Natural justice - validity of reassessment order - The petitioner had sought time to make available the documents sought for and to file objections to annexure D vide annexure F. Time sought by the petitioner has not been granted and immediately annexure A has been passed - Held that: - When the assessee seeks time even if he had availed of the benefit of time earlier, there is no reason as to why the authority should not give time as sought for to enable him to substantiate his stand which undoubtedly will aid in just determination, rather than arbitrary actions.
Petition allowed - decided in favor of petitioner.
Deduction u/s.80P(2)(a)(vi) - Held that:- As decided in assessee's own case for A.Y. 2007-08 CIT(A) was justified in directing the Assessing Officer to allow the claim of the assessee. This view is fortified by the judgment of Hon’ble Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd & Others Vs. CIT [1998 (5) TMI 6 - SUPREME Court] - Decided in favour of assessee
Allowability of advertisement expenses - AO disallowed the same on the ground that the assessee has not provided proof that it was for the purpose of business purpose - Held that:- It is not a case of the Assessing Officer that the expenditure has not been incurred. Since the assessee has established the expenditure incurred on account of commercial expediency, so the commercial expediency is to be viewed from the view point of businessman / assessee. The facts on record indicate the impugned expenditure is on account of public visits of State ministers, local elected representatives and other dignitaries to the city of Nashik and the premises of society, who have helped the assessee in getting more contracts for labour, therefore, commercial expediency established. In the facts and circumstances, the expenditure was rightly made by the assessee for business purpose and the same was rightly directed by the CIT(A) to deleted the expenditure incurred wholly and exclusively for the growth of assessee’s business. Accordingly, the same is upheld.- Decided in favour of assessee
Amortization of the expenditure - Allowability of expenditure incurred - Held that:- HC order confirmed [2011 (1) TMI 1415 - DELHI HIGH COURT] the ball was set in motion in the assessment year 1995-96 when the assessee was allowed to claim deduction at the rate of 10% of the total expenditure incurred by it for four years i.e. for the assessment years 1995-96 to 1998-99 the assessment have become final. Thus, 40% of the lump sum amount incurred in the first assessment year has been allowed as deduction at the rate of 10% in each of these years. That is the factual situation prevailing. Upsetting the apple cart in the middle and challenging the course of action by treating these expenditure under Section 35 D of the Act would clearly be impermissible. SLP dismissed.
The Supreme Court granted leave only on the issue of administrative expenses in one case (SLP 468/2014) and dismissed another case (SLP 560/2014) after condoning delays.
Attachment of property - recovery of Government dues - Sec. 142 (1)( c) (ii) of the Customs Act 1962 read with Rule 4 - Held that: - the issue involved in the current appeal before us is identical to the issue which was decided by the majority order in the case of of Rajabali Ismail Rajbara vs. CCE., Surat [2014 (3) TMI 483 - CESTAT AHMEDABAD (LB)] - Since the issue is covered by a majority decision, and nothing is brought to our notice as to the said order is over turned by higher judicial forum, following the same we allow the appeal and set aside the impugned order - appeal allowed - decided in favor of appellant.
Borrowed service rendered treated as fee for technical services - India-Singapore Tax Treaty - Held that:- We noted that these issues have already been decided by this Tribunal in the various decisions as mentioned above in the group concerns of the assessee before us. Against the decision of the Tribunal, the revenue filed the appeals before the Hon’ble High Court in 14 cases. Those 14 appeals were withdrawn by the revenue.
Department has resolved that the issue under MAP and consequently withdrawn the appeals filed before the Hon’ble High Court. Further, the assessee has filed a letter dated 12/02/2014 thereby stated that the issue relating to taxability of firm function charges does not arise in case of these three appeals and the only issue involved in these appeals is the taxability of borrowed service charges, which has been decided in favour of the assessee under the Mutual Agreement Procedure. Also when the issues involved in these appeals have already resolved under the Mutual Agreement Procedure, we direct the AO to grant the relief accordingly to the assessee after verification of fact that the issues have already been resolved under the Mutual Agreement Procedure. - decided in favour of assessee
Whether the respondent, who is a sub-contractor of the main contractor of M/s. Madhya Pradesh Housing Board is required to pay service tax when the entire service tax liability stands discharged by M/s. Madhya Pradesh Housing Board? - Held that: - when the entire service tax liability stands discharged by the main contractor, there would be no tax liability to the sub-contractors - reliance placed on the decision of the case of CCE, Indore Vs. Shivhare Roadlines [2009 (2) TMI 202 - CESTAT, NEW DELHI] - appeal dismissed - decided against Revenue.
Deemed dividend addition u/s 2(22)(e) - Held that:- A perusal of the case file reveals that while examining a similar issue in the assessee's own case for assessment years 2003-04, 2004-05 and 2005-06 the tribunal had held that no beneficial interest had accrued to the assessee by the aforesaid transactions and advances were made to carry out business which would not attract deeming provisions u/s 2(22)(e) of the Act. Undisputedly, decisions of the ‘tribunal’ have been upheld even by the hon'ble high court. The only plea raised by the Revenue that its special leave petition is pending before the hon'ble apex court hardly forms a justifiable reason not to follow the order of the ‘tribunal’. In these circumstances, we confirm the findings under challenge of CIT(A) deleting impugned addition of deemed dividend. - Decided in favour of assessee
Addition u/s 14A r.w.r 8D in assessment year 2009-10 - Held that:- The Revenue has not filed any evidence before us so as to dispel the findings of the CIT(A) qua the total expenditure, administrative expenses, amount disallowed/added back on its own (supra)by the assessee as well as remaining amount of ₹ 11,10,836/-. It is evident to us that from the total expenses the assessee has itself disallowed/added back expenses of ₹ 18,74,911/- out of ₹ 29,85,747/-. Thus, the expenses which remain in assessee’s profit & loss account turn out to be ₹ 11,10,836/-. From this amount as well, the CIT(A) has chosen to disallow a sum of ₹ 10,94,691/-. This leaves expenditure of a very minimiscule amount of ₹ 16,145/-. Undisputedly, there is no material quoted on record by the appellant/Revenue in favour of its argument that these details of expenditure are against the record of the case. In our view, on the basis of the fact that the authorities below have nowhere rejected the assessee’s profit & loss account explaining details of expenditure, the disallowance in question could not have exceeded the sum total of all expenses. In these circumstances, we find no reason to interfere in the order of the CIT(A) in reducing the disallowance in question from ₹ 21,19,659/- to ₹ 10,24,968/-. - Decided against revenue
Problem with regard to supply of electricity - change in policy - Held that:- As before laying down any policy which would give benefits to its subjects, the State must think about pros and cons of the policy and its capacity to give the benefits because it would be in violation of the principles of promissory estoppel, besides being unfair and immoral on the part of the State not to act as per its promise.
In the instant case, the respondent State was conscious about the fact that there was a problem with regard to supply of electricity in the State of Kerala and possibly for that reason industries which depended much upon electricity as a source of power were not inclined to establish new industries in the State of Kerala. In view of the incentives and assurances given to the appellants along with others, who were desirous of setting up new industries, the appellants set up their new units which were much dependent upon continuous supply of electricity. One of the appellants is a Steel Re-rolling Mill. In steel industry, when the industry is concerned with making of steel or re-rolling of steel, it requires lot of power and energy, and electricity being one of the important sources of power, the appellant was much dependent on continuous supply of electricity, which had been assured to it by the respondent State.
If an assurance was given to the appellants and similarly situated persons that they would be given 100% electricity supply for five years, the respondents can not riggle out of their liability by making a policy to the effect that the benefit by way of incentive would be extended only if the electricity supply was reduced to less than 50% on a particular day.
For the aforestated reasons, in our opinion, the respondent-State was not wholly fair when it extended benefit to the appellants only for the period during which electricity supply was reduced to less than 50% on certain days.
We, therefore, hold that the benefit extended by the respondent State is not sufficient. The respondent-State ought to have extended the period even for the days when supply of electricity was more than 50% but not 100% as assured under G.O. dated 21.5.1990 and 6.2.1992. We, therefore, direct the respondents to give the said benefit by extending the period of incentive.
We, therefore, allow the appeals by quashing and setting aside the impugned order passed by the High Court and direct the respondents to calculate the period during which 100% electricity supply was not given to the appellants and extend the period of incentive accordingly.
Reopening of assessment - addition on account of alleged unaccounted sale proceeds - Held that:- Annexure AB-1, there is no mention of payment of any on-money to the assessee. The presumption has been drawn from the statement of Shri Satish Kulkarni which has been retracted later on. The details given in the seized paper from a third party’s premises itself do not put any liability upon the assessee to explain the seized paper because it was not recovered from the possession of the assessee and it did not lead to any conclusion that the assessee has received any on-money. Everything has been presumed by the AO against the assessee only on the statement of Shri Satish Kulkarni whereas the AO completely ignored the statements recorded by himself of the purchasers during the course of the original assessment proceedings.
Considering all the facts in totality, in the light of the aforestated annexure AB-1, we failed to persuade ourselves to find any relevancy on the said document which could lead to a reasonable conclusion that the assessee has received some on-money which could be made basis for the reopening of the assessment. Accordingly, we set aside the notice u/s. 148 and hold the reassessment proceedings as invalid
AO himself has examined those flats were some extra money in the form of interior decoration was found to be given. It was not the case of the AO that all the flats sold have fetched some on-money. The DR further brought to our notice that the Director of M/s. Ashoka Buildcom Ltd., have moved the Settlement Commission admitting payment of on-money therefore the same should be considered in the hands of the assessee. This submission of the Ld. DR cannot be accepted because what a third party is doing before the Settlement Commission cannot be said to have any relevance in the re-assessment proceedings of the assessee when the buyers have categorically stated that they have not paid any on-money which fact has also been stated in the form of affidavits. Considering all these facts in totality, in our humble opinion, the entire additions have been made on surmises and conjectures based upon irrelevant material ignoring direct evidences on record, therefore, the additions made by the AO cannot be sustained even on merit. - Decided in favour of assessee
Validity of summons issued under Section 50(2) of PMLA - whether summons are illegal, arbitrary and violation of principles of natural justice and violation of Articles 14 and 21 of the Constitution of India and violation of Section 50 of Prevention of Money Laundering Act, by holding that the respondents 2 and 3 have no authority or jurisdiction to issue summons? - Held that:- Section 50(2) of the Act, vest power in the competent authority to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under the Act.
As noted above, ECIR is registered in accordance with the crimes already registered against the petitioner and others and the investigation is taken up in pursuant to the ECIR. Thus, the power of competent authority to summon the petitioner, impugned in this writ petition is traceable to Section 50(2) of the Act 2002. Thus, it cannot be said that there is no power vested in the Assistant Director to summon the petitioner as alleged by the petitioner. No merit in the writ petition.
Income from transaction of shares - short term capital gain or business income - Held that:- The CIT(A) after applying the proposition laid down in the various decisions as discussed above with respect to the facts of the instant case and also keeping in view frequency and continuity of transactions, it recorded categorical finding to the effect that profit earned in respect of four companies as discussed above amounting to ₹ 18,41,027/- was liable to be taxed as business income rather than capital gain. However, in respect to balance of transactions, the CIT(A) has categorically recorded a finding that these were delivery based transactions, therefore, keeping in view the frequency, continuity and volume of transactions, profit arose therefrom are liable to be taxed as short term or long term capital gains depending on the period of holding. The findings recorded by the CIT(A) are as per material on record, therefore, the same do not require any interference. Accordingly, we do not find any infirmity in the order of CIT(A), which is being upheld.
Repayment of loan - application of income - loan money utilized for acquisition of the assets - as contended that the assessee had claimed that for the purpose of acquiring assets in question during the previous years the loan had been utilised and even successfully claimed depreciation on the assets so acquired - Held that:- As to whether assessee had claimed depreciation in any of the previous years or whether the application of money was shown to have been for the acquisition of asset with the loans obtained is a matter of fact. There is no specific finding. In these circumstances the matter is remitted for reconsideration by the Tribunal which shall also take into account the materials brought on record by the assessee that are not already on record under Rule 29 to facilitate a fuller appreciation and recording of facts in this regard. The appellant is also at liberty to place reliance on such additional material having regard to the circumstances.
Undisclosed cash credit - genuineness of the transaction - creditworthiness of creditor - Held that:- There was no dispute regarding identification. As far as the genuineness of the transaction is concerned, the A.O. never doubted the same, the only reason for making the addition was the A.O. disbelieved the creditworthiness of the creditor, although, the source was duly explained to him, it appears that the A.O. doubted the source of the source.
Keeping in view the ratio laid down in S.Hastimal v. CIT reported in [1962 (12) TMI 60 - MADRAS HIGH COURT] wherein held assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution but the origin of origin and source of source as well. The difficulty on the part of any assessee to explain a transaction which took place before a decade has to be borne in mind by the department and should under no circumstances be underestimated or taken advantage of by them, we are of the view that the ld. CIT(A) was justified in deleting the additions. - Decided in favour of assessee
Punishment of dismissal - direction of dismissal punishment set aside and directed reinstatement of the respondent with continuity of service but without back wages by HC - Held that:- It is telltale that the respondent had remained absent for a considerable length of time. He had exhibited adamantine attitude in not responding to the communications from the employer while he was unauthorisedly absent. As it appears, he has chosen his way, possibly nurturing the idea that he can remain absent for any length of time, apply for grant of leave at any time and also knock at the doors of the court at his own will. Learned counsel for the respondent has endeavoured hard to impress upon us that he had not been a habitual absentee. We really fail to fathom the said submission when the respondent had remained absent for almost one year and seven months. The plea of absence of “habitual absenteeism” is absolutely unacceptable and, under the obtaining circumstances, does not commend acceptation. We are disposed to think that the respondent by remaining unauthorisedly absent for such a long period with inadequate reason had not only shown indiscipline but also made an attempt to get away with it. Such a conduct is not permissible and we are inclined to think that the High Court has erroneously placed reliance on the authorities where this Court had interfered with the punishment. We have no shadow of doubt that the doctrine of proportionality does not get remotely attracted to such a case. The punishment is definitely not shockingly disproportionate.
Employees in any organization should adhere to discipline for not only achieving personal excellence but for collective good of an organization. When we say this, we may not be understood to have stated that the employers should be harsh to impose grave punishment on any misconduct. An amiable atmosphere in an organization develops the work culture and the employer and the employees are expected to remember the same as a precious value for systemic development.
Judged on the anvil of the aforesaid premises, the irresistible conclusion is that the interference by the High Court with the punishment is totally unwarranted and unsustainable, and further the High Court was wholly unjustified in entertaining the writ petition after a lapse of four years. The result of aforesaid analysis would entail overturning the judgments and orders passed by the learned single Judge and the Division Bench of the High Court and, accordingly, we so do.
Consequently, the appeal is allowed and the judgments and orders passed by the High Court are set aside leaving the parties to bear their respective costs
Penalty u/s 271(1)(c) - incorrect claim of depreciation - Held that:- The assessee furnished all the details relating to the assets i.e. the truck and claimed the depreciation.
However, merely on the basis that an incorrect claim of depreciation was made by the assessee, it cannot be said that it was a case of furnishing of inaccurate particulars or concealment of income. Thus we are of the view that it is not a fit case for levying the penalty under section 271(1)(c) of the Act. - Decided in favour of assessee.
Whether CESTAT is justified in interpreting that the services rendered by respondent fall within the definition of Information Technology Services as provided in explanation to Section 65(19) of Finance Act, 1994 reported in [2008 (3) TMI 33 - CESTAT BANGALORE] - Held that:- we have seen the relevant portions in the contract, which have been recorded by the learned Tribunal. Upon reading the contract, it appears to us, as has been correctly held by the learned Tribunal, that the respondent is rendering such service, which will fall under the scope of ‘Information Technology Services’. When the interpretation on fact is one of the two possible views, this Court in exercise of its jurisdiction under Section 35G of the Central Excise Act, 1944 cannot be appreciated the fact. Therefore, we do not find any reason to interfere with the judgment and order of the learned Tribunal. - Decided against the Revenue
Expenditure for repair and maintenance of building, development charges of raw material storage yard and filling, levelling and development of safety area-III - revenue v/s capital expenditure - CIT(A) has merely followed the order of the ‘tribunal’ pertaining to assessment year 2004-05 in deleting the addition - Held that:- Once the ‘tribunal’ has deleted the very additions, this argument of the Revenue does not form a justifiable ground for us to adopt a different approach in the impugned assessment year. Therefore, we upholding the findings of the CIT(A).
Re-work the deduction u/s 80IA without setting off the losses on notional basis qua disallowance made in the course of ‘regular’ assessment - Held that:- CIT(A) has followed the decision of hon'ble jurisdictional high court in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs ACIT [2010 (3) TMI 860 - Madras High Court] in observing that losses of earlier year prior to initial assessment year (first year of claim) which had already been set off cannot be set off once again against the profits of eligible business in determining the quantum of deduction u/s 80IA(4) of the Act. In this manner, the disallowance/addition stands deleted. In our view, once the hon'ble jurisdictional high court has decided this substantial question of law, there is no reason to interfere in the CIT(A)’s order which has followed the said judicial verdict. Accordingly, the findings under challenge stand confirmed.
Depreciation claim - Held that:- The assessee has fairly conceded to this plea of the Revenue that the value had not been arrived at in accordance with section 32(1)(ii) as in the case of other plant and machinery as it pertained to increase in the cost of windmill due to the debit of stamp charges paid during the year towards windmill purchases in earlier year. Accordingly, we restore this disallowance of depreciation as the assessee has not supported the findings of the CIT(A). The Revenue’s arguments stand accepted.
Recovery of terminal excise duty earlier disbursed - civil works contract - deemed export benefits - treat supplies to such projects are equivalent to exports, with the same benefits - power of DGFT to review an order under Section 16 of the Act - the decision of the case Alstom India Ltd Through Authorized Signatory Versus Union of India & Another [2014 (2) TMI 1013 - GUJARAT HIGH COURT] is referred to.
Held that: - There can be no review of an earlier refund except in accordance with the provision of Section 16 of the FTDR Act, which only permits the DGFT or the Central Government (in case the original order was by the DGFT) to exercise the power of review. The declaration in paragraph 7 of ANF-8, that Simplex will return any excess duty refunded, cannot eclipse the narrow statutory power to review provided under the Act. - the impugned order and subsequent recovery proceedings exceeds the authority granted by law under the FTDR Act.
Recovery cannot be made. Petition allowed - decided in favor of petitioner.
TDS u/s 195 - whether notwithstanding taxability of amounts paid to non-residents, section 40(a)(ia) read with section 195 of the Income Tax Act, 1961, disallowance can not be invoked in case in which no services are rendered in India in view of pre amended section 9 (1)(vii) read with Explanation thereto? - This plea, according to the assessee applicant, was accepted by the learned CIT(A) but the Tribunal has not dealt with the same - Held that:- In view of the above discussions as also bearing in mind the fact that the Tribunal indeed did not deal with the above aspect of the matter in the order dated 4th February, 2014 and with the consent of parties we deem it fit and proper to recall the order for the limited purpose of adjudication on correctness of the above plea. Accordingly, the hearing is now fixed on 04.03.2014 for the limited purpose of dealing with the said plea, as prayed by the assessee.
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