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Showing 261 to 280 of 2015 Records
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2018 (12) TMI 1757
Cessation of liability u/s 41 - Additions of the forfeited principal portion of settlement amount treating it as a revenue receipt and as income from business - HELD THAT:- Under these circumstances, since the earlier order of the Tribunal was followed in the assessee's case, we do not propose to take a different view. In terms of the earlier order passed by the Tribunal and as confirmed by this Court in M/S MANIPAL FINANCE CORPORATION LTD [2014 (10) TMI 706 - KARNATAKA HIGH COURT] the substantial questions of law are answered in favour of the assessee and against the Revenue.
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2018 (12) TMI 1756
MAT computation - Deduction on account of gain on sale of agriculture land (rural) out of “Book Profit” - whether income derived from sale of land in the hands of the assessee is in nature of agriculture income exempt under section 10(1)? - if the answer to the same is in affirmative, whether it can be excluded while computing book profits under section 115JB - HELD THAT:- In the instant case, the assessee company is in the business of real estate development including purchase and sale of land where the sole purpose of purchase of the land is to sell the same to third parties or to carry out non-agricultural development activities.
AO has also given a finding that the assessee has incurred expenditure on conversion charges on the pieces of land which have been sold during the year which shows clearly the future use of land for non-agriculture purposes and the said finding remain uncontroverted before us. The land in question thus loses its character as agriculture land and any gain arising on sale of such land cannot be regarded as agriculture income exempt under section 10(1) of the Act.
In the books of account, the assessee has shown this income as profit on sale of agriculture land being capital gains and not as agriculture income, we agree with the contention of the ld DR that the provisions of section 115JB is a self contained code and the AO cannot tinker with the books of accounts prepared by the assessee as per Schedule-VI of the Companies Act and once this income in question is not declared by the assessee or treated in the books of account as agricultural income, then the same cannot be allowed as deduction as per the provisions of section 115JB. The books profits for the purpose of Section 115JB of the Act shall therefore, include the amount being the amount on sale of impunged pieces of land. - Decided in favour of revenue
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2018 (12) TMI 1755
Valuation - Chloropyriphos 20 - Hamla - clearance of goods to independent buyers and to toll packers for further conversion - adoption of Rule 8 of the Valuation Rules, 2000 for computation of the additional duty, correct or not - case of appellant is that the provisions of Rule 8 ibid cannot be applied for determination of the transaction value, when the same were sold to the independent buyers - HELD THAT:- By placing reliance upon the Larger Bench judgment in the case of Ispat Industries Ltd. Vs. CCE, Raigad [2007 (2) TMI 5 - CESTAT, MUMBAI], this Bench of the Tribunal has held that the method of valuation adopted by the appellant is correct.
There are no merits in the impugned order passed by the learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 1754
Validity of re-assessment passed under section 143(3) read with section 147 without issuing notice under section 143(2) - HELD THAT:- Requirement of notice u/s143(2) of the Act is a mandatory condition and cannot be dispensed with. It was also held that the omission on the part of the AO to issue notice under section 143(2) cannot be a procedural irregularity and same is not curable.
D/R has contended that the assessee has participated in the assessment proceedings and did not raise any objection. Therefore, once the assessee has submitted to the jurisdiction of the AO, then it cannot raise objection at this stage. We do not agree with this contention of the ld. D/R because in the case in hand what is absent is the issuance of notice under section 143(2) and not the service of the notice issued by the AO is disputed by the assessee. Only in the case where the notice issued under section 143(2) was disputed by the assessee on the point of service of the said notice but the fact of issuance of notice is already available on record, in such a case if the assessee has participated in the assessment proceedings in response to the notice u/s143(2), then subsequently the assessee cannot take the objection of notice issued u/s 143(2) was not properly served on the assessee. Since it is a case of non-issuance of notice under section 143(2), therefore, the initiation of scrutiny proceedings itself was without jurisdiction conferred by the provisions of section 143 - Decided in favour of assessee.
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2018 (12) TMI 1753
Business auxiliary service - export of services - It was the contention of the respondent herein that, the commission, having been received from outside India and in convertible foreign exchange, was for rendering service to entities outside the country the exemption in Export of Service Rules, 2005 would apply - HELD THAT:- It is common ground that the activity of the respondent herein is within the ambit of ‘business auxiliary service’ taxable under section 65(105)(zb) of Finance Act, 1994; the dispute merely pertains to whether the said transactions are exempted as exports. Intuitively, there can be no doubt that an activity for which consideration is received by an entity from outside India in convertible foreign exchange is nothing but export and, hence, not liable to tax. However, it is the contention of Revenue that after the grouping of the various taxable services according to location of the immovable property, location of performance and location of recipient, rule 3(2) of Export of Service Rules, 2005 thereof mandates not only receipts of consideration in foreign exchange but also a two-fold condition of the service having been provided from India and used outside India.
Interpretation of rule 3(2) of Export of Service Rules, 2005 - HELD THAT:- The issue stands settled by the decision of the Hon’ble High Court of Bombay in COMMISSIONER OF SERVICE TAX, MUMBAI-III VERSUS M/S. SGS INDIA PVT. LTD. [2014 (5) TMI 105 - BOMBAY HIGH COURT] and an identical view taken by the majority in the dispute of M/S. MICROSOFT CORPORATION (I) (P) LTD. VERSUS CST. NEW DELHI. [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] where it was held that The Export of Service Rules, 2005, being destination based consumption tax are in accordance with the declaration of law by the Hon’ble Supreme Court. Having held that services involved were export of services, the same are not liable to be sustained against the appellants.
This matter was listed for clarification after conclusion of hearing on 2nd May 2018 on which day the decision on this appeal was pronounced for the limited purpose of ascertaining whether the amount demanded pertains to the period prior to amendment of rule 3(2) of Export of Service Rules, 2005 and difference on the appeal filed by Revenue - While the former was affirmed, we are constrained to take note that the appeal of Revenue has been filed without including the decisions that were pivotal for the reviewing authority to come to a conclusion that the impugned order must be challenged, while forbearing to elaborate on this lapse, departmental authorities are advised to be more cautious in future.
Appeal dismissed - decided against Revenue.
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2018 (12) TMI 1752
Revision u/s 263 - deduction u/s 10A - HELD THAT:- From the records, the AO has specifically raised query regarding exemption u/s 10A during the original assessment proceedings and all the details were given by the assessee during the assessment proceedings which is later on deleted by the CIT(A).
These facts were present before the CIT while giving show cause notice u/s 263 of the Act. The order passed by the Commissioner in capacity of Section 263 is merely a second opinion and does not fall in the category of prejudicial to the interest of Revenue.
Merely taking a second opinion on the issue which is already concluded by the Revenue Authorities cannot be a ground for invoking Section 263 - AO should have done this or that is not a prerogative while invoking Section 263 by the CIT. In the present case, AO has taken cognizance of all the material provided by the Assessee during the Assessment Proceedings and after verifying the same has passed just and proper order. Therefore, in light of the above findings, the order of the Commissioner u/s 263 of the Act is set aside. - Decided in favour of assessee.
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2018 (12) TMI 1751
Assessment u/s 153A - whether section 153C of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short], to the extent it, inter alia, enables the Assessing Officer to issue notice to third parties, on the basis of satisfaction that “any money, bullion, any jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person” referred to in section 153A i.e. the person searched? - satisfaction recorded by the Assessing Officer - HELD THAT:- Allegation of the Revenue is entirely unjustified, unsupported by any document found from the possession or control of the appellants. It is well settled rule of law that burden of proof is on the alleger and not on the person against whom the allegation is made. In the present appeals, the burden is thus on the Revenue to establish that the documents found from the third persons are reliable and authentic and also such documents belong to the distilleries which is uncorroborated by any evidence and even the author of the documents have not been identified. Therefore, it can safely been concluded that the Revenue has not discharged its burden. The mere fact that some of the distilleries are members of the association [UPDA] does not by itself lead to a conclusion that adverse inference can be drawn against members of the association since documents were found from the premises of the association and not from the distilleries. The contents of the impugned documents have to be established as genuine by leading cogent positive evidence or material and have to be supported by corroborative material. In the present appeals, no such material has been brought on record. Therefore, we have no hesitation to hold that the proceedings u/s 153C of the Act have not been validly initiated and, therefore, deserve to be quashed.
Gross violation of principles of natural justice - No cross examination was allowed by the revenue - Revenue accepted what was returned by Shri R.K. Miglani and on the strength of his statement that the documents seized from his premises belong to distilleries, the additions have been made as unexplained expenditure/contribution to UPDA.
It is well settled that only the person competent to give evidence on the truthfulness of the contents of the document is writer thereof. So, unless and until the contents of the documents are proved against a person, the possession of the document or hand writing of that person on such document by itself cannot prove the contents of the document.
Assessment framed u/s 153C of the Act is in gross violation of the principles of natural justice and deserve to be tagged as nullity.
Assessment barred by limitation - As mentioned elsewhere, the assessment proceedings u/s 153C of the Act were started on 11.12.2006 when the Assessing Officer received alleged satisfaction note and the documents belonging to the assessee. As per the provisions of the Act contained in section 153B(b) of the Act, as stated hereinabove, the Assessing Officer had to frame assessment order by 22.03.2008, excluding the period of stay and adding the same period to nine months whereas assessment order is framed on 30.12.2008 and is, therefore, well beyond the period of limitation. In our considered opinion, when the stay got vacated on 07.05.2017 and there being no further stay only such time during which the order of the Hon'ble High Court had been passed granting stay till the same was allowed can alone be excluded.
DR vehemently stated that the time taken for filing the appeal by the department before the Hon'ble High Court of Calcutta should also be excluded. We do not find any merit in this contention of the ld. DR because the provision specifically provides that only that period will be excluded during which the proceedings have been stayed by the Hon'ble High Court. In our considered opinion, the facts on record clearly show that the assessment order framed u/s 153C r.w.s 153A of the Act dated 30.12.2008 is barred by limitation. Since the assessment order has been held to be barred by limitation, proceedings subsequent to the happenings get vitiated. Appeals of the assessee are allowed.
Addition u/s 68 - HELD THAT:- The linkage between the material seized from UPDA’s premise as well as statement of Shri R.K. Miglani was not established through any objective material. Without bringing any cogent material on record, it is merely a presumption that the UPDA has been primarily engaged in the work of facilitating the collection and payment of bribe money.
Some more issues have been raised by the ld. DR.
(i) On the basis seized from the residence of Shri R.K. Miglani, M/s Radico Khaitan Ltd surrendered ₹ 27.50 crores and Balrampur Chini Mills surrendered ₹ 8.90 crores.
We fail to understand how the action of some other tax payer is relevant in the case of the appellant. The wisdom of Radico Khaitan Ltd and Balrampur Chini Mills cannot be considered and should not be considered in the hands of the appellant.
Incriminating documents were also seized from the laptop of Shri Ajay Agarwal, General Manager of M/s Radico Khaitan Ltd.
Again, it is between M/s Radico Khaitan Ltd and its General Manager to explain the incriminating documents. The assessee cannot be held to be responsible for the same.
DR has further asserted that the Revenue has produced a number of evidences in support of the fact that the distillers had made unaccounted payments to UPDA. In this regard, we have to point out that except for the notings in the loose sheets/impounded documents, the Revenue has brought nothing on record to establish any payments made by the distillers to UPDA. Whatever a member distiller has contributed to UPDA is recorded in the regular books of account of the assessee. Preponderance of probabilities do not allow us to assume or presume non existing facts. Considering the facts in totality from all possible angles, we do not find any merit in the additions made u/s 68
Exemption u/s 11 and 12 - HELD THAT:- In the light of our decision relating to the additions made u/s 68 of the Act, we are of the considered opinion that the benefits of section 11 & 12 cannot be denied to the assessee.
Cancellation of registration granted u/s 12AA - enhancement of the income by the ld. CIT(A) from NIL - HELD THAT:- Since the registration was cancelled, the assessee was assessed in the status of an AOP. The ld. CIT(A) found that surplus of receipt over expenditure is ₹ 4,88,140/-. According to the ld. CIT(A), this income should have been brought to tax by the Assessing Officer. The ld. CIT(A) issued notice of enhancement in reply to which the assessee strongly contended that it is not carrying out any business activity and that it has not earned during the year under appeal which can be subjected to income tax. It was further brought to the notice of the first appellate authority that the assessee has only received membership subscription of ₹ 22.34 lakhs. The surplus of ₹ 4.88 lakhs is the unspent amount from out of the membership subscription received during the year under appeal.
Since we have already pointed out that registration u/s 12AA of the Act has been protected till 01.10.2014, therefore, the action of the ld. CIT(A) is uncalled for. We accordingly, direct the Assessing Officer to delete the addition
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2018 (12) TMI 1750
Benefit of N/N. 214/86 dated 25.03.1986 - Wrongful availment of exemption benefit - parts of boilers were cleared from the factory by describing the same as “Boilers in parts” - N/N. 3/2001 dated 01.03.2001 and 6/2002 dated 01.03.2002 - extended period of limitation - HELD THAT:- The show cause notice dated 27.06.2005 issued to the appellant in the present case had enclosed the annexure, mentioning the details of projects executed by the appellant. On examination of the earlier show cause notice dated 30.03.2005, we find that the same projects were also involved therein, for whom the appellant had executed the assigned job. Since, the adjudication order passed in confirming the proposed duty demand in the said notice dated 30.03.2005 was set aside by the Tribunal, it cannot be said that the department is justified in invoking the extended period of limitation for confirmation of the adjudged demands in the present case.
The charges of suppression, wilful misstatement etc., cannot be levelled against the appellant, justifying issuance of show cause notice beyond the normal period provided under Section 11A ibid.
The impugned order upholding confirmation of the adjudged demand beyond the normal period of limitation cannot be sustained - the appeal is allowed in favour of the appellant on the ground of limitation alone.
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2018 (12) TMI 1749
Classification of goods - Non Laminated HDPE/PP woven Bags - rate of GST - classifiable under Tariff Heading 6305 or heading 3923 of the Customs Tariff Act?
HELD THAT:- If articles are manufactured from fabric woven from HDPE/PP strips of width not exceeding 5mm and the woven fabric is neither impregnated, coated, covered, or laminated in any manner, the same cannot be excluded from Section XI and chapter 63 falling under it - The bags under question as explained by the applicant are manufactured from fabric woven from HDPE/PP strips of width not exceeding 5mm further, the woven fabric is neither impregnated, coated, covered, or laminated in any manner therefore cannot be excluded from the purview of Section XI and-appear to be more specifically classifiable under sub-heading 63053300 of Chapter 63.
Thus, Non-Laminated Bags manufactured by the Applicant from HDPE/PP Strips of width not exceeding 5 mm, used for packing Sugar (Sugar bag), Flour (flour Bag), Food Grain (Grain Bag) and other similar bags are to be classified under Tariff Heading 6305 of the Customs Tariff Act - The Applicant is liable to pay GST is 5% on the subject goods.
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2018 (12) TMI 1748
Sanction of amalgamation scheme - Section 230 to 232 of the Companies Act, 2013 - entire undertakings, assets, business and liabilities of the Transferor Companies No. 1,2, and 3 are proposed to be amalgamated with and vested in the Petitioner/Transferee Company as a going concern - shifting of the Registered office of the Petitioner/Transferee Company from the State of Karnataka to the State of Tamil Nadu, and a change in the name of the Transferee Company from Shriram Chits (Karnataka) Private Limited to Shriram Chits (India) Private Limited.
HELD THAT:- The object and business of the Company involved in the Scheme relates to Chit Funds or Kuries and all similar kinds of schemes which encourage the habit of savings by affording all facilities for the purpose and more especially by opening Chit Savings, Thrift savings, and other deposit schemes in relation to trade or public, commercial and regular needs. Therefore, the ordinary public is involved in the business of the Company and the interest of those ordinary public has to be taken care of while sanctioning the scheme.
It is not in dispute that the Tribunal is empowered to sanction the Scheme. However, cases like the present one where the business lies with ordinary public, it is necessary for the Company to take permission/approval from the appropriate authorities - In the instant case, Registrar of Chits is the concerned authority to examine the issue in light of the terms and conditions proposed in the Scheme.
In the interest of justice, the Scheme subject to condition that approval can be taken from the Registrar of Chits after the sanction of the Scheme, cannot be sanctioned - Therefore, the instant Petition is disposed off by granting liberty to the Petitioner to comply all observations/objections as raised by the Regional Director and the Registrar of Companies, especially the observation/objection with respect to approval of the Registrar of Chits in the interest of public/chit holders and thereafter file afresh.
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2018 (12) TMI 1747
Reopening of assessment u/s 147 - reasons to believe - interest on borrowed capital from sister concerns - HELD THAT:- Tribunal in the impugned order has specifically recorded that the question of disallowance of interest paid in view of interest free loans and investment by way of share application money in sisters concerns was raised and examined by the AO during the original assessment proceedings. The said findings of fact have not been challenged before us as perverse or contrary to evidence and material on record. This being the factual position, the impugned order does not require interference as it is in consonance with the ratio and law laid down by the Supreme Court in Commissioner of Income Tax versus Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT] and the Full Bench decision of the Delhi High Court in Commissioner of Income Tax versus Usha International Limited, [2012 (9) TMI 767 - DELHI HIGH COURT] - No substantial question of law.
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2018 (12) TMI 1746
Consolidation and division of the equity shares of the Company - Section 61(1)(b) of the Companies Act, 2013 read with Rule 71 of the National Company Law Tribunal Rules, 2016 - Exit offer to the public shareholders - HELD THAT:- On perusal of the report of the Registrar of Companies, Karnataka, Bangalore, it is clear that the Company should rather opt for the procedure prescribed under Section 68, Companies Act, 2013 if it wishes to reduce the public shareholders and save costs.
Furthermore, on perusal of the Circular No. SEB1/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016, at the Annexure-A, para (vi), the Promoters are liable to acquire shares that are not offered under the exit offer up to a period of one year from the completion of offer. However, it appears the Promoters of the Company have not utilised this provision to acquire all the shares of the public shareholders after completion of one year. Instead, they have appeared before this Tribunal for purchasing shares and providing an exit route to the public shareholders, but under the pretext of consolidation of the share capital - This evinces an intention to avoid compliance with necessary provisions of Companies Act, 2013 and SEBI regulations.
Petition dismissed.
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2018 (12) TMI 1745
Exemption u/s.54B withdrawn - new asset so transferred is not a capital asset - assessee has subsequently sold the new asset on 27.05.2005 i.e. within the period of 3 years from this purchase - HELD THAT:- It is seen that the assessee has transferred agricultural land and resultant capital gain thereon has been claimed exemption on account of purchase of new asset. However, the new asset being a non-capital asset has been transferred within the period of 3 years i.e. 25.07.2005. Therefore, the cost of new asset for computing the capital gain u/s.45 of the Act would be considered as nil as per provisions of section 54B(1)(2) of the Act. Since the assessee has not satisfied the basic condition to avail the exemption u/s.54B(1) of the Act as the new asset is transferred before 3 years of its purchase, the capital gain is worked out after deducting the exemption out of such gains so benefited on the transfer of old asset. This, further stipulates that there should be a capital gain of transfer of such land, hence the assessee has invested in his land it will not be further taxable to capital gain as the land is rural agricultural land, it is not a capital asset.
Basic condition to avail the exemption has not been fulfilled by the assessee, therefore there is no relevance of the fact that new asset was capital asset or non-capital asset. Further, there is no specific provision in section 54B of the Act as mentioned in section 54F(3) of the Act. Therefore, the withdrawal of exemption would be made in respect of long term capital gain chargeable on old assets sold during the relevant assessment year.
As new asset so transferred is not a capital asset, hence no capital gain chargeable on the same. In view of these facts, we are of the considered opinion that the Lower Authorities have justified in withdrawing the exemption claim u/s.54B of the Act as basic conditions stipulated u/s.54B(1)(2) has not been satisfied. Therefore, this grounds of appeal of the assessee are dismissed.
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2018 (12) TMI 1744
Rejection of prayer to transfer the creditor’s winding-up proceedings to the adjudicating authority - admissibility of creditor’s petition by disregarding the defence sought to be set up by the company - whether the mere filing of a petition by a financial creditor under Section 7 of the IBC in respect of a company should prompt the company Court in seisin of a creditor’s petition against the same company to transfer such pending proceedings to the adjudicating authority under the IBC?
HELD THAT:- There are several situations which can arise. Either party – meaning the creditor or the company – may apply in such a situation or, in the post-admission stage, any other creditor may apply and assert that since the matter has partaken a representative character, any other creditor of the company would be deemed to be a party within the meaning of that word first used in the second proviso to Section 434(1)(c) of the Act of 2013. It could also be that at a pre-admission stage both the company and the creditor jointly apply or one of them applies and the other consents. Even in such a scenario, the Court has to apply its mind to see whether any other is sought to be prejudiced by such consent.
It is possible that the very admission of a financial creditor’s petition by the adjudicating authority under the IBC simultaneously triggers off of a moratorium of all other proceedings pertaining to the same company including the pending proceedings before the company Court. But the company Court should be sure that the proceedings before the tribunal or adjudicating authority are firmly in place before transferring the proceedings pending before it when the transfer is resisted by the creditor who has brought the petition before the company Court. It is possible that by virtue of the related provisions of the IBC, an order of admission would imply the immediate appointment of interim resolution professionals and the consequential suspension of authority of other adjudicating fora in respect of matters pertaining to the concerned company; but so be it.
Once the proceedings under the IBC have been admitted, the company Court should yield to the more modern mechanism under the IBC in view of the obvious legislative intent apparent. It was because the liquidation proceedings envisaged by the 1956 Act were found to be less than ideal, that an entirely different scheme has been put in place by the IBC in 2016. Thus, once proceedings pertaining to a company have been admitted by the IBC and the merits of such proceedings are to be gone into for the purpose of the preparation of a resolution plan, the proceedings pending before the company Court should ordinarily be transferred to the tribunal or adjudicating authority. It is true that such transfer, according to the appellant herein, makes no difference since the company Court would already have lost its jurisdiction, by virtue of the moratorium envisaged in the IBC, to adjudicate on the creditor’s claim; but the company Court would be well within its rights to decline a transfer till the proceedings before the adjudicating authority under the IBC stand admitted.
There is no ground to disagree with the order impugned dated August 9, 2018 by which the company’s petition for transfer of the respondent’s winding-up proceedings to the National Company Law Tribunal has been declined by the company Court here - neither appeal holds and the orders impugned dated August 9, 2018 and August 10, 2018 are affirmed - Appeal dismissed.
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2018 (12) TMI 1743
Levy of purchase tax - purchase of pulses, grams and chillies from vendors whose turn over admittedly does not exceed ₹ 5,00/- crores in an assessment year - sale of goods to other States to their branches/agents for making consignment sales - Section 12 of the TNVAT Act, 2006.
The pointed contention of the petitioners counsel is that even though the goods on hand can be brought within the purview of Entry No.41 Part B of the First Schedule, applying the general principle of law that the special will prevail over the general, the goods in question will have to be necessarily treated as exempted goods.
HELD THAT:- The IV Schedule is in two parts. Part A and B. Part A has been omitted by Tamil Nadu Act No.30 of 2011. There is only Part B now. There are as many as 81 Entries in part B. If one runs through the various entries, it can be seen that Entry 1(i) to Entry 64(A) refer only to goods - Entry 68, does not exempt the goods as such. It only exempts the transactions, namely, sale of the goods referred to therein if purchased from any dealer whose turn over in respect of the goods does not exceed ₹ 5,00/- crores in a year.
For the said provision of section 12 to apply, a sale or purchase in respect of the goods must be liable to tax. The goods on hand can obviously be not brought within the scope of Entry 41 of Part B of First Schedule only because of the specific entry, namely, Entry 68 in Part B of the IV Schedule. They are not levied with tax in the turn over of the seller is below ₹ 5,00/- crores. Therefore, the phrase “in circumstances in which no tax is payable” will get attracted - It can be seen from Section 12(1) of the Act and it can be seen from the counter affidavit filed by the respondents that there is a larger object behind incorporation of Section 12 of the Act. It was introduced to ensure that the State will not lose its revenue at least at one stage. The petitioners after purchasing the goods in question have transferred the same to their branches/agents, who are in other States by effecting consignment sales.
The stand of the respondent authority will have to be sustained - Petition dismissed.
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2018 (12) TMI 1742
TP Adjustment - determination of ALP in Software Development Service Segment - comparable selection - application of onsite revenue filter - HELD THAT:- In the TP cases, the onsite revenue filter is generally applied for the purpose of choosing comparable companies. It is, however, to be noticed that the onsite revenue filter has to be applied by having a threshold limit of, say, less than 25% or so of the total revenues of the comparable companies. Without such threshold limit being fixed, companies cannot be excluded. To this extent, there is merit in ground Nos.3 & 4 of the revenue. However, the issue raised in ground Nos.3 & 4 by the revenue will become academic for the reason that Acropetal Technologies Ltd. was excluded by the DRP on the ground that segmental details of its employee cost was not available. This company was also excluded for the reason that there was absence of segmental information to examine whether it passes export sales filter and for the reason that software revenue was not more than 75% of its total revenue.
In the case of Applied Materials (I) P. Ltd. v. ACIT, IT(TP) [2016 (9) TMI 1458 - ITAT BANGALORE] , this Tribunal excluded Acropetal Technologies Ltd. from the list of comparable companies vide para 16.1 to 16.4 of the said order. We are, therefore, of the view that there is no merit in ground No.5 raised by the revenue in this regard.
L & T Infotech Ltd. was also excluded by the DRP for the reason that 48.84% of its total expenses are incurred in foreign currency which includes substantial expenses on sub-contracting indicating that the company has high onsite revenue. Besides the above, the revenues from all the 3 segments in which this company was engaged, was considered by the TPO. This part of the directions of the DRP has not been challenged by the revenue in its appeal and therefore no useful purpose will be served by testing the comparability of this company by applying the onsite revenue filter.
R S Software (I) P. Ltd - This company was not sought to be excluded by the assessee in its appeal before the DRP and accepted the action of the TPO in accepting this company as comparable company. The DRP suo motu applied onsite revenue filter to exclude this company from the list of comparable companies. We are therefore of the view that R S Software (I) P. Ltd should be included in the list of comparable companies
As functional profile of the assessee in the present case and the assessee in the case of Applied Materials (I) P. Ltd. [2016 (9) TMI 1458 - ITAT BANGALORE] are identical and both are software development services provider. We, therefore, following the decision of the Tribunal in the case of Applied Materials (I) P. Ltd. (supra) restore this issue for fresh consideration with similar directions as was given by the Tribunal in the case of Applied Materials (I) P.Ltd.(supra). Thus, ground No. 3(l) raised by the assessee is treated as partly allowed.
Excluding E-Infochip Ltd. from the list of comparable companies for the reason that no segmental information regarding its diverse functions was available and it fails the software services income filter. Besides the above, there were major fluctuation in its profit which were influenced by extraordinary and peculiar circumstances and therefore this company was regarded as not comparable.
Selection of companies only functionally comparable with assessee rendering software development services.
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2018 (12) TMI 1741
TP Adjustment - no conformity with the directions issued by the Hon’ble DRP u/s 144C(5) - assessee pointed out that final order of assessment does not incorporate the directions of the DRP and was a verbatim repetition of the draft order of assessment dated 29.3.2016 - HELD THAT:- As decided in M/S SOFTWARE PARADIGMS INFOTECH PVT. LTD [2018 (1) TMI 1550 - ITAT BANGALORE] instead of passing the final order of assessment as required by law, the AO passed the impugned final order of assessment dated 17/1/2014 u/s 143(3) r.w.s 92CA of the Act; which, as contended by the id AR, is identical to the draft order of assessment passed on 14/3/2013 by only incorporating this TPO's proposals and , thereby evidently giving the DRP's mandatory directions issued u/s 144C(5) of the Act a complete go-by.
It is factually established that the AO in the final order of assessment dated 17/1/2014 has not given effect to or carried out the binding directions of the DRP as required u/s 144C(10) within the time specified u/s 144C(13) of the Act; which is a clear violation of the binding provisions of sec. 144C(10) and (13) of the Act. Therefore, in our considered opinion, the conduct of the AO/TPO in passing the impugned final order of assessment dated is a clear case of defiance and disregard to the binding directions of the higher authorities, i.e, the DRP in the case on hand.
Order of assessment is quashed on the ground that the same is not in conformity with the provisions of section 144C of the Act and further on the ground that the time for passing the final order of assessment is barred by time - Appeal of the assessee is allowed.
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2018 (12) TMI 1740
Valuation of imported goods - finalisation of the assessment in respect of the shipping bills - Revenue has preferred the present appeal inter alia, on the ground that assessment done by the original authority based on the price actually payable as per the formula prescribed under the contract is the correct transaction value for the purpose of determination of the duty liability - HELD THAT:- The impugned order was reviewed by the Committee of Commissioners and vide order dt. 8.9.2016, the said Committee had taken the view that no appeal shall be filed against the impugned order dt. 31.05.2016. Subsequently, the matter was referred by a newly constituted Committee of Commissioners, who vide Review Order dt. 8.8.2017 have held that the impugned order passed by the Ld. Commissioner (Appeals) is not legal and proper and accordingly, directed the concerned officer for filing of appeal before the Tribunal. In the impugned Review Order, no such statutory provisions were mentioned, which empowers the authorities to again review the order, which was already reviewed earlier by the competent authorities. Once, a review committee has taken a decision not to file the appeal before the Tribunal, then in such circumstances, they become functus officio inasmuch as such Committee of Commissioners has no power to review its decision and such a review on re-examination of facts or position of law cannot be allowed.
It is evident that the said review order has been passed after 13 months from the date of passing of the impugned order. Insofar as reviewing the order of the appellate Commissioner is concerned, sub-section (3) of Section 129D ibid mandates that the review order shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority. Proviso clause appended to the said sub-section provides that the Board may, on sufficient cause being shown, extend the said period by another thirty days.
Time limitation - HELD THAT:- On careful reading of the said statutory provisions, it reveals that beyond the period of four months from the date of receipt of the impugned order, the appeal cannot be preferred by Revenue before the Tribunal. Further, no powers have been vested on the Tribunal to condone the delay in passing of the Review order beyond the prescribed time frame. Since Tribunal is a creature under the statute, it has to strictly follow the statutory provisions in entertaining the appeal filed before it - on the ground of limitation also, the appeals filed by Revenue are not maintainable.
There are no merits in the appeals filed by Revenue on the ground of maintainability as well as limitation - appeal dismissed - decided against Revenue.
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2018 (12) TMI 1739
The Supreme Court of India in 2018 (12) TMI 1739 - SC Order, with Justices A.K Sikri and S. Abdul Nazeer, condoned delay, granted leave, and scheduled the case to be heard with other connected matters. Vikram Banerjee, ASG, and others represented the petitioner.
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2018 (12) TMI 1738
Levy of IGST on imported goods - Import under Advance authorization scheme - the bill of entry was not being assessed either on self assessment, provisional assessment or reassessment - it was held that the respondent extended benefit of exemption notification which had hitherto prevailed to levies under the Integrated Goods and Service Tax (IGST). That levy did not exist at the time the amended customs notifications were issued i.e. 29.06.2017.
HELD THAT:- The Special Leave Petition is dismissed.
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