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GST - Presentation before Empowered Committee - Industry voices against dual administration
CASE LAWS
2016-TIOL-1917-HC-AHM-IT
CIT Vs VODAFONE ESSAR GUJARAT LTD: GUJARAT HIGH COURT (Dated: August 23, 2016)
Income tax - Section 115JB(2)
Keywords - computation of book profit - irrecoverability of bad debts & MAT liability
Whether the decision of Division Bench of a High Court which was rendered without the aid of Supreme Court's judgement which was available at the relevant point of time and which may have some bearing on the interpretation of the relevant statutory provisions, would render such decision of such High Court per incuriam - NO: HC
The Revenue had preferred the present appeal seeking effect of insertion of clause (i) to explanation (1) of sub-section (2) of section 115JB of the I-T Act w.e.f 1st April, 2001 in computation of assessee's liability under MAT provisions.
Having heard the parties, the High Court held that,
++ as per clause (i) of explanation (1), for the purpose of section 115JB, "book profit" would mean the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by "the amount or amounts set aside as provision for diminution in the value of any asset". The judgement of the Supreme Court in case of CIT vs. HCL Comnet Systems and Services Ltd., holds the field on the question of adding back the provision made towards irrecoverability of bad debts for the purpose of computing book profit, in which it was held that any provision made towards irrecoverability of debts cannot be said to be a provision for liability. This decision of the Supreme Court was however, rendered when explanation (1) below to section 115JB(2) did not contain above noticed clause (i) which was introduced by the Finance Act of 2009 w.e.f 1st April, 2001. In context of such changed statutory provision, the question considered by the High Court in case of CIT vs. Deepak Nitrite Limited, was whether the decision of Supreme Court in case of HCL Comnet Systems and Services Ltd., would continue to hold the field. The Court therein held that: "....there seems no demarcation between the provisions which would reduce the value of the assets against a situation where the value of the assets may come down to 'Nil'. In either case there would be diminution in the value of assets. Even when the value of the assets is brought down to 'Nil' from the previously existing value, it can still be stated that there has been a diminution in the value of the assets. In any case no such facts arise in this appeal....";
++ it is noticed that there is a conflict between the two judicial pronouncements between two Division Benches. One takes a view that by virtue of insertion of clause(i) to explanation (1) of section 115JB(2), any provision for bad and doubtful debts would have to be added while computing the income of the assessee for MAT provisions. The other taking a view that provision for bad and doubtful debts not being ascertained, liability cannot be added back with the aid of clause (c) to explanation (1) of section 115JB(2). Having gone through the judgement of the Supreme Court in case of Vijaya Bank and decisions of Karnataka High Court in cases of Kirloskar Systems Ltd. and Yokogawa India Ltd., this court is of the opinion that irresolvable conflict has arisen between the two judgements of Division Benches of this Court which cannot be resolved by having resort to the decision of the Supreme Court in case of Vijaya Bank. In the said decision, the Supreme Court interpreted explanation (1) to section 36(1)(viii) which provides that for the purposes of the said clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee, shall not include any provision for bad and doubtful debts made in the account of the assessee. The Supreme Court held and observed that said explanation would not govern a situation where there was an actual write off by the assessee in his books in the manner explained in the judgement. Counsel for the assessee would therefore, contend that in the present case also the same legal philosophy would apply and clause(i) of explanation below section 115JB(2) would not come into play;
++ undisputedly, the decision of the Supreme Court in case of Vijaya Bank, was not rendered in context of newly inserted clause (i) of explanation (1) below section 115JB(2). In that sense it cannot be said that the decision of this Court in case of Deepak Nitrite Limited was rendered per incuriam though it is true that the said decision of the Supreme Court was available by the time judgement of High Court in case of Deepak Nitrite Limited was rendered, was not noticed. In view of the judgement of the Supreme Court in case of Vijaya Bank, whether this Court would have taken a view as was adopted by Deepak Nitrite Limited, is neither possible nor proper on our part to speculate upon. The situation therefore, has arisen where the decision in case of Deepak Nitrite Limited, was rendered without the aid of Supreme Court judgement in case of Vijaya Bank, which though may have some bearing on the interpretation of the relevant statutory provisions, would not render the decision in case of Deepak Nitrite Limited per incuriam. At the same time, the Court in case of Indian Petrochemicals Corporation Ltd. had not noticed the judgement in case of Deepak Nitrite Limited. In our opinion, therefore, this controversy is required to be resolved by the Larger Bench.
Matter referred to larger bench
2016-TIOL-1916-HC-P&H-IT
CIT Vs SATISH BALA MALHOTRA: PUNJAB AND HARYANA HIGH COURT (Dated: August 11, 2016)
Income Tax - Sections 33(1)(iii), 132, 144 & 153A.
Keywords - immovable property - legal heirs - deceased assess - notice of motion - deemed dividend - secured loan - interest.
Whether when there is neither any co-relation of investment made and the interest bearing loan and the capital available with assessee, nor anything to indicate that such investment was made out of the capital, any disallowance on such account is possible - NO: HC
The assessee was an individual, who carried on business in the firm name and style of M/s Modern Publishers as the sole proprietor thereof. The three respondents were his heirs. Assessee had filed a return of income on 31.10.2006. On 15.12.2008, AO passed an assessment order u/s 144. Assessee challenged the same before the CIT(A). A search was carried out u/s 132 at the assessee's premises. On 23.11.2009, the assessee filed a return of income u/s 153 A. There was no difference between the two returns. On appeal, CIT(A) passed an order in the assessee's appeal against the assessment order dated 15.12.2008. On 29.12.2010, a further assessment order was passed u/s 153 This was in relation to the return filed u/s 153 A on 23.11.2009. The assessee challenged this order before the CIT (A) by way of an appeal which was disposed of through order dated 11.08.2011. This order essentially confirmed the order dated 26.02.2010 by which the assessee's appeal against the original assessment order had been disposed of. CIT(A) granted limited relief to the assessee. AO disallowed the deduction u/s 33(1)(iii) in relation to interest paid by the assessee. Secured loans of Rs. 15.32 crores were outstanding as on 31.03.2006. This appeal pertains to the assessment year 2006-2007. The assessee had admittedly advanced loans of Rs. 11.19 crores to his sister concerns. He, however, charged interest in respect of the loans to two sister concerns aggregating to Rs. 3.82 crores. No interest was charged in respect of the loans to six other sister concerns aggregating to Rs. 7.37 crores. As recorded by AO, the assessee paid various amounts of interest of which interest of an amount of Rs. 46.63 lacs is relevant in this appeal. The said amount of Rs. 46.63 lacs was paid as interest during the accounting year from the assessee's overdraft account. AO disallowed interest on a proportionate basis.
Held that,
++ the findings of CIT (A) in the order dated 26.02.2010 were confirmed in the order of the CIT (A) dated 11.08.2011. The order dated 11.08.2011 merely confirmed the findings and the decision in the order dated 26.02.2010. Mr. Katoch, therefore, relied upon the observations and findings of the CIT (A) in the order dated 26.02.2010. The CIT (A) noted the assessee's contention that he had his own capital and interest free loans and profits. It was, however, observed that a perusal of the balance-sheet showed that the capital of the assessee included the profit earned during the year and that, therefore, both the closing capital and the profit earned during the year could not be considered as being available separately for advancing the interest free loans. Even assuming that to be so, it would make no difference. This is for the reason that even otherwise the assessee had sufficient amounts available to him to advance the interest free loan of Rs. 7.37 crores. As mentioned earlier, the assessee had available with him Rs. 11.78 crores on account of capital itself. Moreover, he also had an interest free loan of Rs. 1.18 crores from his wife. CIT(A) also observed that the assessee had not rebutted the AO's contention that he had also made investment out of his capital during the year which exceeded the capital of the assessee. However, Mr. Katoch was unable to invite our attention to any part of the record which established this assertion. He merely relied upon the observation. Further, the nature of this investment is also not indicated. Nor is there anything to indicate that such investment was made out of the capital. There is no co-relation of the investment made and the interest bearing loan and the capital available to the assessee. In these circumstances, the Tribunal's appreciation of the facts to the contrary cannot be held to be absurd or perverse. In our view, therefore, the questions sought to be raised are not substantial questions of law. The appeal is, therefore, dismissed.
Revenue's appeal dismissed
2016-TIOL-1569-ITAT-MUM
ASHA GOPAL GARG Vs ITO: MUMBAI ITAT (Dated: August 24, 2016)
Income Tax - Sections 200A & 234E
Keywords - Adjustment - Fee - TDS
Whether the fees leviable u/s 234E can be adjusted while processing the TDS statements u/s 200A to the period prior to 01.06.15 post to which fees payable u/s 234E can be adjusted while processing intimation u/s 200A - NO : ITAT
The assessees involved in the present appeals are individual as well as company. The assessees filed their return. In all these cases, there was admittedly a delay in filing of the TDS returns. During the assessment proceedings the AO raised demand in each of the aforesaid cases by way of an intimation issued u/s 200A for levy of fees u/s 234E for delay in filing of TDS statement beyond the period stipulated as per the provisions of section 200(3). Aggrieved by this levy of fees, the respective assessees carried the matter in appeal before the CIT(A) but without any success. Being aggrieved by the orders of the CIT(A), the assessees in the above captioned appeals have come in appeal before the Tribunal. Therefore the issue challenged in all these appeals are common in nature hence for the sake of convenience are heard together.
Having heard the parties, the Tribunal held that,
++ respectfully following the proposition laid in Sibia Healthcare Pvt. Ltd. vs. DCIT and Smt. G. Indhirani & Others vs. DCIT where it was held that "in the absence of enabling provision under section 200A prior to 01.06.15 such a power was not vested with the AO (TDS)". In the instant cases also, the intimation u/s 200A has been processed prior to 01-06-2015. Accordingly, consistent with the view taken by the coordinate bench in the above cited case, we set aside the demand raised u/s 234E of the Act in the intimation processed u/s 200A of the Act.
++ in the result, all the appeals of the assessee stand allowed.
Assessee's appeal allowed
