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Showing 441 to 460 of 1256 Records
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2015 (5) TMI 822
Eligibility of Deduction u/s 80IB - profits derived from industrial undertaking on job work contract - whether sub-section (13) of Section 80IA can be made applicable in respect of a claim made by the assessee in terms of Section 80IB? - Held that:- Assuming for a moment that certain clauses of Section 80IA was made applicable by virtue of sub-section(13) of Section 80IB, we find that the said provision is applicable only in respect of sub-section (5) and sub-sections (7) to (12) of Section 80IA and not in relation to sub-sections (4) and (13) of Section 80IA. Therefore, there cannot be any controversy on this issue, as the claim of the respondent/assessee does not fall under Explanation to sub-section (13) of Section 80IA of the Income Tax Act.
The provisions contained in sub-section (5) and sub-sections (7) to (12) of Section 80-IA alone are applicable and not sub-section (4) or (13) of Section 80-IA of the Income Tax Act. Tribunal was right in holding that the deduction under Section 80IB on profits derived from industrial undertaking on job work contract is to be allowed - Decided against revenue.
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2015 (5) TMI 821
Transfer pricing adjustment - Advertising, Marketing and Promotion (AMP) expenses - Held that:- No detail of the AMP functions performed by the assessee is available on record. Similarly, there is no reference in the order of the TPO to any AMP functions performed by comparables. In fact, no such analysis or comparison has been undertaken by the TPO because of his applying the bright line test for determining the value of the international transaction of AMP expense and then applying the cost plus method for determining its ALP. The ld. AR also failed to draw our attention towards any material divulging the AMP functions performed by the assessee as well as comparables. As such, we are handicapped to determine the ALP of AMP expenses at our end, either in a combined or a separate approach. Under such circumstances, we set aside the impugned order and send the matter back to the file of the TPO/AO for determining the ALP of the international transaction of AMP spend afresh in accordance with the manner laid down by the Hon’ble High Court in Sony Ericson Mobile (2015 (3) TMI 580 - DELHI HIGH COURT). Ex consequenti, the ground raised about the TPO having no jurisdiction to determine the ALP of AMP expenses, is dismissed following the judgment in the case of Sony Ericsson Mobile (supra).
Disallowance of Advances written off - Held that:- Succinctly, the assessee claimed the above deduction by treating it as bad debts written off. On being called upon to justify the deductibility of the amount, the assessee submitted that it imported certain goods during the financial year under consideration paying Special Additional Duty (SAD). Since the goods in respect of which such amount of SAD was paid became obsolete, the amount of SAD was written off and claimed as deduction. It was stated that the nomenclature of bad debt was inadvertently given, whereas, in fact, this amount was payment of irrecoverable/unadjustable SAD. It was also stated before the DRP that the payment of SAD by any importer is refunded when the goods are further sold. Since the goods in respect of which this SAD was paid, became obsolete and written off in the accounts of subsequent years, the amount of SAD was claimed as deduction in this year. Unconvinced with the assessee’s submissions, the DRP approved the view taken by the AO in making the addition.
After considering the rival submissions and perusing the relevant material on record, it is noticed that the assessee, as an importer, paid SAD and, hence, would have ordinarily become entitled to its refund on further sale. The amount in question represents the payment of SAD on the goods becoming obsolete and incapable of further sale. As such, the amount of SAD on such goods has ceased to be refundable. When the goods become obsolete, the payment of SAD already made assumes the character of a part of the purchase price of the goods. It can be seen from the assessee’s submissions made before the DRP as recorded in para 11.1 of its Direction that the goods became obsolete and were ‘ultimately written off in the books of account in the subsequent years.’
This shows that the instant amount of SAD paid in relation to such goods cannot be claimed as deduction in the year under consideration because such goods were still appearing as closing stock in the books of account of the assessee. As the payment of SAD in such circumstances is nothing, but, a part of the purchase price, the same cannot be separated from the purchase price of goods, to be written off separately in the year in question, when the corresponding goods are still treated as stock-in-trade. We, therefore, approve the view taken by the AO on this issue. This ground fails.
Denial of deduction towards Provision for warranty - Held that:- There is no discussion in the assessment order on the assessee’s claim for deduction of warranty provision. No addition has been made by the AO on this score. It can be noticed from the DRP’s direction that the assessee took up this issue before the DRP claiming deduction of ₹ 7,22,50,345/- on account of warranty provision for the year in question. It is clear from para 12.3 of the Direction given by the DRP that the assessee voluntarily disallowed this amount at the time of filing income-tax return. It is not understandable as to under which circumstances the assessee suo motu disallowed the claim at the time of filing of income-tax return and sprang up claiming deduction during the course of assessment proceedings. The ld. AR also failed to throw any light on this aspect of the matter. The Hon’ble Supreme Court in the case of Rotork Controls India (P) Ltd. Vs. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA) has held that a warranty provision made by the assessee on the basis of the past experience is allowable as deduction u/s 37. It has further been held that the deduction can be allowed if the provision is made on some rational basis. Since the necessary facts in this regard are not available before us, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of AO for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. - Decided partly in favour of assesse for statistical purposes
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2015 (5) TMI 820
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 reason that the term ‘proceeding’, defined u/s 133A, includes the TDS proceedings also. The survey, thus, could be conducted for obtaining information in regard to TDS proceedings also as mandated 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 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 for issuing of authorisation. As per proviso to section 133A, the 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. 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 enumerated in clauses (i),(ii) & (iii) to section 133A(1), as reproduced above and, therefore the powers cannot be restricted in any manner, particularly when sufficient safeguards have been provided by legislature itself while drafting section 133A, as is evident from bare reading of various clauses of section 133A.
Statement u/s 131 could not be recorded because there was no non-cooperation of persons present at the time of survey as is contemplated u/s 133A(6) - Held that:- The assessee 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 hold that there was no illegality in carrying out survey and the statements recorded u/s 131 at Chennai were validly recorded.
Cross-examination being not provided in respect of various statements used in framing the order u/s 201/201(1A) - held that:- All the statements were duly provided to assessee and during the proceedings before the AO, the assessee never asked for cross-examination. 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, 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. The palladium of justice requires, that law suits be not protracted, otherwise 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 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 disputed/ controverted by assessee in any manner. The submission is that questions put during recording of statements were not taken to its logical end. Therefore, taking an holistic view of the entire gamut of proceedings, we are of the opinion that no irregularity has crept in during course of proceedings before AO/ CIT(A) and, therefore, the orders of both the lower authorities are not required to be set aside, as the matter is not required to be restored to AO/ CIT(A) to correct any irregularity. However, 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
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2015 (5) TMI 819
Penalty u/s. 271(1)(c) - failure to produce certain primary records exhibiting how much rough diamonds were finally converted into polished diamonds, and how one can establish the quality and size - Held that:- stand of the assessee is that it has been maintaining the books of accounts as per the accounting standard notified by the income tax authorities u/s. 145(2) of the Income Tax Act. Assessing Officer has not pointed out any factual error in the details maintained by it. He might have felt handicapness from those details to deduce the result according to his understanding. But the accounts are audited accounts duly complying all the requirements, the addition is an estimated addition on the basis of estimated yield, therefore, there is an inherent difference of opinion between the result shown by the assessee vis-a-vis ultimately determined.
In such situation, assesse cannot be held liable for furnishing inaccurate particulars. In our opinion, if the basic details were not maintained by the assessee and its action put the Assessing Officer against the wall leaving no choice except to reject the book result and estimate the income, then, probably this argument may not be available with the assessee that income has been determined on an estimate basis, therefore, no penalty is imposable on it. But in the present case, the Assessing Officer has not brought on record the facts with this angle. It has not been established that even basic records and the books of accounts were not maintained according to the notified standard of accounting. The Assessing Officer did not point out factual inaccuracy in the details submitted by the assessee. - Decided in favour of assesse.
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2015 (5) TMI 818
Revision u/s 263 - directing AO to treat income from sale of shares as business income instead of income from short term capital gains - Held that:- Perusal of the questionnaire as well as reply given by the assessee exhibits that Assessing Officer has conducted inquiry before accepting the stand of the assessee. In the impugned order, Ld. Commissioner has nowhere pointed out, as to how the order of the Assessing Officer is erroneous. He simply observed that since assessee has earned huge margin on short term investment, therefore, the transaction ought to have been treated as speculative transaction. Even otherwise, the assessee has pointed out that delivery of the shares was taken by it in its Demat account. Speculative transaction means, a transaction in which a contract for the purchase or sale of any commodity including stocks and shares is periodically settled, otherwise than by actual delivery or transfer of the commodity or scripts. The Ld. CIT had nowhere establishes, as to how, it was speculative transaction. It is merely replacement of the opinion of the Assessing Officer with other possible view. Therefore, in our opinion Ld. Commissioner is not justified to take action u/s. 263. We allow the appeal of assessee and quash the impugned order passed u/s. 263 of IT Act by Ld. CIT. - Decided in favour of assesse.
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2015 (5) TMI 817
Unaccounted cash credit - CIT(A)'s appreciating the fact that the assessee's credit card statements do not show any entry of credit card swiping for cash withdrawals - Uaaccounted credit card swiping for cash withdrawal - peak credit benefit to the assessee on the cash withdrawals from the bank accounts given by CIT(A) = Held that:- It was only during the course of proceedings before the CIT(A), the respondentassessee filed the cash flow statement, wherein the sources for the above are supposed to have been explained. However, the AO on remand report had not accepted the cash flow statement in the absence of evidence filed in support of the cash sources shown in the cash flow statement. Even during the course of remand proceedings, the Ld. AO was not satisfied about the explanation rendered for the sources for cash deposits in the bank and the payments made for credit cards. The Ld. CIT(A) without meeting the objections raised by the AO has simply accepted the explanation tendered by the respondent-assessee and he went on discussing about peak credit theory without discussing as to how the fact situation of the case fits into peak credit theory and we find from the grounds of appeal filed before him that no such ground was raised. The additions were made purely based on facts, unless the facts were duly verified by the AO, the addition should not have been deleted.
The CIT(A) in the impugned order had not dealt with the facts of the case, he simply referred to certain case laws governing the peak credit theory which is not the germane to the issue on hand before him. The impugned order gives no reason which would indicate as to why the additions are deleted. The order is bereft of reasons and does not discuss the facts of the case. Therefore, the order suffers from the vice of being an order without reasons. The Hon'ble Supreme Court held in the case of CCT Vs. Shukla Brothers [2010 (4) TMI 139 - SUPREME COURT OF INDIA] held that, recording of reasons is an essential feature of providing justice and in fact is the soul of orders. Further, the Supreme Court in the case of Kranti Associates (P) Ltd. Vs. Masood Alam Khan [2010 (9) TMI 886 - SUPREME COURT OF INDIA] has summarized the principles for recording reasons. Thus the order of CIT(A) cannot be sustained in the eyes of law. Remit the matter back to the file of CIT(Appeals) for fresh adjudication of the issue after affording a reasonable opportunity of hearing to the respondent-assessee. - Decided in favour of revenue for statistical purposes.
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2015 (5) TMI 816
Eligibility for benefit of section 44BB denied - AO treated the payment received by the assessee from leasing of oil drilling rig as royalty as per Article 12 of India- USA DTAT - Held that:- There is no dispute that the contract entered into by the assessee in India was effectively connected with that PE in India and the dispute as to whether letting out drilling rig, services and facilities by the assessee in connection with prospecting production and extraction of mineral oil under the contract with Pride Foramer as accepted by ONGC is a sub-contract and hence the assessee is not entitled to have benefit of taxability under sec. 44BB of the Act has been decided in favour of the assessee by the Co-ordinate Bench of the ITAT in the case of Louis Drefus Armateures SAS vs. ADIT (2015 (2) TMI 899 - ITAT DELHI).
Since both the conditions as pointed out in the case of PGS Geophysical AS vs. ACIT (2014 (7) TMI 723 - DELHI HIGH COURT), i.e.the receipt of the assessee can be taxed under sec. 44BB only if the assessee has a PE in India during the relevant period and the contract entered into by the assessee in India was effectively connected with the PE in India have been fulfilled in the present case, we are of the view that the assessee is very much eligible for the benefit available under sec. 44BB of the Act towards the hire charges of the drilling rig by applying the deemed profit ratio of 10% under the said provisions. It is held accordingly with direction to the Assessing Officer to compute the tax as such by allowing the benefit of the provisions laid down under sec. 44B of the Act - Decided in favour of assesse.
Chargeability of interest u/s 234B and 234C - Held that:- As when there was no obligation for advance tax as income received by the assessee was subject to tax deduction at source and tax was also deducted in accordance with order passed u/s 195 of the Act and further that the AO has erred in law by charging surcharge and education cess on income tax rate in excess of the maximum rate of tax prescribed under Article 12 of the India USA Double Tax Avoidance Treaty. These issues are consequential in nature to the issue raised in ground No. 1 adjudicated herein above. These grounds thus do not need independent adjudication - Decided in favour of assesse.
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2015 (5) TMI 815
Penalty u/s 271(1)(c) - Held that:- From the aforesaid observation of the AO, it is clear that whatever was added that was the result of investigation carried out by the Investigation Wing of the Department. However, the AO during the course of regular assessment proceedings u/s 143(3) of the Act was fully satisfied with the explanation of the assessee and no addition was made in spite of the fact that all the information relating to increase in share capital were furnished by the assessee. So, it cannot be said that the assessee concealed any information or particulars from the department.
It is well settled that penalty proceeding and assessment proceedings are two different and distinct proceedings. In such type of cases, there can be many reasons for making the surrender but the surrender itself is not a conclusive proof of concealment of income or furnishing of inaccurate particulars of income. In the present case, it is also noticed that the AO levied the penalty u/s 271(1)(c) of the Act. However, for levying the penalty in search cases the Finance Act, 2007 inserted section 271AAA of the Act w.e.f 01.04.2007 which clearly states that no penalty under the provisions of clause (c) of Sub-section (1) of section 271 t shall be imposed upon the assessee in respect of the undisclosed income referred to in Sub-section (1) i.e. the undisclosed income found after the search, the word “shall” used in Sub-section (3) to section 271AAA makes it mandatory, therefore, the penalty u/s 271(1)(c) of the Act was not leviable in the present case. Therefore, it can be said that the AO wrongly invoked the provisions of section 271(1)(c) of the Act and levied the penalty under said section. In the present case, since the search took place on 04.09.2008 i.e. after first day of June 2007, therefore, penalty if any was leviable that was to be levied u/s 271AAA of the Act but not u/s 271(1)(c) of the Act. Thus penalty levied by the AO u/s 271(1)(c) of the Act was not justified and the ld. CIT(A) wrongly upheld the penalty levied by the AO - Decided in favour of assesse.
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2015 (5) TMI 814
Refusal for granting registration u/s 12A(1)(aa) - Held that:- It is an undisputed fact that assessee is running educational institution as is apparent from the assessment order of earlier years and moreover the object clause as suggests that assessee is running school for educational purposes.
The argument of Ld. D.R. that original constitution needs to be examined with respect to objects clause does not hold much force as A.O. in assessment orders of earlier years has noted that society was running a school. In view of above facts and circumstances and in view of the judgements as noted above, we direct the Commissioner to allow registration u/s 12AA of the Act. The A.O. during assessment proceedings will however be entitled to examine the books of accounts of assessee with a view to examine any violation of the Act and can disallow exemption u/s 11 if anything adverse is found. - Decided in favour of assessee
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2015 (5) TMI 813
Revision u/s 263 - examination of sale of property and genuineness of long term capital gains - Held that:- The details called for by the Assessing Officer were furnished by the assessee and such details were accepted by the Assessing Officer and in such circumstances, it cannot be said that there is a lack of enquiry. There was an enquiry, though it is inadequate and in such circumstances, in view of the above decisions, the Commissioner of Income Tax lacks jurisdiction under section 263 of the Act to revise the assessment order. Thus, respectfully following the said decisions of CIT Vs. Sunbeam Auto Ltd. [2009 (9) TMI 633 - Delhi High Court] and CIT Vs. Development Bank Ltd [2010 (2) TMI 161 - BOMBAY HIGH COURT] we set aside the impugned order of the Commissioner of Income Tax - Decided in favour of assesse.
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2015 (5) TMI 812
Disallowance of deduction under section 80IA - sale of carbon credit, TUF interest subsidy receipt and generation loss compensation receipt - Held that:- As relying on case of C.N.V Textiles Pvt. Ltd., Vs. DCIT [2015 (5) TMI 808 - ITAT CHENNAI] we hold that income from carbon credit is capital receipt not exigible to tax and such income is not eligible for deduction under section 80IA of the Act.
As relying on case of C.N.V Textiles Pvt. Ltd., Vs. DCIT [supra] we hold that TUF is a capital receipt and not a revenue receipt and not entitled for deduction under section 80IA on such receipt.
Respectfully following the said decisions of of C.N.V Textiles Pvt. Ltd [supra] & Magnum Power Generation Ltd. vs DCIT [2010 (5) TMI 605 - ITAT DELHI] we hold that generation loss compensation is eligible for deduction under section 80IA of the Act.
Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 811
Exemption u/s 10A - Treatment to foreign exchange rate gain on packing credit foreign currency loan - income from other sources OR income from business for the purpose of computing deduction under section 10A - Held that:- On going through the order of the Commissioner of Income Tax (Appeals), we do not find any valid reason to reverse the findings of the Commissioner of Income Tax (Appeals) in holding that the foreign exchange gain on packing credit foreign currency loan is not eligible for deduction under section 10A of the Act. The case laws relied on by the counsel for the assessee are distinguishable on facts and are not applicable to the facts of the assessee’s case. Decided against assesse.
Exclusion of travelling expenditure incurred in foreign currency from the total turnover also while computing deduction under section 10A - Held that:- The Commissioner of Income Tax (Appeals) following the Special Bench decision in the case of ITO Vs. Saksoft Ltd.(2009 (3) TMI 243 - ITAT MADRAS-D), rightly directed the Assessing Officer to exclude the travelling expenditure from total turnover also. Thus, we uphold the order of the Commissioner of Income Tax (Appeals) on this issue.
Excluding 50% of telecommunication expenditure incurred in Indian rupee from the export turnover - Held that:- only if telecommunication charges were incurred in foreign exchange, the same can be excluded fom the export turnover. However, in the instant case, the entire telecommunication were incurred in Indian Rupees and hence requires no exclusion from the export turnover and the Hon'ble jurisdictional Tribunal in the case of California Software Company Ltd. [2008 (8) TMI 430 - ITAT MADRAS-A] has confirmed this view. Therefore, the action of the AO is not justified in excluding the said expenditure from the export turnover as it was not incurred in foreign exchange.
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2015 (5) TMI 810
Disallowance u/s 14A - restoring back the issue to the file of AO for de novo adjudication in light of the provisions of Rule 8D - ITAT deleting the addition made by the AO u/s 14A for the purpose of computing book profit u/s 115JB(f) - Held that:- Tribunal had only reiterated in paragraph 8 of the order under challenge the finding on the expenditure as per rule 8D r/w section 14A of the Income Tax Act 1961. In relation to that, the Tribunal held that Rule 8D is not applicable to the A.Y. Under consideration. Hence, applying the provisions of Rule 8D is not justified. The further finding of the Tribunal is only to bring to the notice of the Assessing Officer that he has to abide by clause (f) of Explanation 115JB of the Income Tax Act. In such circumstances, what the Tribunal has done is to invite attention of the Assessing Officer to the orders passed by the Tribunal, Delhi Bench. Beyond this, we do not think that the Tribunal has adjudicated the claim or has accepted the contentions raised before it by either side. In these circumstances and when the Assessing Officer is expected to determine the claim afresh and in accordance with law, we do not see any basis for the apprehension and which is voiced by Mr Ahuja. With this additional clarification, the Appeal does not raise any substantial question of law. - Appeal dismissed.- Decided against revenue.
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2015 (5) TMI 809
Disallowance from the sale of carbon credit u/s 80lA - sale of carbon credit - Held that:- There is no dispute about the nature of receipts arising from sale of carbon credits as the decision of My Home Power Ltd vs DCIT (2012 (11) TMI 288 - ITAT HYDERABAD) has been upheld [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] holding therein that the same are not an offshoot of business but arise from environmental concerns. Their lordships have also observed that these carbon credits are not directly linked with power generation. It has been held as ‘capital’ and not a revenue receipt. It is to be seen that the CIT(A) applies ‘estoppel’ principle against the assessee.
The assessee had declared the carbon credit sale receipts as income due to the fact that it is otherwise entitled for section 80IA deduction. In the lower appellate proceedings, it had sought to withdraw the said declaration. The CIT(A) has not quoted any specific provision barring such an alternative plea. In these facts only, we observe that as the substantial question of law has been settled against the Revenue about nature of the receipt, the assessee is entitled for acceptance of its alternative claim. So, we accept the relevant grounds and hold that carbon credit receipts have to be treated as ‘capital’ in nature.
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2015 (5) TMI 808
Disallowance of deduction under section 80IA - sale of carbon credit, TUF interest subsidy receipt and generation loss compensation receipt - Held that:- Co-ordinate bench of the 'tribunal' in P.K.Ganeshwr vs ACIT [2015 (5) TMI 809 - ITAT CHENNAI] has accepted a similar plea raised in lower appellate proceedings for treating sale of carbon credit receipts as ‘capital’ receipts instead of ‘revenue’ receipts already accounted. The Revenue fails to point out any distinction on facts
TUF receipts is a capital receipt and not a revenue receipt and not entitled for deduction under section 80IA on such receipt. See CIT vs Shamlal Bansal [2011 (1) TMI 409 - PUNJAB AND HARYANA HIGH COURT]
Generation loss compensation receipt is eligible for deduction under section 80IA of the Act Aas relyin on Magnum Power Generation Ltd. vs DCIT [2010 (5) TMI 605 - ITAT DELHI].
Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 807
Manpower Recruitment and Supply service - principle of mutuality - Invocation of extended period of limitation - Held that:- issue is prima facie covered by the Gujarat High Court [2013 (7) TMI 510 - GUJARAT HIGH COURT] and Jharkhand High Court [2012 (6) TMI 636 - Jharkhand High Court] decisions as also by the Tribunal decision in the case of Federation of Indian Chambers of Commerce and Industry [2014 (5) TMI 183 - CESTAT NEW DELHI]. Apart from that we also prima facie find favour in the appellant's contention that demand is barred by limitation. On this ground we are of the view that appellant has a good prima facie case in its favour - Stay granted.
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2015 (5) TMI 806
Demand of service tax - Invocation of extended period of limitation - Held that:- Revenue has not filed any appeal against the impugned Order-in-Appeal for dropping the penalty under Section 78 ibid. The period involved in this case is October, 2002 to December, 2006 while the Show Cause Notice was issued on 23.02.2008. It is thus obvious that the entire demand is beyond normal period of one year (except for a period of mere three months i.e. October, 2006 to December, 2006 and that too only if the Show Cause Notice dated 23.02.2008 was actually received by the appellants on or before 25.02.2008) and therefore is hit by time bar in view of the analysis above. When the entire demand covering the period October, 2002 to December, 2006 is a meagre ₹ 19,576/- the demand for a mere 3 months will be pittance or less making it ridiculous to remand the case for computation thereof in view of the paper and effort involved as a consequence of so doing particularly when it does not involve any question of law or interpretation thereof. - Decided in favour of assessee.
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2015 (5) TMI 805
Waiver of pre deposit - Online Information and Database Access and/or Retrieval Services - Held that:- Inter-connection charges paid by one ISP to another ISP are not liable to service tax - on 01.05.2006, appellant on their own, to avoid any further litigation, took registration certificate under the category of "Business Support Services" and discharged service tax liability on such amount received from ISP and in 2008 took registration under the category of "Internet Telecommunication Services". - appellant has made out a case for waiver of pre-deposit of the amount involved as the adjudicating authority could not have argued against the Board's Circular and the clarification as is reproduced here-in-above. In view of the foregoing, we allow the application for waiver of pre-deposit of the amount involved and stay recovery thereof till the disposal of the appeal. - Stay granted.
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2015 (5) TMI 804
Levy of purchase tax u/s 4 - agriculture product processors i.e. (1) rice millers, or (2) dhal millers, or (3) soyabean oil millers, or (4) cotton millers - whether in the nature of levy on farmers - Held that:- Notwithstanding the goods being "taxable goods", there may be circumstances by reason of which the particular sale transaction does not attract tax under the Act. Section 4(4) provides for such a situation and makes the purchase of such goods taxable in the hands of the purchasing VAT dealer, on his purchase turnover, in any of the circumstances referred to clauses (i) to (iii). For instance, branch transfer or stock transfer of goods by a VAT dealer to his consignee/agent is not taxable under the Act. Such transactions attract the ingredients of clause (ii) of Section 4(4). Therefore the input of such goods are subjected to tax under Section 4(4) of the Act.
The tax levied under Section 4(4) is not on the sale of goods by a farmer/agriculturist, but on the VAT dealer who purchases goods (agricultural produce) from the farmer. The contention that a farmer or an agriculturist is being subjected to tax is not tenable, as tax is levied not on him but on the VAT dealer who purchases goods from him. It is not every purchase of taxable goods from an agriculturist/farmer, but only such goods which fall within the ambit of clauses (i) to (iii) of Section 4(4), and its proviso, which attracts levy of tax at the stage of its purchase. The contention that a farmer/agriculturist is indirectly being subjected to tax does not, therefore, merit acceptance.
When taxable goods are sold by a person, who is not a dealer under the Act, then VAT is not payable on the sale of such goods. Where a farmer grows raw cotton, paddy, raw dhal and soyabean seed in his land, and sells these agricultural produce to others, he is not liable to pay tax, on the sale of such goods, as he is not a dealer under Section 2(10) of the Act. Purchase of such agricultural produce by a VAT dealer is in circumstances in which no tax is payable by the seller. In such circumstances tax, at 4%/5% of the purchase price of such goods, is liable to be paid by the VAT dealer who purchases the aforesaid goods i.e., agricultural produce. This liability of a VAT dealer to pay purchase tax would, however, arise only if any one of the conditions, mentioned in clauses (i) to (iii) of Section 4(4), are satisfied.
If the allegations in the show-cause notice, accepted as true, show that the dealer had committed wilful evasion of tax, and the findings recorded in the assessment order establish that the assessee had wilfully evaded tax, it would suffice to extend the period of limitation in terms of Section 21(5) of the Act notwithstanding that the show-cause notice does not explicitly refer to Section 21(5) and does not specifically use the words wilful evasion of tax.
Purchase tax is levied on goods which are used as inputs for other goods which are exempt from tax, or for goods which have been transferred on consignment or to branches of the VAT dealer outside the State otherwise than by way of sale. While the provisions of the Act must, in view of Article 286(3) of the Constitution of India, be complaint with Sections 14 and 15 of the CST Act, it is not clear as to how denial of input-tax credit, or computation of input-tax credit in accordance with Rule 20 of the Rules, in the present cases is contrary to the mandate of Sections 14 and 15 of the CST Act. - In any event the question, whether computation of input-tax credit in terms of Rule 20 is in violation of Sections 14 and 15 of the CST Act, must be answered on the facts and circumstances of each case. It is for the assessee to satisfy the assessing authority that computation of the eligible input-tax credit, in terms of Rule 20, is in violation of Sections 14 and 15 of the CST Act. - Matter remanded back - Decided in favour of assessee.
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2015 (5) TMI 803
Duty demand - Invocation of extended period of limitation - Held that:- The limitation, at the relevant time, for issuance of show cause notice was six months. It is therefore clear that in terms of Section 28 of the Customs Act, 1962, the show cause notice issued to the respondents before the limitation period. However, the Department sought to invoke the aforesaid proviso on the ground that there was willful misstatement and miss-declaration of the imports in the Bills of Entries which were filed by the respondents in clearing the goods. The misstatement/miss-declaration which is attributed is that though the imports were not meant for repairs, it was so stated in the Bills of Entries. This stand to invoke the proviso found to be incorrect by the Tribunal and it has recorded that there was no misstatement of fact.
No doubt the respondents claimed that the goods were meant for ship repair. However, for this purpose the complete statement of fact and the manner in which the imported goods were to be utilized was stated in the communication. After going through the same it was for the authorities to come to the conclusion whether goods could be treated for the purpose of ship repair or not. In no case it can be termed as willful misstatement/wrong declaration. On this ground alone the respondent is to succeed in these cases. - Decided against Revenue.
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