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Showing 101 to 120 of 1407 Records
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2015 (2) TMI 1315
Revision u/s 263 - Disallowance under section 40A(3) - no opportunity to assessee to explain before the A.O. whether the cash payments are coming within the exceptions provided under Rule 6DD - HELD THAT:- CIT was not justified in directing the A.O. to apply section 40A(3) to the cash payments made by assessee straightaway. Assessee deserves an opportunity to explain before the A.O. whether the cash payments are coming within the exceptions provided under Rule 6DD. The decisions relied upon by A.R. also say section 40A(3) has to be looked into in conjunction with Rule 6DD. We, therefore, direct the A.O. to examine whether the cash payments are coming within exceptions of Rule 6DD of the Rules and only thereafter, may decide whether to apply section 40A(3) to such cash payments. The A.O. must afford reasonable opportunity of being heard to the assessee in the matter.
CIT herself has admitted the fact that as far as interest to the creditors are concerned, most of the creditors were brought forward from earlier years. Even in respect of balance two creditors assessee has not only established the identity but has also furnished confirmation letters and it is also fact that the credits are through regular banking channel. Without bringing some material on record to show that these two creditors are not genuine or they do not have creditworthiness, CIT cannot hold the assessment order to be erroneous and prejudicial to the interest of Revenue.
As it appears from record at the time of assessment proceedings, assessee has also produced confirmation letters from creditors. Therefore, it cannot be said that the A.O. has not examined the credits. In these circumstances, the assessment order passed cannot be held to be erroneous and prejudicial to the interests of Revenue.
Similarly, in so far as cash deposits made to the S.B. Account is concerned, it is manifest from the revision order that CIT has accepted that the deposits have been reflected in the books of accounts. Moreover, assessee has also explained the source of such deposits - at assessment proceedings, A.O. has examined the books of accounts as well as the bank statement. Therefore, when the assessee has produced its books of accounts before the A.O. as well as before the Ld. CIT and has also explained the source for deposit which have not been disputed or found to be incorrect by the Ld. CIT, in our view, it was not proper on the part of CIT to set aside the assessment order on that issue as the directions given by the CIT, without any positive finding of error or prejudice to the Revenue, is only in the nature of a roving and fishing enquiry to be conducted by the A.O. which is not the intent and purpose of section 263. We direct the A.O. to only examine the issue of applicability of section 40A(3) with reference to Rule 6DD after giving due opportunity of being heard to the assessee. The order of Ld. CIT is modified to this extent. Appeal of assessee is partly allowed for statistical purposes.
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2015 (2) TMI 1314
Maintainability of petition - Delay in compliance with the pre-deposit - HELD THAT:- It is an admitted fact that after the disposalof the appeal by the Appellate Deputy Commissioner, the appellant had deposited the pre-deposit as directed by the Appellate Deputy Commissioner (CT), Vishakhapatnam.
The High Court ought to have condone the delay in complying with the order passed by the Appellate Deputy Commissioner (CT), Vishakhapatnam and should have directed him to decide the appeal on merits. Since that has not been done by the High Court, we take exception to the said order.
The appeal filed by the appellant-herein is restored to the Appellate Deputy Commissioner (CT), Vishakhapatnam to decide the same on merits.
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2015 (2) TMI 1313
Reopening of assessment u/s 147 - denial of natural justice - assessee denied an opportunity of fair hearing - petitioner holding that certain shares were purchased by the petitioner out of the income that had escaped from the assessment - HELD THAT:- As the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details/copy of the statement based on which the impugned assessment order has been passed. Writ petition is allowed. The impugned order is set aside. The matter is remitted for fresh consideration to the respondent. See SRI SURESH KUMAR KOTHARI (HUF) VERSUS INCOME TAX OFFICER, BANGALORE [2015 (1) TMI 1426 - KARNATAKA HIGH COURT ]
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2015 (2) TMI 1312
Unexplained cash credit u/s. 68 - as per assessee the amount was received being advance on account of sale of potato seeds to the farmers and later adjusted the same with the sales within the same year and there is no carry forward credit. According to assessee, these are merely a trade creditor - HELD THAT:- We find that the plea of assessee is quite reasonable that this being trade advance by very nature of activity of the assessee and the same has been adjusted against the sales made to various parties and the area particularly farmer community. This being the nature, these advances are surely trade advances and not cash credit as assumed by AO and upheld by CIT(A). In view of the above facts and circumstances, we are of the view that trade advances cannot be treated as cash credit u/s. 68 and addition made and confirmed by lower authorities is deleted. - Decided in favour of assessee
Addition being advance on account of amusement tax - addition under the sub head ‘advance of amusement tax - HELD THAT:- Assessee made no argument qua this addition and even otherwise the assessee before CIT(A) also did not argue on this. The assessee has disclosed this amount as loans and advance under the head ‘loans’ with revenue authorities under the sub head ‘advance of amusement tax’. It is not clear from the records that whether this is paid or not. Once this is not paid it will not be claimed as deduction and the assessee is unable to prove that this is advance on account of amusement tax. As the assessee could not explain neither before lower authorities nor before us, we confirm this addition. This ground of appeal of assessee is dismissed.
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2015 (2) TMI 1311
Disallowance of deduction u/s. 80P by invoking the provisions of sec. 80P(5) - assessee neither complied with this notice u/s. 142(1) nor filed return of income in terms of section 139 or in terms of notice u/s. 142(1) and hence, the AO proceeded to initiate best judgment assessment u/s. 144 of the Act as per the notice issued u/s. 142(1) - HELD THAT:- As decided in KADACHIRA SERVICE CO-OP. BANK LTD. VERSUS INCOME-TAX OFFICER, WARD-1, KANNUR THE MAVILAYI SERVICE CO-OP BANK LTD VS ITO [2013 (2) TMI 208 - ITAT COCHIN] Under section 80A(5), the legislature made it mandatory that the claim under Chapter VIA under the heading "C.- Deductions in respect of certain income" has to be made in the return. If the contention of the assessee is accepted, then the person, who files the return of income and fails to make a claim of deduction in the return of income either by ignorance or otherwise may not get the benefit, but a person who has not filed the return of income may be in a better position to claim the benefit. It is settled principles of law that in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with. Therefore,the mandatory provisions contained in section 139(1) r.w.s. 80A(5) it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction in the return itself - Decided against assessee.
Exemption u/s 80P - HELD THAT:- It is not a dispute that the assessees are accepting deposits from general public, maintaining savings account, providing cheque facilities, etc. as a banking business. The question arises for our consideration whether the assessees providing banking services to the general public and their members are eligible for exemption u/s. 80P of the Act. This Tribunal has discussed this issue elaborately in Kunnamangalam Co-operative Bank Ltd. [2014 (10) TMI 350 - ITAT COCHIN] and Pinarayi Services Cooprative Bank Ltd. [2014 (7) TMI 1176 - ITAT COCHIN] and also followed by the CIT(A) wherein it was held that the assessee are not eligible for exemption u/s. 80P of the Act. Therefore, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed.
Disallowance u/s. 40(a)(ia) - contention of the assessee before the lower authorities was that section 40(a)(i) is applicable only for the amount remaining to be paid as at the accounting year end and it is not applicable to the amounts already paid - HELD THAT:- CIT(A) followed the order of this Tribunal in the case of Karivelloor Service Cooperative Bank Ltd. vs. ITO [2013 (3) TMI 673 - ITAT COCHIN] and Smt. Prasanna Radhakrishnan Dawson vs. ITO [2015 (10) TMI 802 - ITAT COCHIN] and found that the decision of the Special Bench of the Visakhapatnam Bench of this Tribunal in Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] is not applicable in these cases. In fact, this Tribunal in the case of Orchid Marine Vs. ITO [2014 (9) TMI 1020 - ITAT COCHIN] by following the judgment of CIT vs. Sikandarkhan N Tunvar [2013 (5) TMI 457 - GUJARAT HIGH COURT] found that the provisions of section 40(a)(ia) are applicable not only in respect of the amount paid but also the amounts remain to be paid as on the last day of the financial year. The CIT(A) has followed the order of this Tribunal. Therefore, we do not find any infirmity in the order of the lower authorities. Accordingly, the same is confirmed.
Disallowance u/s 36(1)(viia) - HELD THAT:- As AR submitted that even though the judgment of the Jurisdictional High Court in Lord Krishna Bank Ltd. vs. CIT [2010 (10) TMI 860 - KERALA HIGH COURT] is against the assessee, the assessee is eligible for exemption. The CIT(A) has followed the binding decision of the Jurisdictional High Court in Lord Krishna Bank (supra). We are of the opinion that the judgment of the Kerala High Court is binding on all authorities including this Tribunal. We find that similar issue came up for consideration in the case of Kannur Co-operative Bank Ltd. [2014 (6) TMI 930 - ITAT COCHIN] wherein the Tribunal decided the issue against the assessee.
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2015 (2) TMI 1310
Penalty u/s 271(1)(c) - assessee had not complied with notice under section 142(1) - HELD THAT:- AO had not contravened the assertion made by the assessee that the FAA has not considered that vital issue while deciding the appeal that in the assessment order the AO has mentioned that the AR of the assessee has appeared before him time to time that the assessed income is same as the returned income. As the assessee had appeared before the AO so there was no justification for levy of penalty u/s.271(1)(b) of the Act. We also find that the predecessor of the FAA had deleted the penalty levied by the AO u/s. 271(1)(b) .
Secondly, in the matter of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust [2007 (8) TMI 386 - ITAT DELHI-G] held that assessee had not complied with notice under section 142(1) but assessment order was passed under section 143(3) and not under section 144, that meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by AO and, therefore levy of penalty under section 271(1 )(b) was not justified - Decided in favour of the assessee.
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2015 (2) TMI 1309
Condonation of delay in filing appeal - time limitation - HELD THAT:- It is fairly well-settled that the State functions in an impersonal fashion and that the ordinary standards, applicable to a litigant pursuing his own case, do not at times apply stricto sensu to the action or inaction of the State. That apart the enquiry conducted by the Registrar (Vigilance) of the High Court has not in the instant case suggested any collusion at the level of the State Government. What appears to have actually happened is that the appeal papers were presented within the time but repeatedly re-presented without fully removing the defects, in which process there was considerable delay.
The report no doubt confines the charge of dereliction to the two range officers, mentioned earlier. We are of the view that the range officers being themselves under the supervisory control of their higher officers the latter were as much responsible for ensuring that the former perform their duties diligently. The enquiry report has not gone into that aspect.
The Secretary, Department of Environment and Forest, Government of Tamil Nadu, shall call for an explanation of the officers who were, during the relevant period, supervising the two range officers, mentioned in the report. The officers would be called upon to explain as to why they were unable to take note of the neglect/dereliction of duties by the range officers concerned and explain their failure to do so - Appeal allowed.
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2015 (2) TMI 1308
Penalty u/s 271(1)(c) - change of head of income during the reassessment proceedings - rental income from warehousing premises was treated as business income OR Income from house properties - Reopening of assessment - HELD THAT:- In the reopened assessment proceedings, the assessee fairly conceded to the change of head of income as proposed by the AO. There was neither furnishing of inaccurate particulars of income nor of concealment of income.
We agree with the contention of the assessee that it was not a case of furnishing of inaccurate particulars of income or concealment of income. The assessee even had fairly agreed to the change of head of income during the reassessment proceedings. Every case where the claim of the assessee is not accepted cannot be said to be a case of concealment of income.
The addition in this case has been made because of change of head of income and not because of furnishing of inaccurate particulars of income or concealment of income. It is not a case where the assessee had deliberately shown the income under a wrong head but under a bonafide belief that the income of the assessee was assessable as business income. We do not think it to be a case for levy of penalty under section 271(1)(c). The penalty levied by lower authorities is therefore ordered to be deleted. - Decided in favour of assessee.
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2015 (2) TMI 1307
Imposition of penalty - KVAT Act - mis-classification of a item - sanitary equipments and fittings that are made of brass - HELD THAT:- There is no consideration in the said orders of the specific entry that deals with articles of brass, where there is a reference to an eight digit HSN code. Exts.P16 to P20 orders do not indicate as to why the products in question would not merit classification under the specific entry, and would rather be classifiable under the residual entry - In my view, such an exercise has necessarily to be done by an authority who proposes to impose a penalty on an assessee on the ground of mis-classification of an item. The issue of classification being a mixed question of law and fact, it is incumbent upon the taxing authority to correctly determine the classification of the item, before arriving at a finding that the item in question has been misclassified by the assessee dealer.
The 1st respondent is required to re-consider the aspect of imposition of penalty on the petitioner, for the assessment years in question - petition allowed in part.
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2015 (2) TMI 1306
Accrual of income - Interest received from banks on amounts of share capital temporarily deposited and on account of forfeiture of earnest money - Its return, assessee claimed that these amounts were inextricably linked with the capital stream and not taxable as income - AO treated the same as income - CIT differed from that view and directed the deletion of the amount from the assessment also confirmed by ITAT - HELD THAT:- ITAT upheld the order of the CIT (Appeals). In doing so, the ITAT followed the decision of this Court in Indian Oil Panipat Power Consortium Limited v. Income Tax Officer [2009 (2) TMI 32 - DELHI HIGH COURT] and the later decision of this Court in the case of NTPC Sail Power Company Private Limited v. CIT [2015 (7) TMI 193 - ITAT DELHI] .
Having considered the submissions, this Court is of the opinion that there is no infirmity in the order of the ITAT. No substantial question of law arises. The appeal is accordingly dismissed.
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2015 (2) TMI 1305
Income from House Property OR busniss income - rental income from let out of “premises only” - HELD THAT:- A bare reading of the lease agreement between the assessee-firm and “VCPL” shows that the rent was charged by the assessee-firm only for the “premises” as provided in the lease agreement. Providing of electrical panel and space for generator could not be said to be a separate service or asset and in fact no separate rent is charged for the same. We find that there was no provision of any services to be provided by the assessee to the “VCPL” or to the partner of the assessee-firm in the upper floor.
CIT(A) has recorded in his appellate order that the value of the building was shown at ₹ 3.86 crores whereas the value of the furniture and fixtures is of ₹ 87,226/- only, which are of insignificant value vis-ŕ-vis value of the building. We are of the view that in the absence of any facilities or business infrastructure provided by the assessee-firm to its lessee, rental income from let out of “premises only” was rightly taxed by the department under the head “Income from House Property” and no interference in the order of the CIT(A) on this issue is called for, which is confirmed and the ground of the appeal on this issue is dismissed.
Determination of the notional value of the second floor to fifth floor of the building let out to one of the partners of the assessee-firm, who runs a hotel business - HELD THAT:- Allowance of deduction at 10% per higher floor from the bottom ground and first floor of the property, was on the lower side, and that upper second floor to fifth floor not having any hall type construction to suit for commercial use for any departmental stores etc., and construction of building consisted of small rooms only and the claim of the assessee that covered area on the higher floors were less as compared to the ground and first floor of the property, and also considering the undisputed fact that the partner of the assessee-firm, who is running a hotel “Sudarshan Palace” business has advanced deposit of ₹ 1.63 crores to the assessee-firm without charging any interest, we are of the view that the ends of justice shall be met, if the rental value of second floor to fifth floor of the property used for hotel business is determined at ₹ 30.00 lakhs per annum for the relevant year, as against ₹ 49.95 lakhs determined by the AO, and after allowing ₹ 2 lakhs for municipal tax paid by the assessee, and also 30% of the annual value of the property, the income from second floor to fifth floor of the property let out to M/s.Sudarshan Palace, should be assessed at ₹ 19.00 lakhs as against ₹ 32,96,882/- assessed by the AO and the grounds of the appeal of the assessee, on this issue, are partly allowed.
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2015 (2) TMI 1304
Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - Held that:- The principles applicable to grant of leave against a judgment of acquittal are well settled. The petitioner has to show that the judgment suffers from perversity or that there is clear mis-appreciation of evidence by the Court below. Merely because the appellate court may prefer a different view would not be a ground to interfere with the judgment of acquittal as the presumption of innocence stands fortified by the judgment under decree.
In the present case, the accused was clearly able to raise a serious doubt about the claim of the petitioner complainant that no amount was due from the accused to the complainant on account of supply of any equipment. The accused was able to establish instances where products imported by the complainant in the name of the firm M/s Sony Impex were shown as sold to M/s Taurian Overseas; from M/s Taurian Overseas to M/s Xeon Infotech; from M/s Xeon Infotech to M/s Grafiti Infotech and the entire payment received in respect of such sale was routed back firstly into the account of M/s Xeon Infotech and from there to the account of M/s Taurian Overseas and further into the account of M/s Sony Impex - The defence of the accused that he was an employee of the complainant – receiving salary, in the form of salary and commission, was also established.
Petition dismissed.
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2015 (2) TMI 1303
Awards passed by an arbitral tribunal - Separate awards were rendered by the arbitral tribunal in the two references - Whether the Respondent committed breach/ breaches of the terms and conditions of the Contract Agreement No.COM/BOT/1 of 2000-2001 supplemented by the Supplemental Agreement dated 11th May, 2005 as alleged by the Claimant? - Whether any delay in completion of the project was caused by the Claimant? - If so, whether the delay in completion of the project was caused due to any default and/or breach on the part of the Respondent?
Extra Overheads and loss of expected profit - Held that:- Once it is accepted that the grant of escalation is justified on principle, the next question is of the quantum of damages that can be awarded on this account. The arbitrators have taken 10 % per year as the basis. This was on the footing of a rate of escalation accepted by the parties themselves, as reflected in Form 6 forming part of the BOT contract. The basis thus adopted by the arbitral tribunal cannot be termed as unreasonable, arbitrary or impossible - The claim awarded by the arbitral tribunal in this behalf is, thus, not open to challenge under Section 34.
Compensation/ damages on account of subsequent legislation - Held that:- Clause 3.7.14 is not a clause about subsequent legislation at all. The arbitrators are aware of this. But they say, clause 3.7.14 “though explicitly not a clause of subsequent legislation, it implies that the claimant is entitled for compensation on account of withdrawal of the concession in terms of income tax which was available to him on the date of submission of the bid”. Nothing can be further from the true interpretation of the clause.
Reimbursement of royalty charges - Held that:- This claim could possibly be justified on account of the increased cost incurred by the contractor during the extended period as a result of the delay ensuring from the employer's breaches. But then we do not have before us any analysis or working of extra costs incurred during the extended period in this behalf. It cannot be ascertained from the material available on record if any royalty had to be paid on minerals or materials particularly during the extended period, which the contractor would not have paid during the original period of contract and therefore could be claimed as extra costs incurred on account of delay, particularly so because the subject royalty was introduced by the Government during the original period of contract. Besides, that may even amount to rewriting of the award, which is not permissible in a challenge under section 34 - the award in relation to this claim cannot be sustained.
Excess excavation work due to landslide and shifting of alignment - Held that:- The arbitrators noted that the contractual provisions, clause 3.6.6 of GCC read with Form 6, implied that any extra work carried out by Atlanta was to attract 22% charges over the rate; and that accordingly the Superintending Engineer had prepared his estimate in the recommendation made by him. In the premises, the arbitrators accepted the claim. The arbitrators rejected the State's contention that the work involved only shifting (loading, unloading and transportation) and not excavation and therefore, payable only at the rate of ₹ 51.70 / cum (which was exclusive of excavation) - This view of the arbitrators is clearly a possible view. It is based on a reasonable and possible interpretation of contract, is supported by material on record and there is no legal infirmity in either the admissibility of the claim or its assessment in value. No infirmity can be found with this part of the award.
Difference in the rates and cost as claimed and allowed on account of additional work ordered - Held that:- The arbitrators considered the provisions of Form 3 of the original contract agreement and standard practice followed in comparable matters to consider such escalation in cash flow. Barring the reliance on the recommendation of the Superintending Engineer as in the case of other claims, the reasons discussed and material considered in this behalf by the arbitrators can very well support the award. No interference is called for in relation to this part of the award under Section 34.
Demand of interest - Held that:- The arbitrators have granted pendente lite and post award interest on the principal amount of the award at 20 per cent per annum. The rate of interest is in accordance with the provisions of the contract, namely, the concession agreement, and need not be interfered with - Award of interest on the principal amount awarded by the arbitrators is within the discretion of the arbitral tribunal and no fault can be found either with the date (the date of commencement of arbitration) with reference to which such interest is calculated in the award or the manner of calculating such interest, namely, simple interest method as opposed to annual compounding method - There is, thus, no merit in Atlanta's challenge to the impugned award.
On the question, whether Atlanta was in beach of the provision in the contract concerning repairs and maintenance, the arbitrators considered the records placed before them, and came to a conclusion that from the correspondence on record, and having regard to the proof tendered by Atlanta for maintaining the road in pothole free condition including the certified copies of deployment of manpower and machinery, Atlanta did what was reasonably expected of it and the State had failed to prove that Atlanta was negligent or careless in road maintenance. These are matters of fact, and the conclusion of the arbitrators is a possible view on the basis of the material available before the arbitrators. The conclusion is supported by evidence. Sufficiency of the evidence and the merits of its assessment by the arbitrators are not matters for this Court to examine, and no interference is called for.
Arbitration Petition is partly allowed.
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2015 (2) TMI 1302
Disallowance u/s 14A read with Rule 8D as against a dividend income - HELD THAT:- The present assessment year being assessment year 2007-08, the provisions of Rule 8D shall not be applicable as held in the case of Godrej Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT]. In the above said decision, also held that for the year under consideration, the disallowance has to be computed in a reasonable manner. Hence, we are of the view that this issue requires fresh consideration at the end of the AO. Accordingly, we set aside the order of ld.CIT(A) on this issue and restore the same to the file of the AO with a direction to compute the disallowance u/s 14A accordingly
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2015 (2) TMI 1301
Assessment u/s 143(3) without issuing notice under section 143(2) - reopening of assessment - HELD THAT:- As followed by this Court in Commissioner of Income Tax Vs. Bihari Lal Agrawal, [2012 (5) TMI 198 - ALLAHABAD HIGH COURT] wherein the Court has also held that the assessee had participated in the assessment, would be of no legal consequences when the proceedings are vitiated on account of non issuance of notice under section 143(2) of the Act, 1961. Question no. 1, therefore, is answered in favour of the assessee.
No manner of doubt that if an earlier order of assessment under section 143(3) is found illegal for want of notice under section 143(2) and period within which notice under section 143(2) may be issued is still available, the assessing authority can proceed further by issuing a fresh notice and thereafter can pass fresh order, but, if in the meantime, period within which notice under section 143(2) could be issued, has already lapsed, no such fresh exercise is permissible. Therefore, we answer question no. 2 accordingly.
We dispose of this appeal by directing the Assessing Officer that it shall first examine whether the period within which notice under section 143(2) could have been issued, was available to the Assessing Officer on the date when Tribunal passed impugned order. It can proceed further only if such period was available and not otherwise. The order of Tribunal shall stand modified accordingly.
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2015 (2) TMI 1300
Penalty u/s. 271(1)(c) - assessee not deposited in EPF account after deducting the same from the employees - Held that:- We find that the fact regarding nonpayment of such dues to the Government account were obtained by A.O. from the documents accompanying income tax return only and A.O. had not detected any concealed income of the assessee. Full particulars regarding statutory payment to be made were disclosed in the return of income therefore, we hold that assessee had not concealed particulars of income and had not furnished inaccurate particulars of income. Mere wrong claim made by assessee cannot amount to concealment of income.
In the case law of Price Waterhouse Coopers[2012 (9) TMI 775 - SUPREME COURT] the assessee had not added back to its computation of income the quantity as per the provisions of section 40A(7) of the Act. However, Hon'ble Supreme Court deleted the penalty holding that mistake was due to human error. In the present case, we observe that not adding back to the income of unallowable expenses, was due to a bona fide mistake which is strengthened from the fact that assessee had declared a loss of ₹ 153.35 lacs and even if the amount of ₹ 21.54 lacs was suo moto added back by assessee, still the income figure would have remained in negative. Therefore, it cannot be said that intention of assessee was to evade taxes by claiming wrong deductions.
We hold that penalty was not imposable and therefore we delete it. - Decided in favour of assessee.
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2015 (2) TMI 1299
TDS u/s 192 OR 172 - disallowance u/s. 40(a)(ia) towards freight charges paid to agent of foreign shipping companies - as per assessee as per Circular No.723 of 1995 dated 19/9/1995 the provisions of section 194C and 195 will not apply in the case where recipient is assessed under section 172 - Held that:- As far as the binding nature of Circular issued by CBDT Cir. No.723 dated 19/9/1995 is concerned it is pertinent to note that the Circular and Instructions issued by the Board are binding on the taxing authorities and not on the Courts. Further, if the Hon'ble Supreme Court or Hon'ble High Court declares the law on the question arising for consideration then, it would not be appropriate for the Court or this Tribunal to direct the taxing authority to give effect to the Circular and not the view accepted in the decisions of the Courts. Thus, if under a particular provision, a legal question arises, and has been answered and explained by the Hon'ble High Court or Hon'ble Supreme Court then, the said explanation in the decisions of Hon'ble Supreme Court or Hon'ble High Court will be binding and not the Circular issued by the CBDT as held by the Larger Bench of Hon'ble Supreme Court in the case of Commissioner of Central Excise vs. Rattan Melting & Wire Industry (2008 (10) TMI 5 - SUPREME COURT OF INDIA).
As per the 2nd proviso if the assessee failed to deduct the tax in accordance with Chapter XVII-B on any payment but is not deemed to be an assessee in default as per the first proviso to section 201(1) then for the purpose on this subclause it shall be deemed that the assessee has deducted and paid tax on such sum on the date of furnishing of return of income by the resident assessee. The decision of Hon'ble Supreme Court in the case of Hindustan Coca-cola Breweries (P) Ltd. (supra), was in respect of the payment to the resident payee and only on the point of liability under section 201(1) when the payee already paid the tax on such amount. The 2nd proviso to section 40(a)(ia) has made it clear that the benefit of payee having paid tax on such income is available only when the payee is resident. In the case in hand the payee is a non-resident, being a foreign shipping company, therefore, the 2nd proviso to section 40(a)(ia) as well as the first proviso to section 201(1) and 201(1A) are not applicable in such payments. Accordingly we do not agree with the alternative plea of the ld. AR
Disallowance of transportation charges under section 40(a)(ia) - CIT(A) deleted the disallowance on the ground that the recipients have paid the tax on the transportation charges collected from the assessee and therefore, no TDS was required to be deducted - Held that:- It is apparent that the respondent assesse did not violate the unamended section 40(a)(ia). We have noted the ambiguity and referred their contention of Revenue and rejected the interpretation placed by them. The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support view taken that the expression “said due date” used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance.
Disallowance under section 40(a)(ia) in respect of maintenance charges - expenses on account of repair and maintenance not exceeding ₹ 20,000/- of individual bills - Held that:- We note that out of total expenditure of ₹ 92,700/- ₹ 51,000/- relates to the purchase of machinery parts, therefore, provisions of chapter XVII-B are not applicable so far as the expenditure relates to purchase of machinery parts. The remaining expenditure is comprising of several bills and the amount of one individual bills does not exceed ₹ 20,000/-. Accordingly we do not find any error or illegality in the impugned order of CIT(A). This ground of the revenue is disallowed.
TDS on clearing and forwarding expenses under section 40(a)(ia) - addition on want of deduction of tax - grievance of the assessee before CIT(A) is only in respect of the amount of ₹ 4,19,505/- claimed to be reimbursement of expenses. The CIT(A) has accepted the said contention and allowed part claim - Held that:- As it is manifest from the record, that no such grievance was raised before CIT(A), and further, the fresh plea raised before this Tribunal required the finding of fact, whether any contract between the parties did exist or not. Even otherwise the payment of service charges to C&F agent is based on agreed rate/charges which constitute an agreement between the parties. Accordingly in the facts and circumstances of the case we do not find any merit or substance in the cross objection of the assessee hence, the same is dismissed.
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2015 (2) TMI 1298
Seeking one more opportunity to furnish details before CIT(A), lest the assessee should suffer huge losses - Non furnishing of details as called by the CIT(Appeals) - Held that:- Commissioner of Income Tax (Appeals) has given more than one opportunity to the assessee to furnish materials called for by him. However, the assessee failed to furnish the same and hence the learned Commissioner of Income Tax (A) was constrained to pass order. At the same time, we find some merit in the plea of the learned Authorised Representative. Hence, in the interest of justice, we are inclined to accept the plea of the learned Authorised Representative subject to payment of cost.- Appeal of the assessee is treated as allowed for statistical purpose.
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2015 (2) TMI 1297
CENVAT Credit - capital goods/inputs - towers, towers parts, cabin, cabin parts, medi-claim services and goods other than towers, pre-fabricated buildings and shelters - period involved in these appeals is 2005 to 2006 and 2007 to 2008 - time limitation - Held that:- The rules do provide for availment of Cenvat credit on capital goods as well as inputs - In the cases in hand we find that the towers and shelters, which were received by the appellants at site were not capital goods in the form as they were received, inasmuch as they were covered under Chapter 73, the pre-fabricated shelters were covered under Chapter No. 94. The definition of capital goods do not include these two chapters in the scope, for the eligibility to avail Cenvat credit.
The ratio of the decision of the Hon'ble High Court of Bombay in the case of Bharti Airtel Ltd., [2014 (9) TMI 38 - BOMBAY HIGH COURT] as regards the eligibility to avail Cenvat credit would be directly applicable in all these cases - Their Lordships after considering all the detailed submissions made by the counsel before them and considering various case laws, came to a conclusion that Cenvat credit cannot be availed by the appellant therein either under the category of capital goods or inputs on the towers or pre-fabricated buildings - the issue is now squarely covered by the decision of the jurisdictional High Court, which is binding on us and is in favour of Revenue.
The confirmation of demand of ineligible Cenvat credit and interest thereof on towers and pre-fabricated buildings within the limitation period are upheld in respect of all the appellants.
Extended period of limitation - Held that:- The issue of availment of Cenvat credit on the towers and pre-fabricated buildings and shelters was being disputed before the various forum and hence all the appellants could have entertained a bonafide belief that they were eligible to avail Cenvat credit of duty paid on towers and pre-fabricated buildings/shelters - extended period of limitation should not be invoked - Demand of ineligible Cenvat credit which is confirmed along with interest, by invoking extended period is set aside in respect of all the appellants.
Penalty - Held that:- As the issue was of are interpretative nature i.e., as to eligibility of Cenvat credit or otherwise on the towers and the building and had to be settled in the hands of the Hon'ble High Court, the appellants could have entertained a bonafide belief. Hence, all the penalties imposed on all the appellants herein are set aside by invoking the provisions of Section 80 of the Finance Act, 1994.
Appeal disposed off.
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2015 (2) TMI 1296
Penalty u/s 271C - non deduction of tds u/s 194J by assessee bank on payments made to State Bank of India, Surat in connection with clearance of MICR cheques - "reasonable cause" - penalty levied on the successors for an alleged infringement by the predecessor bank - bonafide belief that there was no tax deductible on such charges - Held that:- The expression "reasonable" gives an impression that prima facie, if a person of average intelligence has acted and under those circumstances the said action was at that point of time not infringed the settled law then it can be reasonably held that assessee was prevented by a "reasonable cause" under those circumstances not to act as prescribed or determined by a case law.
We are aware that ignorance of law is not an excuse but at the same time, it is not practical that every tax payer should be aware about the latest development of tax law; which are otherwise fast changing. We find that issue at hand was debatable at relevant point of time and assessee was prevented by a reasonable cause not to deduct TDS under the relevant provisions of Income Tax Act. In view of this, assessee is entitled for relief from penalty levied under the provision of 271C - Decided in favour of assessee
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