointed out that assessee at no stage asked for cross-examination of the employees or ex-employees who in fact left service around the same time but were associated with the transactions which came to notice in the course of survey. He submitted that it is a classic case of dilatory tactics. Ld. Special Counsel submitted that Cross-examination of Mr. Krish .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

;ble Court by holding that the Department shall not take any coercive measure till the next date of hearing for the recovery of demands. He further pointed out that another set of writ petitions were filed challenging orders under section 201 of the Act on various grounds but in none of the grounds in these writ petitions, the assessee sought to seek quashing of the order on the basis of absence of cross-examination of the witnesses, who were employees of the assessee at the time of depositions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

allowed cross-examination of all the persons whose statements were relied upon while framing the assessment. On a perusal of the records of the CIT (Appeals) it was noticed that CIT (Appeals) asked the authorised persons appearing on behalf of the appellant to specify whose cross-examination they would be seeking for. Copy of this noting made by the CIT (Appeals) as obtained from the file of the CIT (Appeals) on this letter has been filed by Revenue. However, the assessee did not specify the emp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s) on 23.05.2013, 24.05.2013 & 27.05.2013. In none of these letters, the Company sought to cross-examine any person other than Mr Sastry. Ld. Special Counsel pointed out that before CIT(A) assessee had, inter-alia, submitted as under ; "appellant may not have the need of cross-examination any other witnesses once the appellant cross-examines Mr. Sastry, In any case, the appellant will be in a position to take this call only after cross-examining Mr. Sastry".After examination of Mr. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and cross-examination of Mr. Sastry got concluded only on 21.05.2013. Though it filed three letters thereafter before the CIT (Appeals), in none of the letters, there is any request to this effect. 6.17. As regards the submission of ld. Sr. Counsel for the assessee that the cross-examination should have been allowed by the AO and at subsequent stages of the case, such alleged "illegality" cannot be cured, for which reliance has been placed on the decisions of Tin Box Co vs. CIT reporte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed before Hon'ble High Court of Delhi with liberty to file appeal before CIT (Appeals). It could have pleaded before the Hon'ble Court to restore the case to the AO which it did not. In the case of Ingram cited supra, the issue was before the DRP which is extension of assessment proceedings and not an appellate authority and, therefore, Hon'ble Bench restored the matter to the file of the AO. Facts in the present case are entirely different. 6.18. As regards the proceedings befor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion, Finland were being made regularly. Thus, Assessing Officer did not solely relied on the statements of employees only but used them to corroborate his findings. Ld. Special Counsel further submitted that at page 22 of his order, the AO has clearly stated that the statements without exception are relied upon not to establish the default, but to corroborate certain aspects such as the manufacturing process, the software downloads, the manual preparation of invoices, basis of preparation and th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iving any conclusions; 3. The statements are not made under any misconception of facts but to explain the facts; and 4. Statements are one of the best forms of evidence that an opposing party can rely upon and though not conclusive are decisive unless successfully withdrawn or proved erroneous. Reliance ws be placed on Narayan Bhagwantrao Gosavi Batajiwale vs Gopal AIR 1960 SC 100 and Pranav Construction Co vs ACIT (ITAT, Mum) 61 TTJ 145. 6.19. Ld. Special Counsel further submitted that the conc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dent from Para 1.2 with its sub-paras at pages 10 to 13 of his order. He further submitted that to attribute malafide in the recordings of statements of technical personnel and allege coercion and duress without any affidavit on the part of these personnel requires outright rejection of such contentions. The Persons whose statements were recorded are all highly educated persons and cannot be coerced as alleged. None of these persons has levelled any allegation to this effect so far. Such irrespo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ised either before the AO or before CIT (Appeals) and even in the grounds of appeal before us. In regard to assesse s plea that the matter should be remanded back to the AO where in the opinion of the assessee irregularity has occurred, ld. Special Counsel submitted that such an argument has some ulterior motive. It is well settled that appellate proceedings before first appellate authority constitutes continuation of the assessment proceedings as has been so held by Hon'ble Apex Court in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of. This was so held by Hon'ble Apex Court on the issue of natural justice in the case of Chairman, Board of Mining vs Ramjee reported in AIR 1977 SC 965. 6.22. Ld. Special Counsel further submitted that it seems quite interesting that in the VTT report furnished before CIT (Appeals) as additional evidence by the assessee-Company at Page (31), the VTT researchers have obtained inputs beside a few other individuals on need basis at Chennai, from two lead presenters, namely, (1) Shri E. Umash .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s were explained to survey team but the VTT team understood it differently. 6.23. Ld. Special Counsel relied on following Case Laws on issue that absolute right of Cross-examination can't be claimed by the subject- 1. G. Sridhar and Ors. Vs. Collector of Customs- 1992 (43) ECR 95 Tri Chennai. 2. Nath Mishra and Ors. Vs. The Principal, Rajendra Medical- AIR 1973 SC 1260, (1973) IILLJ 111 SC, (1973) 1 SCC 805. 3. Kisanlal Agarwalla vs Collector of Land Customs- AIR 1967 Ca180, 69 CWN 864 4. Sa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cross-examination next day (18th December). The Revenue has received response on this issue only on 30.01.2015, after nearly one & a half month. In this letter also, the appellant "deviously" requests Hon'ble Bench to grant it an opportunity to cross-examine any or all of the afore-mentioned 22 persons. What purpose the appellant wishes to serve by cross-examining "any" of the 22 persons, if so considered by Hon'ble Bench. There appears some design even in this p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ferred to the order passed u/s 201 and pointed out that in The Fact Matrix considered in para 3.1 at page 38 of his order along with his finding in para 3.2.3 at page 47, as well as discussion in para 3.3 under the heading How is the transaction executed and his finding in para 3.3.6 at page 57 & 58 all the aspects have been dealt in detail and the assessee has not pointed out any factual inaccuracy in any of the statements relied upon by AO for arriving at his conclusion. The assessee did n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lable to the assessee well in time with show cause notice. 6.28. At the stage of appeal proceedings before ld. CIT(A) despite his instructions, the assessee never came forward to indicate names of persons whose cross-examination would be required for reasons to be given. In course of hearing, ld. Standing Counsel produced before us the noting made by ld. CIT(A) in course of hearing wherein he required the assessee to specify the persons to whom it wanted to cross-examine. This fact has not been .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Bench to choose one or all the persons whose statements were recorded. However, action indicated that all 22 persons be made available for cross-examination. 7. We have considered the rival submissions and have perused the record of the case. 7.1. First we take the issue regarding legality of survey raised by assessee. Ld. Spl. Counsel has raised a preliminary objection on this count by submitting that the assessee has not taken any ground to this effect. In this regard we find that though ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assailed the findings of ld. CIT(A) in holding that the statements of employees/ ex-employees and auditors recorded u/s 131 had evidentiary value. Therefore, though assessee has not very specifically taken ground that for TDS purpose, the resort could not be had to survey proceedings, particularly in view of the amendment being made u/s 133A by inserting sub-section (2A) by the Finance (No. 2) Act, 1914 w.e.f. 1-10-2014 but assessee did challenge the actions taken in course of survey proceedings .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Tribunal being creature of statute and, therefore, it is to confine itself for entertaining the appeals which have been provided u/s 253 of the I.T. Act. 7.4. Ld. Spl. Counsel has drawn the analogy on this aspect from the decision of various courts in holding that while hearing an appeal against an order of assessment, Tribunal cannot go into the question or otherwise of any administrative decision for conducting the search as same may be subject matter of challenge in independent proceedings .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n passed solely on the basis of survey being carried out, therefore, it cannot be held that Tribunal is not entitled to examine the validity of actions taken during the course of survey, which ultimately culminated in the passing of the order u/s 201. In our opinion, all the incidental actions taken by the revenue authorities are subject matter of challenge before Tribunal and, therefore, Tribunal, while deciding appeals against the orders passed by ld. CIT(A) in appeals against the order u/s 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the case of Paras Rice Mills (supra), which decision was rendered with reference to the search & seizure action carried out u/s 132(1) and not with reference to survey u/s 133A. In that case Tribunal held that the search and seizure was illegal and no material was produced before the Tribunal to show that the requirements of section 132(1) of the Act were complied with. In that case the Tribunal had gone into the question as to whether the circumstances warranted the initiation of search .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

out authority of law. Moreover, power of search & seizure of Income-tax authorities cannot be equated with the power of survey, because search can be carried out only if the specific authorities mentioned u/s 132 have information in their possession, on the basis of which they have reason to believe that if a person who is required to do certain acts as contemplated under clauses (a) and (b) of section 132(1), would not comply with the directions and has in his possession certain money, bull .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

validity of survey action cannot be examined while deciding the correctness of the order passed u/s 201. Therefore, Tribunal is well within its powers to examine the challenge to validity of survey. We, therefore, proceed to examine the same. 7.7. The first objection of assessee regarding validity of survey is that under the Income-tax Act, there was no power conferred on Income-tax authorities for conducting survey to verify whether the tax has been deducted or collected at source in accordanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter XVII or under sub- heading BB of Chapter XVII, as the case may be, enter, after sunrise and before sunset, any office, or any other place where business or profession is carried on, within the limits of the area assigned to him, or any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

conducted prior to insertion of this sub-section and the only object of insertion of this sub-section is to curtail the powers of AO in regard to following: (3) An income-tax authority acting under this section may,- [(ia) impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him: Provided that such income-tax authority shall not- (a) impound any books of account or other documents except after recording his reasons for so doing; .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erified by him, 7.9. He, therefore, submitted that it is beneficial in the interest of assessee only. 7.10. The object of survey is also to obtain information in respect of any matter which may be useful for or relevant to any proceedings under the Act. The word proceedings has been defined as under: (b) proceeding means any proceeding under this Act in respect of any year which may be pending on the date on which the powers under this section are exercised or which may have been completed on or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndated u/s 133A sub-section (1) clause (iii). We are in agreement with the submission of ld. Spl. counsel that this amendment has been inserted by way of abundant precaution so as to ensure that while carrying out the survey proceedings, for ensuring compliance with TDS provisions, cash and stock is not examined. Further, we find from the case laws relied by ld. Special Counsel that survey was carried out for TDS purposes even prior to introduction of sub-section (2A) to section 133A and Hon ble .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he survey can be carried out by the authorities mentioned in the section itself and only if the survey is carried out by an Asstt. Director or a Dy. Director or AO, or tax recovery officer or Inspector of Income-tax, then the approval of the Joint Director or the Joint Commissioner, as the case may be, is required. In the present case, the DDIT Chennai was authorized by the Addl. Director of Income-tax (Inv.), which was in accordance with the CBDT Notification no. S.O. 1189(E) dated 3-12-2001, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sdiction of Directors. the Central Board of Direct Taxes hereby (a) directs that the Directors specified in column (2) of the Schedule hereto annexed shall exercise their powers vested in them under section 32 of the said Act - perform their functions relating thereto in respect of the territorial areas or whole of India; (b) directs (hat the Directors specified in column (2) of the Schedule hereto annexed shall exercise their powers vested ill them under all other provisions of the said Act (ot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rders. 2. This notification shall come into force on the date of publication in the Official Gazette. SCHEDULE Sl. Nos. Designation of Directors of Income-tax (Inv.) Territorial Area 1. 2. 3. 5. Director of Income-tax (Inv.), Chennai Tamil Nadu and Pondicherry except Mahe and Yenam. 7.13. Therefore, it cannot be said that DDIT, Chennai was not duly authorized to carry out the survey. A bare reading of section 133A(1) makes it clear that survey can be carried out at the place where business or pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rom bare reading of various clauses of section 133A. 7.14. The survey at Gurgaon was duly authorized by Addl. Director of Income-tax (International Taxation), New Delhi. Therefore, both these authorities i.e. DDIT Chennai as well as ITO, TDS could enter the premises occupied by the company to conduct survey on the strength of authorization issued to them. The assessee has also alleged that Shri Sastry from CFSL could not enter the premises. In our opinion, this objection deserves to be rejected .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t u/s 131. The submission is that in view of section 133A(6) only non-cooperation of persons present at the time of survey triggers invoking of section 131. In this regard we find in the letter dated 21-2-2013, contained at page 19 to 24 of the PB of DDIT, inter alia, informed as under to the assessee: 1. A survey under section 133A of the Income Tax act was conducted at the factory and corporate office premises of MIs. Nokia India Private Limited (NIPL) in Chennai and Gurgaon respectively on 08 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers relating to taxation. ii. No books of accounts were found maintained in physical form at both the premises. When questioned, it was stated that books of account were ever maintained in physical form and they were always maintained in the SAP system. iii. When it was requested to show the computerized accounts in the SAP system, the next excuse was that none of them had access to the books of account in the system as per the protocol. iv. When questioned about the agreements entered in to reg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act. In view of the above, summons under section 131 of Income tax Act, 1961 were issued to the employees and their statements were recorded. Subsequently, some other employees were summoned and examined in the office of the undersigned. Even during these enquiry proceedings, non cooperation continued and the crucial information required or various proceedings under the Act, -as mentioned below, have been withheld and not submitted till date:- i. Xerox copies of software supply agreements were f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of profits to the parent company, concealment of income by manipulating the actual profits to certain predetermined/ desired levels, manipulating software - voices etc. As such, the official mail correspondence entered into by the executives of NIPL, as recorded in the server, was required to be produced. It is a matter of record that the mail dump has been withheld deliberately for reasons best known to the management. iii. The details regarding month wise production of mobile handsets, number .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e to mention here that all -the details/ information requested as above is readily available with NIPL and it does not require any extra/ special effort to furnish the same. However, it was chosen not to company with the requirements of law for the reasons best known to NIPL only. In your letter dated 18.01.2013 too it was stated that the employees co-operated to the extent possible, qualifying the ,degree of co-operation and thereby admitting that it was not full co-operation. 7.16. Therefore, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on under clauses (i) to (v) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that subsection, notwithstanding that no proceedings with respect to such person or class of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the time of survey, could not be recorded. In our opinion, this plea deserves to be rejected at the very outset, because once the powers are exercised u/s 131(1A) in order to gather the information, the designated authorities could issue summons to any person. DDIT is one of the designated authority and, therefore, no irregularity/ illegality can be imputed. 7.19. In view of above discussion, we hold that there was no illegality in carrying out survey and the statements recorded u/s 131 at Chen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ative on the ground of breach of fundamental right of privacy because of the decision of Hon ble Supreme Court in above cases. 9. The next objection of ld. counsel for the assessee is that statement on oath could not be recorded in course of survey. The assessee has relied on various case laws which we have considered in the submissions of assessee. However, we find that now this issue is covered by the decision of Hon ble Bombay High court in the case of Dr. Dinesh Jain (supra) and, therefore, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ffered any opportunity to cross-examine the employees whose statements had been relied upon by AO for arriving at the conclusion that the impugned payments made by NIPL to Nokia Corporation were on account of royalty payments. The revenue s main contention on this count is that assessee was provided with all the statements taken during the course of survey which were mainly of technical persons who explained the manufacturing process, but submission of revenue is that assessee never objected or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

therefore, there is no need for cross examination of employees. 12. Before we embark upon to examine the contentions of both the parties on this count, it would be useful to discuss the scope of principles of natural justice. Rules of natural justice traditionally comprised of the rules audi alterm partem and nemo judex in causa sea. Rule of audi alterm partem requires the maker of a judicial or quasi judicial decision to give prior notice of the decisions to persons affected by it and an opport .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act have been given powers under various sections viz. 131, 132, 133A, 133B etc. in the manner prescribed by law. All the information obtained by the authorities are required to be provided to assessee and also the statements and further to provide opportunity to assessee as well as persons whose statements were recorded for correcting or contradicting any relevant statement prejudicial to their view. The underlying principle is that there should be fair play in the process of decision making. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en complied by authorities or not, but the court cannot impose its own method on administrative or executive authorities, else it would amount to usurpation of powers of authorities. The authority is the best judge to decide the extent to which the principles of natural justice have to be applied in the given circumstances, the function of court being limited to examine whether substantial justice has been imparted or not. It entirely depends on the nature of issue to be determined. Diplock J. i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39; be proffered by another person represented at the hearing, or is discovered by the deputy commissioner as a result of his own investigations; (c) to allow each person represented to comment upon any such 'evidence and, where the 'evidence' is given orally by witnesses, to put questions to those witnesses; and (d) to allow each person represented to address argument to him on the whole of the case. This in the context of the Act and the regulations fulfils the requirement of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

etermined, or to show the likelihood or unlikelihood of the occurrence of some future event the occurrence of which would be relevant. It means that he must not spin a coin or consult an astrologer, but he may take into account any material which, as a matter of reason, has some probative value in the sense mentioned above. If it is capable of having any probative value, 'the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of decidin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eal with the dictum : Audi Alterm Partem . While arguing the opportunity aspect, Shri Dastur stated that the principles of natural justice have been was not given to the assessee. To support this the learned counsel relied on precedents. We examine the applicability of the same in the facts of the present case. 85. In the case of Vasanji Ghela & Co. (supra) the Court held : The rules of natural justice do require that normally speaking, if the statement of a person is intended to be used as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eptional or special cases, be denied without violating the principles of natural justice. 86. In the case of V.K. Batcha Mohideen v. Joint Commercial Tax Officer [1971] 28 STC 450 (Mad.) the Court held : The principles of natural justice have a very wide and extensive field for action. They enfold within their net the activities of the revenue in problems of taxation as well. They are not circumscribed to civil actions, since their arms can extend even to correct errors committed by taxing autho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he must act in consonance with natural justice, and one such rule is that he should not use any material against an assessee without giving the assessee an opportunity to meet it. He is not bound to divulge the source of his information. There is no denial of natural justice if the ITO refuses to produce an informant for cross-examination though if a witness is examined in the presence of the assessee, the assessee must be allowed to cross-examine him. The range of natural justice is wide and w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

decision was upheld by the Court. Thereafter, the State filed appeal for the certificate. The Apex Court held that : Unless the previous statements of witnesses are supplied the dismissed person will not be able to have an effective and useful crossexamination and therefore, it is unfair to deny the Government servant copies of the earlier statements of witnesses. Synopsis of the statements will not satisfy the requirements of reasonable opportunity to show cause against the action proposed to b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-non-grata whose cause may be treated with disdain. The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

own as audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is- record must be placed on evidence or record against a person then that evidence or record must be placed before him for his information, comment and criticism. That is all that is meant by the doctrine of, audi alteram partem. That no party should be condemned unheard. No natural justice requires that there sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

charged has a fair and reasonable opportunity to see, comment and criticise the evidence, statement, or record on which the charge is being made against him, the demands and the test of natural justice are satisfied. Cross- examination in that sense is not the technical cross-examination in a Court of law in the witness box. 91. In the case of Satellite Engg. Ltd. (supra). The jurisdictional High Court has held that : It is true that the Department must disclose every information to the petitio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it will well-nigh be impossible together any material in future. Therefore, it cannot be said that there was violation of natural justice specially when the name of the exporter sending the quotations was disclosed to the petitioner. 92. In the case of Kanungo & Co. (supra). It was held : . . . The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our op .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

What the impugned order does is that it refers to the evidence on the record which militates against the version of the appellant and then states that the appellant had not been able to meet the inferences arising therefrom. In our opinion, the High Court was right in holding that the burden of proof had shifted on to the appellant after the Custom Authorities had informed appellant of the results of the enquiries and investigations. 93. In the case of Tulsiram Patel (supra). The Apex Court has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nvoked if importing it would have the effect of paralysing the administrative process or where the need for promptitude or the urgency of taking action so demands. 94. DCW Ltd. s case (supra), para 11 of the said decision (p. 237) is reproduced here as under : The Supreme Court had an occasion to consider the applicability of the principles of natural justice in a recent case in R.S. Dass v. Union of IndiaAIR 1967 SC 593. The Supreme Court in Chairman, Board of Mining Examination v. Ramjee AIR 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n case, can be exasperating. We can neither be finical nor financial but should be flexible yet firm in this jurisdiction. . . . 95. Sri Desai submitted that the rules of natural justice are not rigid rules, they are flexible and their application depends upon the setting and background of statutory provision, nature of the right which may be effected and the consequences which may entail its application depends upon the facts and circumstances of each case. It was stressed that natural justice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s concerned with the complaints regarding molestation of girl students. In exceptional cases the requirement may be waived. The case of the assessee does not fall in the category of exceptional cases. In the light of cases discussed hereinbefore, it was pleaded that great injustices given to the assessee. We have perused the decisions cited before us. The judicial climate on this point is thickly clouded with plethora of precedents. This point has created chaos in judicial cosmos. The result is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

may not understand her completely and though she is sometimes too difficult for him. - Trial Judge (at page 27) 96. The appellant s basic contention is that the statement of witnesses and materials which are relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which are adverse to the assessee should be disclosed to the appellant and the witnesses should be offered for cross-examination. Supreme Court in the case of Suraj Mall Mohta & Co. (supra) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed upon to lead evidence in rebuttal. 97. In the case of K.T. Shaduli Grocery Dealer (supra), it was held (at p.1631) : . . . the usual mode recognized by law for proving fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness of completeness of the return would, therefore, necessarily carry with it the right to examine witnesses and that would include equally the right to cross-examine witnesses examined by the Salestax Office .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aced in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other wholesale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross-examining Hazi Usmankutty and other wholesale dealers with reference .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alsehood. Here, it was not disputed on behalf of the revenue that the assessee in both cases applied to the STO for summoning Hazi Usmankutty and other wholesale dealers for cross-examination but his application was turned down by the STO. This act of the STO in refusing to summon Hazi Usmankutty and other wholesale dealers for cross-examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion exercised, the conduct of the party and the circumstances of the case. 99. Whether in a particular case the particular party should have the right to cross-examine or not depends upon the facts and circumstances of a particular case. This is so, because the right to cross-examine is not necessarily a part of reasonable opportunity. This view was taken by the Calcutta High Court in the case of Manindra Nath Chatterjee (supra). Thus in a given case the rule of audi alteram partem may impost a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dence was held not to be admissible. It was held that opportunity to controvert should be given to the assessee. 101. In the case of Dr. Rash Lal Yadav (supra), it was held : The concept of natural justice is not a static one but is an ever expanding concept. In the initial stages it was thought that it had only two elements, namely, (i) no one shall be a judge in his own cause, and (ii) no one shall be condemned unheard. With the passage of time a third element was introduced, namely of procedu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o the principles of natural justice. The principles embodied reflect the value of the society accepted for time being. The change is a fact of life. Every living thing takes new shape, new dimension with the flux of time. Hon ble Supreme Court has observed in 44 STC 61 (sic) : It must be remembered that law is not a mausoleum. It is not an antique to be taken down, dusted, admired and put back on the shelf. It is rather like and old but vigorous tree, having its roots in history yet continuously .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tural sense of justice. We have carefully considered the profile of the subject in the light of the latest developments. Principles of justice prohibit, determination without hearing. [Terminer sans over] Similarly, hearing without determination [Over sans Terminer] is also interdicted by the finer norms of justice. That all is required is impartial and fair hearing, and determination of disputes with utmost promptitude. The question whether or not any rules of natural justice had been contraven .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

witness who made adverse report, is not an invariable attribute of the requirement of the dictum, audi alteram partem . The principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the revenue cannot rely on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Collateral Nature. 106. Adverting to the facts of the present case, we find that the Assessing Officer made addition on account of the clandestine premium alleged to have been received by the assessee on the sale of cigarettes. The factum of the premium collection is mainly based on the edifice of the following facts:- (i) Analysis of the assessee s finance results revealed that the assessee sustained Loss From Sale of Cigarettes , to the tune of ₹ 20,59,57,913. (see para-6); (ii) Invoice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment order] is based on the TwinBranding Principle . First the difference between the ex-factory price of a particular brand and its high price twin was worked out. Amount so arrived at was multiplied by the volume. Resultantly came the figure of ₹ 29,11,68,078. Out of that ₹ 2,91,16,807 [10 per cent] got deducted. It was attributed to the share of WB s who were privy to such clandestine operations. Finally a sum of Rs. [29,11,68,078 - 2,91,16,807] = ₹ 26,20,51,271 round .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g in the same name as that of the payees or else were discounted. (ii) The advertisement expenses of the assessee-company were incurred through these secret bank accounts. (iii) Assessee-company donated the funds out of these secret bank accounts, viz., donation to Methodist Church out of transfer of funds from the a/c. of H.K. Patel (in assessment year 1984-85) and donation to the Festival of India Committee out of transfer of funds from the a/c. of Shree Associated [current A/c. No. 1724 in In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee-company. (v) Amounts in the shape of commissions, profits on sale of goods other than cigarettes, technical and supervision charges, etc., were reintroduced in the assessee s a/c. by means of havala entries. In view of the above, Assessing Officer concluded that assesseecompany had nexus with the secret Bank a/c s. Thus he supported the premium theory with reference to the abovesaid facts. Out of the total amount of addition on account of premium, Assessing Officer deducted, inter alia, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oice price of the cigarettes as reflected in the records was less than the manufacturing cost. These facts were examined with reference to the observation of the Technical Study Group of Central Excise Tariff, 1985. The impact of the Excise Duty on the trade was considered. The outcome of the enquiry indicated that the premium was generated by the use of the Twin Branding System . The basis of addition was the difference between the ex-factory price of a particular brand and its high price twin. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cted through the WB s. It was kept in the secret bank accounts. It was utilised for meeting the expenditure, viz., advertisement, donation, etc. Some amount was reintroduced in the assessee s account by means of havala entries and reflected as commission and trading income. 110. From the aforesaid discussion, it is clear, that addition was not made merely on the basis of findings given apropos the secret bank accounts, disbursement made out of such account s or on the strength of havala entries, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rwise treat oppression might be done under the colour and pretence of law [interest republica ut sit finis litum]. These loafty principles which are harbinger of justice cannot be used for dragging the justice in the labyrinth. We have already indicated that adverse evidence and material, relied upon in the order, to reach the finality should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature. Having regard to the facts and c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-2014 and then continued on 13-11-2014. Thereafter, the appeal was refixed for hearing on 15-12-2014 on which date ld. Sr. Counsel raised a plea regarding no cross-examination being provided to employees, as will be evident from following order-sheet notings. 15-12-2014:- Present: For assessee: Shri P.Kaka Sr. Adv. along with Shri Vikash Srivastava Adv. For Department: Shri G. Dave Adv. (Spl. Counsel ) along with Shri Sanjeev Sharma CIT(DR). Ld. Sr. counsel submits that on the first day of heari .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts/ documents, which have neither been referred to in the assessment order nor in CIT(A) s order and, thus, they are in the shape of additional evidence. Ld. Special Counsel for the department vehemently opposed these submissions and submitted that the entire proceedings u/s 201/201(1A) have been initiated on the basis of survey carried out by the department. He also filed a copy of survey report as per the direction of the Bench. He further submitted that in the revenue s paper book (Vol. I), t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l further pointed out that there is no objection to the documents contained at sl. Nos. 8 & 10 which are as under: 8. All the E-mails of Ms. Arja Bjorklund with Anssi found at the time of survey and emails of other employees. 10. Software Delivery & Procedures which is part of the Agreement dated Ist January,2006. As far as other three documents i.e. at sl. 7, 9 & 11are concerned, Ld. Special Counsel stated that the same may be ignored. Ld. Sr. Counsel further submitted that the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

factured and sealed in binary coding, which was not capable of tempering with and other aspects. After hearing both the parties, the Bench directed the assessee s representative to file a detailed note on his preliminary objections, with a copy to ld. Special Counsel for Revenue, so that the issues may be crystallized. 10/2/15: The assessee counsel: Shri P.Kaka Sr. Adv. Deptt. Sh. G. Dave Adv. (Spl. Counsel) The Ld. G. Dave (Spl. Counsel) files the reply of the revenue on contentions raised by & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

want to cross examine and advanced his arguments on this preliminary objection of assessee. Ld. Senior counsel for assessee is replying for further hearing. Adjourned to 11/02/15. 12.5. At this juncture, we may point out that in the written submissions filed by revenue, the dates of hearings have not been correctly mentioned. In view of the above proceedings, the revenue s contention is that the time of raising this plea, at such a late stage, raises serious doubt on the purpose of appeal being .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se laws because it all depends on facts of each case whether principles of natural justice have been complied with or not. If decision making authority has provided due opportunity to the person complaining of non-observance of principles of natural justice then it is for the person so complaining to demonstrate the same and show the prejudice caused to him. Mere bald assertion of non-observance of the principles of natural justice is of no consequence. 13.1. In course of survey it was found tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reports were cross checked and verified by the employees of NIPL in course of survey. The invoices were also impounded which were raised by Nokia Corporation of software payments at Chennai Factory. These invoices were raised at Chennai factory. The AO examined the various details with respect to commercial agreement submitted by the assessee. All these preliminary details led to the AO s belief that payments were made for down loads made by NIPL under the agreement for use in manufacture of mob .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and, therefore, it was not covered u/s 195 of the Act, attracting TDS provisions. 13.2. In the backdrop of above facts now we have to examine the role of statements recorded by the survey authorities in arriving at AO s conclusion particularly in the backdrop of assessee s plea that entire addition made by AO is based on statements. 13.3. The AO at page 8 of his order has observed that copies of statements recorded at Gurgaon were provided to the AR on 12-2-2013. Copies of statements received fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er, the AO has observed that during the course of survey, the employees of NIPL were asked as to whether there existed any agreement between NIPL and Nokia Corporation governing the transfer of software and payments thereof. He has observed that no such agreement was found at the survey premises either at the Chennai factory or Gurgaon corporate office. None of the executives knew about the existence of any such agreements. M/s Acha Bjorklund CFO NIPL till 21-12-2012 expressed her ignorance, tho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

doubtful. However, AO elaborately examined the agreement after it was produced before him post survey. At present we are not going into the details of this software supply agreement and are only referring to the same to demonstrate the background in which the statement of Ms. Acha Bjorklund CFO is to be considered. Therefore, AO s findings are primarily based on agreement and not on CFO s statement which was used only to corroborate his findings. 14.1. As noted earlier, the invoices raised by N .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

regard AO relied upon the statements of technical experts, the extracts from which are reproduced hereunder to demonstrate that there was no contradiction between statements of various top ranking technical experts of asessee-company. 14.3. In this regard the first statement of factory head and director operation Prakash Katama was recorded. This statement is contained at pages 602 to 604 of the PB. The question no. 1, 3,4,5,6,9 and 10 are to be reproduced. Q.l Please furnish the list of Top emp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the day to day affairs of the Chennai Plant. Ans. Myself is involved in the decision making in the areas of education, planning/ product and process equipment, man power planning. Shri D. Sbundararajan involves in decision making process in respect of HR related issues. ShrLRahul Sood involves in cost management works . Q. 4. Whether any Employment letter or employment agreernent are issued to the employees. If yes, by whom? Ans. Employment letter or employment agreement are issued by HR Central .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o sits in Espro, Finland. Mr.Kristian Pullola is the global finance antroller, who sits in Espro, Finland . Q. 6 Is there any agreement for supply of software that is used by the Chennai Plant, jf yes, please furnish the same. Ans. I have not seen or access any such document for supply Of softwre.. Q.9 Whether the subsidiary (Nokia India Private Limited, Chennai Plant) is used for the activities of the parent company Nokia OYJ, Finland? Ans. Though Nokia India Pvt. Ltd., is wholly owned subsidy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

recorded on oath. 15.The next statement relevant in the present context is of Ms. Arja Bjorklund in course of survey on 8 & 9 and subsequently on 24-1-2013 and 31-1-2013 . The statement is contained at pages 565 to 569 and at pages 605 to 632 of the PB. Relevant questions and answers thereof are reproduced hereunder: Q.1: Please furnish details of your association with Nokia group of companies. Ans: I am associated with Nokia Group of companies since Nov. 20004. I was working with Nokia Cor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ill March, 2013, the person in the helm of affairs of accounting matters of Nokia India Pvt. Ltd. i.e. Mr. Tanuj Patro, will be reporting to me. Q.5: Please furnish a detailed description of manufacturing activities of Nokia India Pvt. Ltd ? Ans: Nokia Chennai factory was set up in around 2006, it was established in SEZ because it was supposed to be an 100% EOU. It was a unit of Nokia India Pvt. Ltd. It purchases components from various suppliers, initial there were no Indian suppliers, but pres .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is done under contract manufacturing. Q.7: Is the above contract is through some written instruments? Ans: Yes, we have that. We ll provide the same to you. Q.9: Please state how the process of developing and selection of software take place for any particular model of handset, that are manufactured in Chennai factory? Ans: I do not know where the software are developed, but it is embedded in the handset in the course of manufacturing of the handset. Q. 15: We are given to understand that earli .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

titive. Q16: From when this started, who took decisions in this regrd, whether there was any written agreement for not charging any cost for delivering software to NIPL any more? Ans: It started sometimes in 2012. Who took decisions, I don t know. People at Nokia Corp. might be knowing it. I have no knowledge of any such agreements. Q17: Who in NIPL might be knowing about any such agreement? Was there any other form of understanding between Nokia Corp. and NIPL? Ans: It is not in my knowledge. Q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the DDIT, Chennai u/s 131(1A) of the Act on 4-2-2013 and 5-2-2013, is contained at pages 665 to 680 of the PB. Relevant questions and answers thereto are reproduced below: Q.2: Kindly tell me about yourself? Ans: I am Chartered Accountant by profession. I completed my CA. in Jan. 98. I first worked with Siemens telecom for two years, then two years with KPMG. In 2003 I moved to Ariba India Pvt. Ltd. In 2005, I was with Ericsson. In May 2008, I joined NIPL and was with NIPL up to 10th Sept., 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y M/s Nokia OYJ since the F.Y. 2-006-07 to the date of your joining in M/s NIPL. Please explain about the Change if any on the withholding tax issue on the software supplied subsequent to the date of your joining in M/s NIPL. Q.16. I am showing the mail by Mrs. Rinne sari to Mr. Kambhampati Shiva. It clearly states that Mr. Jitendra Grover trained Mrs. Bindu in the factory to do software invoicing with the basis that each mobile phone has a unique software license and further stated that Mr. Jit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ormation they received from factory Finance team in India. I emphasize that there was no change in the methodology for working out software price since inception in 2006 till 2011. There was no new process for computing software price suggested or implemented by me. The instruction Mrs. Sari is referring to in her email is probably the change in the description of invoice which was effected after the process of supply of software key came into vogue. The only change that happened in the software .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

software in discussion is Nokia Proprietary software. So what I was informed is that there is no way to appropriately value a "proprietary software" as there are no valuation methods or bench marks. In such a scenario, since 2006 the method followed was to value every item around excluding the software and in accordance with global transfer pricing policy, Nokia gave cost Plus margin to India factory. The balance part of cost was billed in the form of software. Software pricing theref .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iness are being assumed by Nokia Corporation. To the best of my understanding and memory, I have not seen any contract between Nokia Corp. and NIPL for contract manufacturing. Q. 23. What is the role of F&C in NIPL? Ans: NIPL F&C is responsible for three primary functions. 1) Sales Controllership including pricing of products in India, 2) Investment Controller, 3) ARC (Accounting, Reporting and Compliance). F&C team in NIPL is responsible for providing support to business in terms of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r, s/o Shri N. Elumalai, aged 34 residing at No. 45, Housing Board, Near collector office, Pallava Nagar, Kanchipuram. I am the variant manager of Chennai plant of M/s Nokia India Private Limited working since December 2008. 3. As variant Manager, Chennai plant of M/s Nokia India Private Limited (NIPL), what are the various activities that you look after? Ans: I am managing the engineering change management in the factory. Whenever there is any change in either the software or the hardware aspec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the existing models or in new models. Ans: As I told earlier, any change in the existing model or the introduction of new model is communicated to me through PDM via ECN. As far as software is concerned, it IS directly downloaded into the local IMES Server located in the Chennai factory. I along with my team access it and check it for the presence of any functional irregularities/defects. In case, there are any, we get them rectified by the global R&D team by highlighting the same. In a&q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

These are loaded to magazine, that is, screen impression for soldering purposes. 3. Then it will go through the process of SMT (surface mount technology) wherein, the capacitors, ICs, resistors, shield, light protective caps etc are placed. 4. After this process, the component is placed at automated 'optic inspection for position and quality testing. 5. After this process, they same will be passed through final heat shield connection and protective cap through reflow oven/heater. 6. After a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Speaker are placed. 9. Then, Final User Interface tests are carried out. At this Stage, the semi finished product is called as the Engine. 10. Now this engine is flashed with label software, where the customer settings are loaded in the Mobile Phone. 11. The final assembly tool mechanics, which is Key Mat, A-Cover and B-Cover, are placed. 6. What are the software that are used in the manufacturing of the Mobile phones that are made out of Chennai and at what stages, the software are used? Ans: T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tware is flashed and tested in the handset at four different stages during the Manufacturing Process, pulling the software from the local server located in the Chennai factory. 1. The first phase of software is the Panel Flash, where the core software is downloaded from the local server located in the factory into the chip. The product Serial number is generated at this stage. 2. The Second stage is the alignment testing stage where the software aligns the radio frequency of the mobile handsets. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

they paid for? Ans: These software are designed and developed at various R& D Sites of Nokia Corporation. Then, these softwares are stored at the global server of Nokia Corporation located in Finland. As explained earlier, for each model, the software is downloaded from the global server to the local server located in the Chennai factory and stored therein. In turn, each time a mobile handset is being manufactured; the software is being incorporated into each mobile handset. With regard to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ia Private Limited. I am working in NIPL since-August 2005 . 3. Product and process engineering Manager, Chennai plant of M/s Nokia India Private Limited (NIPL), what are the various activities that you look after? Ans: My role is ensuring the overall engineering capability of the factory which involves new product launch support, maintenance engineering, industrial engineering support and. equipment installation. 4. Please explain the manufacturing/assembling process of the mobile phones manufa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d at automated 'optic inspection for position and quality testing. 5. After this process, they same will be passed through final heat shield connection and protective cap through reflow oven/heater. 6. After above process is over, on the said component, the dome sheet is placed 7. Next, ACF-(assembling the LCD to the board) is done. Up to this, the process is called as Module. After the module, in the process of Panel Flash, the core software is downloaded from the server, located in the fac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s, which is Key Mat, A-Cover and B-Cover, are placed. 5. What are the software that are used in the manufacturing of the Mobile phones that are made out of Chennai and at what stages, the software are used? Ans: The mobile phones that are manufactured out of the Chennai Plant are based on Series-30 and Series-40 Platforms. For any Mobile Phone that is launched, the software is designed and developed by Nokia R&D. This software is stored in the global server in Finland. When a new model of mo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

located in the factory into the chip. The product Serial number is generated at this stage. 2. The Second stage is the alignment testing stage where the software aligns the radio frequency of the mobile handsets. 3. The Third Phase is called as the final user interface wherein, the software checks the functionality of the mobile handsets. 4. The fourth and final Phase is called the Labeling of the Mobile Handsets, wherein, the customer settings are downloaded in the Mobile Handsets and the IMEI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

server to the local server located in the Chennai factory and stored therein. In turn, each time a mobile handset is being manufactured; the software is being incorporated into each mobile handset. With regard to the payment for the software, I don't know the basis, quantum and nature of these payments. 7. Are you aware of any software key numbers being supplied by Nokia ration and are being used in the manufacturing process? Ans: I do not know any software keys supplied by Nokia 15.4. Next .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct Manager, Chennai plant of Mis_Nokia India Private Limited NIPL), what are the various activities that you look after? Ans: I am responsible for the new product launches, variant management and process engineering . 4. Please explain the process through which you update the software in the existing models or in new models. Ans: Any change in the existing model or the introduction of new model is communicated to my team through POM via ECN. As far as software is concerned, it is directly downlo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/assembling process of the mobile phones manufactured in the Chennai plant of M/s Nokia India Private Limited (NIPL)? Ans: The manufacturing process consists of the following steps, 1. First of all, the printed circuit boards are imported from china/taiwan. 2. These are loaded to magazine, that is, screen impression for soldering purposes. 3. Then it will go through the process of SMT (surface mount technology) wherein, the capacitors, ICs, resistors, shield, light protective caps etc are placed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

downloaded from the server, located in the factory, to the Chip. This panel flash is the heart of the Mobile Phone. The Product Serial Number .(PSN) is assigned during the Panel Flash. 8. Subsequently, light guide, protective shield, D-Cover, Connector, Mic, Speaker are placed. 9. Then, Final User Interface tests are carried out. At this Stage, the semi finished product is called as the Engine. 10. Now this engine is flashed with label software, where the customer settings are loaded in the Mob .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lobal server in Finland. When a new model of mobile phone is launched in the Chennai factory, the basic software is downloaded from the global server and stored in the local server in the Chennai factory. Each time a mobile phone is being manufactured; the software is flashed and tested in the handset at four different stages during the Manufacturing Process, pulling the software from the local server located in the Chennai factory. 1. The first phase of software is the Panel Flash, where the co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

downloaded in the Mobile Handsets and the IMEI number is also generated. 7. Please explain, where from these softwares, which are used in, the Mobile handsets are obtained and how are they stored and finally into the Mobile Handsets? And also, explain how are they paid for? Ans: These software are designed and developed at various R& D Sites of Nokia Corporation. Then, these softwares are stored at the global server of Nokia Corporation located in Finland. As explained earlier, for each mod .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

PB. Relevant questions and answers thereto are reproduced below: 2. Please identify yourself Ans: I am Subbaiah Chokkalingam, sto Shri M. Chokkalingam, aged 41 residing at C-1S, Shanti Niketan, West Woods, Kuntrathur Road, Mathanandapuram, Porur. I am, the supply operations manager of Chennai plant of fv1/s Nokia India Private Limited, I am working since March 2011. 3. As supply operation Manager, Chennai plant of M/s Nokia India Private Limited (NIPL), what are the various activities that you l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ufacturing process consists-of the following steps, 1. First of all, the printed circuit boards are imported from china/taiwan. 2. These are loaded to magazine, that is, screen impression for soldering purposes. 3. Then it will go through the process of SMT (surface mount technology) wherein, the capacitors, ICs, resistors, shield, light protective caps etc are placed. 4. After this process, the component is placed at automated 'optic inspection for position and quality testing. 5. After thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erial Number .(PSN) is assigned during the Panel Flash. 8. Subsequently, light guide, protective shield, D-Cover, Connector, M/s, Speaker are placed. 9. Then, Final User Interface tests are carried out. At this Stage, the semi finished product is called as the Engine. 10. Now this engine is flashed with label software, where the customer settings are loaded in the Mobile Phone. 11. The final assembly tool mechanics, which is Key Mat, A-Cover and B-Cover, are placed. 6. What are the software that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m the global server and stored in the local server in the Chennai factory. Each time a mobile phone is being manufactured; the software is flashed and tested in the handset at four different stages during the Manufacturing Process, pulling the software from the local server located in the Chennai factory. 1. The first phase of software is the Panel Flash, where the core software is downloaded from the local server located in the factory into the chip. The product Serial number is generated at th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

used in, the Mobile handsets are obtained and how are they stored and finally into the Mobile Handsets? And also, explain how are they paid for? Ans: These software are designed and developed at various R& D Sites of Nokia Corporation. Then, these softwares are stored at the global server of Nokia Corporation located in Finland. As explained earlier, for each model, the software is downloaded from the global server to the local server located in the Chennai factory and stored therein. In tu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mbamorthy, aged 35 residing at No.4, Bharathydasan Street, New perungalathur, Chennai-63. I am the capability manager for factory support and deployment of Chennai plant of M/s Nokia India Private Limited. I am working in NIPL since March 2007. 3. As capability manager for factory support and deployment, Chennai plant of M/s Nokia India Private limited (NIPL), what are the various activities that you look after? Ans: I am managing a team which supports tier-2 model for manufacturing and executio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt manager and his team (namely Mr. E. Uma Shankar). As I understand from what he told me that any change in the existing model - the introduction of new model is communicated to him through PDM via ECN. As far as software is concerned, it is directly downloaded into the local IMES Server located in the Chennai factory. He along with his team access it and check it for the presence of any functional irregularities/defects. In case, there are any, he gets them rectified by the global R&D team .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, screen impression for soldering purposes. 3. Then it will go through the process of SMT (surface mount technology) wherein, the capacitors, ICs, resistors, shield, light protective caps etc are placed. 4. After this process, the component is placed at automated 'optic inspection for position and quality testing. 5. After this process, they same will be passed through final heat shield connection and protective cap through reflow oven/heater. 6. After above process is over, on the said comp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r Interface tests are carried out. At this Stage, the semi finished product is called as the Engine. 10. Now this engine is flashed with label software, where the customer settings are loaded in the Mobile Phone. 11. The final assembly tool mechanics, which is Key Mat, A-Cover and B-Cover, are placed. 7. What are the software that are used in the manufacturing of the Mobile phones that are made out of Chennai and at what stages, the software are used? Ans: The mobile phones that are manufactured .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dset at four different stages during the Manufacturing Process, pulling the software from the local server located in the Chennai factory. 1. The first phase of software is the Panel Flash, where the core software is downloaded from the local server located in the factory into the chip. The product Serial number is generated at this stage. 2. The Second stage is the alignment testing stage where the software aligns the radio frequency of the mobile handsets. 3. The Third Phase is called as the f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e designed and developed at various R& D Sites of Nokia Corporation. Then, these softwares are stored at the global server of Nokia Corporation located in Finland. As explained earlier, for each model, the software is downloaded from the global server to the local server located in the Chennai factory and stored therein. In turn, each time a mobile handset is being manufactured; the software is being incorporated into each mobile handset. With regard to the payment for the software, I don .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m of mechanics solutions sourcing availability management in Chennai plant of M/s Nokia India Private Limited. I am working in NIPL since May 2006. 2. As availability head electro mechanics in Chennai plant of M/s Nokia India Private Limited (NIPL), what are the various activities that you look after? Ans: My role is to ensure availability of electro mechanics commodity used in the mobile handsets produced at Nokia factories all over the world, namely Chennai, Beijing in China, Dongguan in China .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ince May 2011. 3. As manager planning and logistics in Chennai plant of M/s Nokia India Private Limited (NIPL), what are the various activities that you look after? Ans: My role is to plan for the production in the factory, looking after the logistics of finished goods. 16. We have extensively extracted from the statements in order to demonstrate that all the persons whose statements were recorded were either controlling the operations or were in direct charge of the manufacturing of the mobile .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, therefore, there was no occasion to putting them for cross-examination. Further, these technical persons never questioned, either themselves or through their employer, the replies so recorded or complained of any coercion, undue influence or threat. The contents and facts of these statements have never been questioned by them. We find considerable force in the submission of ld. Spl. Counsel that assessee never pointed out any factual inaccuracy in any of the statements and never came out with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pert s report etc. . It is well settled law that before the plea of cross examination is advanced, it has to be shown that the party seeking cross examination is an adversely affected party by the evidence (in present case statements of employees) placed on record. In the present case the contents of statements have not at all been disputed by assessee and, therefore, it cannot be said that assessee is an adversely affected party by these statements. 17. Now coming to the issue regarding timing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for cross-examination of such individuals, as was necessary. The assessee further stated as under: It is, therefore, imperative as a basic prerequisite that in the interest of administration of justice and the principles of natural justice, the appellant should be allowed to present its case in a more effective manner before your goodself. In order to enable the appellant to present its case in an effective manner, the appellant should be provided: Adequate opportunity to file additional eviden .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ity to rebut various observations and interpretations of the Ld. AO 17.2. Thereafter vide letter dated 6-5-2013 the assessee again primarily requested for providing an opportunity to cross-examine Mr. Sastri K. Panjala. Vide letter dated 8-5-2013 the assessee again, inter alia, submitted as under: Äs regards the hearing we had already requested your goodself to clarify if the appellant will be given an opportunity to crows-examine witnesses and tender additional evidence in letters dated 3- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed for providing cross examination but the main thrust was on the cross-examination of Mr. Shastri and after his cross-examination only, the assessee clearly stated that it would be in a position to take a call for crossexamination of other persons. 17.4. Vide letter dated 17-5-2013 ( page 271 to 428 of the PB), the assessee again requested for cross-examination as requested in letters dated 2-3-2013, 3-5-2013, 6-5-2013 and 8-5-2013. 17.5. On 20-5-2013 Mr. Shastri was cross-examined by the asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT(A) and further submissions based on cross-examination and re-examination of Mr. Shastri and also response to the supplementary replies filed by the DDIT, Internatiional Taxation, Circle 2(1) dated 23-5-2013. It is pertinent to note at this juncture that assessee did not ask for cross-examination of other employees in this letter and, therefore, did not pursue its claim regarding cross-examination of other employees. Further, the department has filed before us, copy of letter dated 2-5-2013, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pecify the employees to whom they wanted to cross-examine and in response thereof, the assessee has filed the following letter: The Honourable Members Bench 'E" Income Tax Appellate Tribunal Loknayak Bhawan, Khan Market New Delhi Dear Sirs, Sub: Submission of names of persons the appellant wishes to crossexamine Re: Submissions of arguments on the opportunity to cross-examine persons submitted to the Hon'ble Tribunal on 18th December, 2014. As directed by the Hon'ble Bench to su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on page 47 of the order (illustratively for A Y 2007-08) has stated that all the statements recorded by the income tax authorities have been provided to the appellant and are being relied upon. Similarly, on page 56 of the order the Respondent has again stated that the factual matrix of the case has been gathered from the recorded statements. However, the Respondent in the assessment orders dated 15.03.2013 has expressly relied on the statements of the following persons: 1. Jitendra Grover 2. A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g the course of hearing before this Tribunal has further filed the statements of the following persons with the intention of relying upon them: 11. P. Ravindran 12. Santosh Kulkarni 13. Gerald Lawrence 14. N. Ganesh 15. Usha Rajeev 16. Anupam Dhawan 17. Avijit Mukerji 18. Tarun Arora 19.D. Indragiri Raj Kumar 20. Rahul Sood 21.P. Balaji 22. R. Ramachandran While the Respondent has maintained that all statements have been relied upon, we wish to limit our cross-examination to such witnesses whose .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irect the Respondent to not rely on statements of any other witnesses (other than the 22 persons mentioned above) without first affording the appellant an opportunity to cross- examine them. 17.7. In this letter also the assessee has not specified specific employees to whom it wanted to cross-examine. 18. We have gone through the proceedings from inception and find that authorities below have acted justly to assessee by providing statements of all employees, ex employees, CFL reports etc. Having .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f ld. Special Counsel that timing of raising this plea at such a later stage of proceedings is not justified . If the assessee was very serious about this plea then it should have been taken on the very first date of hearing and not when Revenue was replying to the detailed submissions advanced by assessee on merits. 18.1. The submissions of ld. Counsel, however, is that they were not knowing as to what were the settings in SAP; how the software product was manufactured and sealed in binary codi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ignored and suppressed. Further, the details given by the Process Engineering Manager, V. Sembian on February 8, 2013 in the course of actual survey in relation to the two mobile handsets clearly showing the IMEI, the PSN and Software ID numbers were mentioned. There were no follow-up questions in this regard and the fact that the Ld. DDIT, Chennai was shown these facts and details after they were downloaded from the database is not borne out by the statement of Mr. V. Sembian. Facts and detail .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y can only be brought out by cross-examining the witnesses. As far as submissions with reference to CFSL report are concerned, Mr. Shastri was cross examined by assessee before ld. CIT(A) and, therefore, the objections qua CFSL report cannot be sustained. However, a close examination of ld. Sr. Counsel s submission makes it very clear that primarily assessee s endeavour is to seek certain clarifications from employees on technical aspects. The employees, whose statements were relied by AO, were .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version