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Showing 321 to 340 of 1967 Records
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2014 (1) TMI 1649
Marketability of optical transmission equipment - Valuation of goods – Cost construction method OR value of comparable goods - Clandestine removal of goods - Extended period of limitation - Supreme Court after hearing the appeal dismissed the appeal filed by the assessee against the decision of Tribunal [2013 (11) TMI 1415 - CESTAT CHENNAI], wherein Tribunal held that For goods to be marketable it is not necessary that goods in question should be generally available in the market - Marketability does not depend upon the number of purchasers - The goods cleared without payment of duty for which duty is now demanded cannot be considered as goods cleared to other units of the appellant for further manufacture of other excisable goods - Excise liability does not depend on realisation of money but on manufacture and removal - the appellant has been freely removing goods under the pretext of testing to be done, replacement of defective pieces etc. without payment of duty and proper accounting of the goods after testing etc. – thus in the case of short shipment also this is only a method adopted for clandestine removal and not cases of genuine supplies to make good short shipments.
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2014 (1) TMI 1648
Classification - Whether a “VSAT” will be covered by the term “Satellite Receiver” under Entry 75(i) of the Notification, dated 29-1-2000 or it will be covered by Entry 75(iii) under residual items of electronic goods - Held that:- Once it is clear that functioning of “VSAT” and “Satellite Receiver” is different, their actual use is different, both are differently known by the people who deals therein, and, both work differently, then it cannot be doubted that a “VSAT” cannot be identified with “Satellite Receiver”. It would not be correct to treat a “VSAT” as a “Satellite Receiver”, so as to attract taxability under entry 75(i) of the Notification, dated 29-1-2000. In my view, “VSAT” is different from “Satellite Receiver”. Since it is not separately mentioned in entry 75(i) and 75(ii), it would be covered by entry 75(iii), being an electronic good, not covered by any other item in entry 75 and would be taxable under entry 75(iii) - Decided against Revenue.
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2014 (1) TMI 1647
Duty demand - Suppression of facts - Invocation of extended period of limitation - Whether the claim of the Department is barred by limitation, since the period started from 28-1-1997 to 31-3-1997 - Held that:- If there is no suppression of facts on the part of the assessee, the normal period of limitation for making claim of Central Excise duty is six months and if there is suppression of facts, the period of six months would extend to five years. - appellant/assessee has duly intimated the process of job work received from M/s. Raghavendra Spinners Limited, Tirunelveli. The only contention putforth on the side of the Department is that even though the assesses has fairly conceded that it has received job work from M/s. Raghavendra Spinners Limited, Tirunelveli it failed to intimate either brand name or trade name. In order to answer befittingly, the learned counsel appearing for the appellant/assessee has drawn the attention of the Court to the decision referred to earlier, wherein it has been clearly mentioned that failure to mention classification as supplied by assessee does not come within the purview of suppression of facts. Therefore, it is quite clear that there is no suppression of facts on the part of the appellant/assessee in respect of job work done by it during the relevant period mentioned in the show cause notice.
The claim in question has been made for the period started from 28-1-1997 to 30-3-1997 and show cause notice has been given on 3-8-1998. Even from 31-3-1997, no show cause notice has been given within a period of six months. Under the said circumstances, the demand made through show cause notice, dated 3-8-1998 is clearly barred by limitation. Since the claim made through show cause notice, dated 3-8-1998 is barred by limitation, it is needless to say that the order passed by the CESTAT is liable to be set aside and the order passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli is liable to be restored. - Decided in favour of assessee.
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2014 (1) TMI 1646
Availment of CENVAT Credit - Non payment of excise duty - Held that:- As per Section 73 sub-section (2) of the Finance Act, 2010 the assessee has to make an application to the Commissioner of Central Excise along with documentary evidence and a Certificate from the Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods within a period of six months from the date on which the Finance Bill, 2010 received the assent of the President. - assessee had reversed the credit even prior to the amendment and the order of the Tribunal is in fact no different from what is contemplated under the Finance Act, 2010 - Decided against Revenue.
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2014 (1) TMI 1645
Modification of order - Whether the previous Orders-in-Original in case of M/s. Natani Rolling Mills Pvt. Ltd. and in case of Shiv Prasad Rolling Mills Pvt. Ltd., passed by the Commissioner of Central Excise, Jaipur by which he dropped the duty demands against them can be the basis for modification of the stay order dated 23-10-2013 passed in the case against the appellant company and its Director - Held that:- Just because the Commissioner in December, 2012 in cases of M/s. Natani Rolling Mills Pvt. Ltd. and M/s. Shiv Prasad Rolling Mills Pvt. Ltd. has dropped the proceedings against them, this cannot be the justification for modification of the stay order dated 23-10-2012, as it is not known as to whether the facts of the case against the appellants and the facts of the cases against M/s. Natani Rolling Mills Pvt. Ltd. and M/s. Shiv Prasad Rolling Mills Pvt. Ltd. are identical
Though the impugned Order-in-Original in case of the Appellant company and the Orders-in-Original in the cases against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills have been passed by the same Commissioner i.e. CCE, Jaipur-I, it is not known as to whether the facts of the case against the Appellant Company and the facts of the cases against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills are identical, as it is not known as to whether the fact of unexplained wide fluctuation in power consumption per MT from month to month - there in the cases against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills, which have been dropped by the Commissioner. In any case, the Commissioner’s orders in the cases against M/s. Natani Rolling Mills and M/s. Shiv Prasad Mills have been challenged by the Department before the Tribunal and the Commissioner findings on the points of facts and points of law involved in these cases cannot be said to be final.
The dropping of cases by the Commissioner against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills are not the developments which change the balance of convenience, as, as explained in para 24 above, the facts of the present case may not be identical to the facts of the cases against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills, and even if the facts are identical, it cannot be said at this stage that the Commissioner’s orders dropping the proceedings against M/s. Natani Rolling Mills and M/s. Shiv Prasad Rolling Mills are correct. Thus the judgment of Hon’ble Bombay High Court in case of M/s. Sarla Performance Fibers (2008 (2) TMI 68 - HIGH COURT BOMBAY) is not applicable for the facts of this case. - Modification denied.
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2014 (1) TMI 1644
Rectification of mistake - Rectification filed after 7 months and 10days - Held that:- Section 129A(5) relates to condonation of delays in presenting the appeals or Cross Objections, the same cannot be made applicable to the delays in filing the ROM applications. Section 129B(2), which prescribes a limit of six months in filing the applications, does not confer any jurisdiction on the Tribunal to condone the delays beyond the said period. As such, we find that the applications having been filed after a period of 7 months and 10 days from the date of the order are barred by limitation and cannot be entertained on this ground itself. - mistake pointed out by the appellant is as regards non-consideration of their plea regarding the import of photocopiers not being restricted items during the relevant period - said plea was neither raised nor argue at the time of disposal of the appeal and the only prayer was to reduce the redemption fine and penalty, which stand accepted by the Tribunal - Rectification denied.
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2014 (1) TMI 1643
Meaning of “compensation has not been paid” under Section 24(2) of the Land Acquisition, Rehabilitation and Resettlement Act, 2013 w.e.f. 01-01-2014 - Held that:- 2013 Act puts in place entirely new regime for compulsory acquisition of land and provides for new scheme for compensation, rehabilitation and resettlement to the affected families whose land has been acquired or proposed to be acquired or affected by such acquisition.
Insofar as sub-section (1) of Section 24 is concerned, it begins with non obstante clause. By this, Parliament has given overriding effect to this provision over all other provisions of 2013 Act. It is provided in clause (a) that where the land acquisition proceedings have been initiated under the 1894 Act but no award under Section 11 is made, then the provisions of 2013 Act shall apply relating to the determination of compensation. Clause (b) of Section 24(1) makes provision that where land acquisition proceedings have been initiated under the 1894 Act and award has been made under Section 11, then such proceedings shall continue under the provisions of the 1894 Act as if that Act has not been repealed.Section 24(2) also begins with non obstante clause. This provision has overriding effect over Section 24(1). Section 24(2) enacts that in relation to the land acquisition proceedings initiated under 1894 Act, where an award has been made five years or more prior to the commencement of the 2013 Act and either of the two contingencies is satisfied, viz; (i) physical possession of the land has not been taken or the compensation has not been paid, such acquisition proceedings shall be deemed to have lapsed.
1894 Act being an expropriatory legislation has to be strictly followed. The procedure, mode and manner for payment of compensation are prescribed in Part V (Sections 31-34) of the 1894 Act. The Collector, with regard to the payment of compensation, can only act in the manner so provided. It is settled proposition of law that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden.
Now, this is admitted position that award was made on 31.01.2008. Notices were issued to the landowners to receive the compensation and since they did not receive the compensation, the amount (Rs.27 crores) was deposited in the government treasury. Can it be said that deposit of the amount of compensation in the government treasury is equivalent to the amount of compensation paid to the landowners/persons interested? We do not think so. In a comparatively recent decision, this Court in Agnelo Santimano Fernandes[Ivo Agnelo Santimano Fernandes and Others v. State of Goa and Another [2011 (2) TMI 1352 - SUPREME COURT];relying upon the earlier decision in Prem Nath Kapur[Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd. [1995 (11) TMI 441 - SUPREME COURT], has held that the deposit of the amount of the compensation in the state’s revenue account is of no avail and the liability of the state to pay interest subsists till the amount has not been deposited in court.
From the above, it is clear that the award pertaining to the subject land has been made by the Special Land Acquisition Officer more than five years prior to the commencement of the 2013 Act. It is also admitted position that compensation so awarded has neither been paid to the landowners/persons interested nor deposited in the court. The deposit of compensation amount in the government treasury is of no avail and cannot be held to be equivalent to compensation paid to the landowners/persons interested. We have, therefore, no hesitation in holding that the subject land acquisition proceedings shall be deemed to have lapsed under Section 24(2) of the 2013 Act. - Decided against the appellant.
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2014 (1) TMI 1642
Valuation of goods - Classification of goods - Valuation u/s 4 or 4A - Difference of opinion - Majority order - Whether the appellants are required to affix MRP on their product as per the provisions of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 or not - Held that:- As the decision of the Hon’ble High Court of Bombay in the case of Larsen & Toubro Ltd. (2008 (2) TMI 645 - HIGH COURT BOMBAY) has not been set aside by the Hon’ble Apex Court. Therefore in the light of the judgment in the case of Shri Chamundi Mopeds Ltd. [1992 (4) TMI 183 - SUPREME COURT OF INDIA] the judgment of the Hon’ble High Court of Bombay in the case of Larsen & Toubro Ltd. (2008 (2) TMI 645 - HIGH COURT BOMBAY) is a law of land as on today. Therefore, we hold that the appellants are required to affix MRP on the impugned goods.
Whether the list price with suitable adjustment for VAT and local taxes can be accepted as an accurate and reasonable substitute for the MRP - Held that:- A careful examination of the provisions of sub-section (2) reveals that two conditions are required to be satisfied for application of Section 4A. The first condition is that there should be a requirement under the Standards of Weights and Measures Act, 1976 or the Rules made thereunder or under any other law for the time being in force to declare the RSP on the packages of the goods. The second condition is that the goods should be notified under sub-section (1) of Section 4A. If these two conditions are satisfied, then notwithstanding anything contained in Section 4, the value for the purpose of assessment of duty will be the retail sale price minus the amount of abatement, if any, as specified by the Central Government.
Therefore, once the goods are specified under Section 4A(1) and there is a statutory requirement to declare RSP on the retail sale packages of the goods, the question of application of Section 4 would not arise at all. In the present case, there is no dispute on the fact that on the retail packages the appellant-manufacturers were required to declare the RSPs and the goods were also notified under the provisions of Section 4A(1). If that be so, it cannot be contended that the valuation of the goods have to be done under Section 4 of the Act and not under Section 4A. Thus, there is a contradiction in the findings and conclusions drawn by the learned Member (Judicial) that prior to 1-3-2008 the goods were liable to be assessed for excise duty purposes under Section 4 of the Act and not under Section 4A.
Whether for the period prior to 1-3-2008, the maximum retail price of the impugned goods can be determined by the assessing officer using reasonable/best judgment method based on the materials available and consistent with the provisions of Section 4A of the Central Excise Act, 1944, in the absence of a machinery provision available for determination of the MRP of the product - Held that:- Central Government acquired the powers to ascertain in the prescribed manner the retail sale price of such goods and the retail sale price so ascertained shall be deemed to be retail sale price for the purpose of the Section vide Finance Act, 2003 which substituted sub-section (4) of Section 4A. The rules were notified only w.e.f. 1-3-2008. The question is, prior to 1-3-2008 whether the provisions of the said Rules could be applied for determination of RSP using the best judgment method - If one carefully goes through the provisions of Section 4A and the Rules, 2008 cited above, it can be seen that there is no determination of RSP envisaged in the legal provisions. The declaration of RSP is mandated by the provisions of the Packaged Commodities Rules and the Standards of Weights and Measures Act and RSP by definition is the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale. Neither the Standards of Weights and Measures Act nor the Rules made thereunder provides for determination of RSP. It merely defines what RSP is. Since the declaration of RSP is mandated by the Standards of Weights and Measures Act or the Rules made thereunder, Excise law cannot prescribe a method for determination of RSP since the declaration of RSP is not mandated by the Central Excise law. Therefore, what is provided under the Central Excise law is only the ascertainment of the RSP as against determination of RSP.
In the present case, the charging section is Section 3 of the Central Excise Act and the rate of tax is prescribed in the Schedule to the Central Excise Tariff Act, 1985. The value for the purpose of assessment is the retail sale price as defined in the Explanation 1 to Section 4A of the Act. Thus, the taxable event, the rate of tax, the measure of the tax and the person liable to pay tax are separately provided for in the various provisions of the Central Excise Act, 1944 and the Rules made thereunder. Rules, 2008 apply only to a limited situation where the manufacturer fails to declare the RSP or tampers with or obliterates the RSP already declared. Therefore, the provisions are merely procedural and directory in nature and hence has retrospective operation. - charging section provides for the levy, the rate of tax is specified in the schedule, the person liable to pay the tax is the manufacturer of the goods under Rule 4 of the Central Excise Rules, 2002 and the measure of tax is defined under Section 4A. Thus, all the core ingredients of the tax system is specified in the law. The Rules 2008 merely provides for ascertainment of the measure of tax in a situation where it is not declared.
There is absolutely no doubt that the MRP of the product can be ascertained by the assessing officer using reasonable/best judgment means based on the material available and consistent with the principles and the provisions of Section 4A of the Central Excise Act, 1944 even if rules for ascertainment of the same were not framed earlier and came about later - excise levy on the impugned goods is not on the transaction value but is on retail sale price. The appellant has circulated list price to their stockists which is exclusive of local taxes and octroi. The stockists cannot sell the goods at a price higher than those mentioned in the list price. This is explicitly mentioned in the list price itself. Revenue has adopted the list price with suitable adjustment for including the sales tax/VAT and octroi elements and from such value abatement has been given for arriving at the assessable value.
In the absence of any such evidence, the additions made by the Revenue to the list price towards local taxes cannot be faulted at all so long as the reasonableness of the additions has not been rebutted by the appellants either before the adjudicating authority or before this Tribunal. Therefore, I do not find any infirmity in the determination of RSP of the goods manufactured by the appellants by adopting their list price and adding thereto the VAT/sales tax and octroi elements.
From the facts available on record it is seen that the appellants were aware that they were required to declare RSP on the packages of the goods manufactured and sold by them. They were so advised by the Director of Legal Metrology as early as in 2002. However, in spite of being aware of their legal obligations, the appellants did not comply with the statutory directions. After a gap of five years they challenged the decision of the Director, Legal Metrology before the Hon’ble Bombay High Court and the Bombay High Court directed the Director, Legal Metrology to pass a speaking order which the Director, Legal Metrology has done in 2007. - Thus, the appellants were fully aware of the legal requirements. In spite of such knowledge, the appellant chose not to comply with the law in complete defiance of the law. There was no reason for the appellant to entertain any reasonable belief that they were not required to declare the RSP on the packages. The question is when an appellant deliberately defies a statutory requirement, can they be allowed to get away with it and obtain the benefit under some other law.
Appellant have deliberately contravened the provisions of Standards of Weights and Measures Act and the Packaged Commodities Rules made thereunder. Therefore, they have to suffer the consequences of the contraventions. For such contraventions the appellant cannot claim benefits under the provisions of Central Excise Act by holding that the appellant was not liable to discharge excise duty under Section 4A of the Central Excise Act. In the present case, a deliberate contravention of the Standards of Weights and Measures Act in utter disregard to the law was also a contravention under the provisions of Central Excise Act and these contraventions had been committed by the appellant with an intention to evade payment of legitimate Central Excise duty. In these circumstances, the invocation of extended period of time is completely justified and, therefore, the main demands made invoking the extended period of time is clearly sustainable.
The appellants also resorted to subterfuge by making misdeclarations on the packages that they are meant for industrial consumers and not for retail sale. There was no exemption under Rule 34 of the PCR from declaration of MRP even if the goods were meant for industrial or institutional customers, if they were sold by numbers and displayed for sale by the stockists and retailers. The appellants’ agreements with the stockists required the latter to display these goods for sale and the stockists have also confirmed this fact in their statements given before the investigating authorities. There is also no dispute that the appellants’ goods are sold by numbers. Thus to circumvent the law, the appellants resorted to misdeclarations, which clearly reveals their guilty mind. Thus the charge of suppression of facts and wilful misstatement of facts with an intent to evade excise duty is writ large and established beyond doubt. In such circumstances, invocation of extended period of time for demand of duty is completely justified - Decided against assessee.
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2014 (1) TMI 1641
Disallowance of lease rentals - Tribunal deleted disallowance - Held that:- When once the managing director admits in his affidavit that there was no purchase of materials/machinery, there was no lease of machinery and, therefore, the amounts paid is not lease rentals, we fail to understand what more evidence was required to establish that the case of lease rentals pleaded by the assessee is a sham transaction or unreal transaction. Therefore, the Tribunal without any justification erred in setting aside the concurrent findings recorded by the two courts below, which is based on legal evidence. However, after holding that the assessee is not entitled to a claim of depreciation on the lease rentals it holds that the said amount is to be treated as financial transactions and treated as interest paid for the financial loans availed of by the assessee, a finding, which is without any basis, without any legal evidence on record. When once the case pleaded by the assessee was found to be without basis and the transaction, on which reliance is placed was found to be bogus, sham and unreal, the assessee's claim is to be negatived. - Decided against the assessee.
Unexplained cash credit - Unapproved creditors - addition u/s 68 deleted by ITAT - Held that:-Particulars were sought for, complete particulars were not furnished thereby disabling the assessing authority to make any further enquiry. It is in those circumstances, the assessing authority has been very reasonable, instead of treating the entire credit, for which the particulars are not given, he has treated only 10 per cent. of the total advances as unexplained cash credit. The finding of the Tribunal that such procedure is contrary to the spirit of judicial precedents is unfounded. In view of that, the finding recorded by the Tribunal cannot be sustained. It is contrary to law. - Decided against the assessee.
Interest on borrowed funds disallowed - ITAT allowed the claim - Held that:- Unfortunately, the Tribunal did not look into all the three transactions as one transaction. It was of the view because S. N. Project Ltd. did not take off and because of the memorandum of understanding entered into between the parties towards the purchase of the electricity, which is not in dispute. It was of the view that the transaction cannot be held to be a sham transaction. However, it holds that the amount of ₹ 45.5 crores invested by S. N. Project Ltd. is money, which the assessee had raised from the shareholders, it is not a part of borrowed amount. Absolutely there is no material to substantiate this particular aspect, thereby the Tribunal also accepts if this represents the borrowed money that transaction cannot be sustained. Both the authorities below on a careful scrutiny of the material on record and on the basis of the admission of the managing director, which is found in the affidavit have recorded the aforesaid findings. It is based on the legal evidence. Such concurrent findings of fact has been disturbed by the Tribunal without there being any evidence to the contrary. That is not the scope of appeal, in which the appellate authority could have interfered with the concurrent findings of fact. In that view of the matter, the said finding is also unsustainable. Accordingly, it is hereby set aside. - Decided against assessee.
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2014 (1) TMI 1640
Application for Scheme of Arrangement and Reconstruction of the company in Liquidation to revive under Section 391 to 394 of the Companies Act - Regional Director's & Official Liquidator's observation duly addressed - Application for stay of winding up of the Company under section 466 of the Companies Act - Held that:- In view of the analysis of the objections which have been raised by the Regional Director in his report dated 17.7.2013, do not survive. Apart from the objections analysed, the Regional Director has no other objection and it has been stated in the report that the Registrar of Companies of the State of Madhya Pradesh and Chhattisgarh had submitted his report to the Regional Director, vide letter dated 27.5.2013 and 14.6.2013 and as per the said report, there is no complaint against the Company including any complaint/representation against the proposed Scheme of Arrangement and Reconstruction, and the Regional Director has no other objection, and it is stated that the Scheme of Arrangement may be considered by this Court. The Regional Director had submitted the second report in the form of affidavit dated 27.9.2013, but it is not disputed by the counsel for the respective parties that the second affidavit is mere reiteration of the objections raised in the earlier report-affidavit dated 17.7.2013.
The report of the Official Liquidator discloses that the petitioner in compliance of the order of this Court dated 27.2.2013, has deposited a sum of ₹ 37,87,550/- on 12.3.2013. It has further been stated by the Official Liquidator that no claim has been received from any unsecured creditors of the Company and that the Official Liquidator has not received any complaint against the proposed Scheme of Arrangement and Reconstruction from any person or party interested in the Scheme in any manner. It has further been expressed by the O.L. that except for the above objections, the affairs of the Company have not been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. In the present case, it is not disputed by any of the secured creditors or the official liquidator that the applicant has cleared the outstanding dues of the secured creditors and that the scheme of reconstruction/revival has been approved by the unsecured creditor and shareholders.
Having heard the learned counsel for the parties on the issue of the pending claims of the ex workers of the Company in liquidation, it is found that the workers' claim can not be ignored and it is the bounded duty of the promoter/contributory before this court to satisfy the claim of the workers but at the same time it is to be kept in mind that the revival of the Company in liquidation is in the interest of the ex workers, since there is an offer of re-employment to all the willing workers. Since the Company is situated in the interiors, therefore, revival of the Company will also give an opportunity of employment to the other eligible workers in the neighbouring areas. Thus, I am of the opinion that the interest of the workers would be adequately protected if a Claim Committee is appointed and the claim of the workers is adjudicated.
In view of the above analysis, in Company Petition No.21/2013 following directions are issued - Having considered the Scheme and on perusal of the record and report, the Scheme appears to be fair and reasonable and not opposed to public interest. Accordingly the Scheme of Arrangement and Reconstruction filed as Annexure P/5 to the petition is hereby approved. So far as Company Petition No.17/2002 is concerned, In view of the above in terms of Section 466 of the Companies Act, the following directions are issued - Further proceedings of liquidation shall remain permanently stayed.The official liquidator shall handover the assets of the Company in liquidation to the applicant promoter/contributory.The applicant-promoter will submit six monthly report to the O.L. till the time the Company becomes fully operational. - In net Scheme of Arrangement and Reconstruction of the company in Liquidation to revive approved and winding up petition permanently stayed.
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2014 (1) TMI 1639
Constitutional validity of Section 2(1)(o) of the SARFAESI Act and the RBI Circular dated 1st July 2013 - Violation of Article 14 - whether it is on the whims and fancies of the financial institutions to classify the assets as non-performing assets - Held that:- As a matter of fact a policy has been laid down by Reserve Bank of India providing guidelines in the matter for declaring an asset to be a non-performing asset known as “RBI's prudential norms on income recognition, asset classification and provisioning -- pertaining to advances‖ through a circular dated 30-8-2001 - The petitioner could not place any convincing material to show that Section 2(1)(o) of the Act and the RBI Circular dated 1st July 2013 are unreasonable, arbitrary or otherwise repugnant to the constitutional principle. Consequently, we are of the view that the petitioners are not able to rebut the presumption of constitutionality of Section 2(1)(o) of the SARFAESI Act and the RBI Circular in question.
Section 2(1)(o) of the Act defines NPA as an asset or accountable receivable of a borrower, which has been classified by banks or financial institutions in terms of RBI guidelines as sub-standard, doubtful and loss asset. Clause 4.1 of the RBI guidelines classifies NPA into three categories - sub-standard, doubtful and loss asset. Once the account finds place in any of these categories, it becomes an NPA with respect to clause 2.1 of the RBI guidelines. Broadly speaking, the classification of assets into sub-standard, doubtful or loss asset is done taking into account the degree of well-defined credit weakness and extent of dependence on collateral securities for realisation of dues. The Legislature has left it to RBI to identify, define and classify different assets in accordance with current international best practices as well as the changing economic scenario of the country. We are of the opinion that the Legislature has clearly defined NPA under Section 2(1)(o) of the SARFAESI Act and the RBI guidelines are issued to improve quality of assets of the bank and to recover the public money speedily.
There is no excessive delegation or scope for the banks to act upon basing on their whims and fancies, but they are governed by the guidelines issued by the RBI which under Section 21 of Banking Regulation Act 1949 is empowered to lay guidelines in the interest of banking policy relating to advances to be followed by the banking companies. It is settled law that in the matters of policy decisions of the Government in respect of economic matters, Courts cannot interfere unless such policy is contrary to the Constitution.
Section 2(1)(o) of SARFAESI Act clearly defines NPA as an asset or an account which has been classified as a sub-standard, doubtful or loss asset. Consequently, the Indian Parliament while enacting SARFAESI Act has not delegated essential legislative function to the RBI / Financial Institution with regard to the concept of NPA. - impugned Circular issued by the RBI, which provides guidelines for determining NPAs, is in conformity with Section 2(1)(o) of the SARFAESI Act. Clause 2.1 of the RBI Circular is beneficial in nature inasmuch as even though a customer may be a defaulter on account of his failure to pay interest or repay principal in accordance with the contract, yet he would be classified as NPA only if the default continues beyond ninety days.
There is no discretion vested with the Bank under Section 2(1)(o) of SARFAESI Act to pick and choose an account as an NPA at its own whim and fancy. In declaring an account as an NPA, the Banks have to act in accordance with the provisions of the Act and the various Circulars / Guidelines issued by the RBI. - Moreover, if the borrower is aggrieved by the action taken by the Banks under Sections 2(1)(o) and 13(4) of the SARFAESI Act, the same can be challenged before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act. Consequently, Section 2(1)(o) of SARFAESI Act is neither unreasonable nor violative of Articles 14 and 19(1)(g) of the Constitution, as alleged by the petitioners. - Section 2(1)(o) of the SARFAESI Act and the RBI Circular dated 1st July 2013 are perfectly legal, valid and are not violative of Articles 14 and 19(1)(g) of the Constitution of India - Decided against Appellant.
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2014 (1) TMI 1638
Disallowance u/s 69 - unexplained cash deposit - Non maintenance of books of accounts - held that:- Assessee has declared total gross turnover of ₹ 25,56,850/- and in the absence of books of account, the AO estimated the total receipts at ₹ 30 lacs in the assessment order and did not accept the applicability of provisions of section 44AD of the IT Act being the nature of business of the assessee to be different. The AO directed to apply 10% profit rate and directed to make addition of ₹ 95,492/-. The AO similarly made addition of ₹ 16,94,500/- being the amount deposited in the bank account and since it was a larger amount, therefore, no addition on account of gross profit was made. These facts clearly show that the amount deposited in the bank account of the assessee was part of the total turnover, which was enhanced to ₹ 30 lacs from the turnover disclosed by the assessee in the absence of the production of books of account. The ld. CIT(A) was, therefore, justified in holding that the addition on account of unexplained bank deposits is unjustified and the addition on account of applying reasonable profit rate has to be made - No merit in appeal - Decided against Revenue.
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2014 (1) TMI 1637
Deduction u/s 10B - Held that:- Assessee filed a copy of decision of ITAT Delhi [2014 (4) TMI 929 - ITAT DELHI] and submitted that the issue of allowability of deduction u/s 10B of the Act has been decided in favour of the Assessee in Assessee’s own case for immediately preceding assessment year to the year under consideration in this appeal. The Ld. Counsel of the Assessee drawn our attention towards Paragraph No. 7 & 8 wherein the CIT(A) concluded its findings and observations by directing the Assessing Officer to grant exemption u/s 10B of the Act to the Assessee and ITAT ‘C’ Bench, Delhi upholded the findings of the CIT(A) by holding that the Assessee was entitled to exemption u/s 10B of the Act then the period of exemption started from Assessment Year 1998-99 and cannot be said to be exhausted in the year under consideration in the present appeal i.e 2006-07. - Following decision of asessee's own previous case, authorities below were not justified in rejecting the claim of the Assessee for deduction u/s 10B of the Act - Decided in favour of assessee.
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2014 (1) TMI 1636
Disallowamce of Deferred revenue expenditure - Held that:- Expenditure was incurred on development of improvised version of the existing “wheel type” harvestor combine machines which the assessee was selling. Thus, the expenditure resulted in only improving the existing machine but did not bring into existence any new profit earning apparatus. Hence, it was in revenue field and not in capital field. The assessee had primarily claimed the expenditure in such a manner so that the entire expenditure is claimed over the period by which the product was expected to be commercially launched. - CIT(A) has rightly observed that assessee had not claimed the deferred revenue expenditure by way of amortization @ 10% for a period of 10 years. Further the assessee never represented that the deferred revenue expenses were of the nature of pre-operative expenses and, accordingly, never claimed them u/s 35D. - No reason to interfere with order of CIT(A) - Decided against Revenue.
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2014 (1) TMI 1635
Deduction u.s 80IA - profit of power plant -revised return - CIT (A) rejected the claim of the assessee by holding that claim u/s 80IA cannot be allowed by filing a letter during the assessment proceedings - Held that:- Commissioner of Income Tax Vs. Jai Parabolic Springs Ltd. [2008 (4) TMI 3 - HIGH COURT OF DELHI], Jute Corporation of India Ltd. Vs. CIT [1990 (9) TMI 6 - SUPREME Court], Commissioner of Income Tax Vs. Rose Services Apartment India P. Ltd. [2009 (2) TMI 483 - Delhi High Court] and CIT Vs. Jindal Saw Pipes Ltd. [2010 (9) TMI 45 - DELHI HIGH COURT] - Matter remanded back - Decided in favour of assessee.
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2014 (1) TMI 1634
Disallowance of Transfer Pricing Adjustments - Assesse followed TNMM method to determine the ALP with its AE transactions and in its return itself offered to tax an amount of ₹ 3,31,652 calculated at 4.88% qua the bulk sale of books to AEs - Held that:- Apropos T.P. adjustments, there is merit in the argument of ld. Counsel for the assessee that bulk discount and reduce bad debt liability risk with AEs is well known factor and is to be considered while making T.P. adjustments. In view thereof CIT(A) has rightly appreciated the issue and held that the suo motu offer of adjustment by assessee at 4.88% as net profit margin adjustment was reasonable. The CIT(A)’s order being based on sound reasoning and proper appreciation of facts, needs no interference, which is upheld. - Apropos advertisement also assessing officer has not given any rational basis or cogent reasons to come to a conclusion that 15% ad hoc of the total expenditure on publicity & advertisement was attributable to brand building. CIT(A) has rightly held that the expenditure has been incurred on profit generating apparatus of the assessee. - Respectfully following Hon’ble Supreme Court judgment in the case of Emporium Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME Court] And Citi Finance (2011 (3) TMI 622 - Delhi High Court) we uphold his order - Decided against Revenue.
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2014 (1) TMI 1633
Reassessment u/s 147 - assessments were reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 03.03.2008 on the ground that the meat processing plant of the assessee was not liable for deduction u/s 80IB of the Act. - Held that:- Even in the assessment order passed u/s 153A of the Act the AO has recorded that the claim of deduction by the assessee has been examined and verified. It is only after this the AO has granted the assessee deduction u/s 80IB of the Act. A perusal of the reason recorded, as also the assessment order which is the subject matter of the appeal now shows that nowhere is there anything mentioned by the Revenue to show that the assessee has not disclosed truly and fully all material facts necessary for assessment. - for the purpose of reopening an assessment beyond the period of four years form the relevant assessment year there must be a failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. This failure having not been shown the first provisio to section 147 grants protection to the assessee. Further the fact that AO in the Assessment orders passed u/s 153A of the Act has specifically mentioned that he has examined and verified the claim of deductions clearly shows that the reopening is only on the basis of a change of opinion, which is also not permissible in such case where the failure on the part of the assessee has not been shown. In the circumstances we are of the view that the finding of ld. CIT(A) is on a right footing and does not call for any interference.
Disallowance of employees contribution of PF deducted from the salary before due date - Held that:- As it is noticed that the employees contribution to PF has been paid before the due date of filing the return and this fact has not been disputed by the Revenue we are of the view that findings of ld. CIT(A) being in consonance with the decision of the Hon’ble Jurisdictional High Court in the case of Vijay Shree Ltd. referred to supra we are of the view that the findings of ld. CIT(A) is on a right footing and does not call for any interference. - Decided against Revenue.
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2014 (1) TMI 1632
Disallowance of depreciation - Held that:- Amount of depreciation debited to the account of Charitable Institutions is to be allowed as deduction to arrive at the income available for application to charitable or religious purposes. Accordingly the disallowance made by the Assessing Officer on account of depreciation of ₹ 2,79,58,973/- as claimed by the assessee is hereby deleted
Following the judgment of Hon’ble Delhi High Court in the case of Director of Income Tax Vs. Raguvanshi Charitable Trust in [2010 (7) TMI 158 - DELHI HIGH COURT], the appellant society is allowed to carry forward the deficit of the current year and to set off the same against the income of the subsequent years - Decided against Revenue.
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2014 (1) TMI 1631
Disallowance of bad debt claim - Proofs of bad debts not produced - Held that:- It clearly emerges that the amounts in question are unpaid hospital bills of earlier years, which were included in the income of the charitable hospital. It has not been disputed that assesse could not have detained the patients and not discharge them due to unpaid bills. This would have been a matter of jeopardy for the assessee as these patients had no money and for detaining them the lodging and boarding was to be provided by the assessee. Besides, its object being charitable, if some amount remained unpaid, the letting go of the patient does not militate against the object of the assessee. - assessee has no obligation to give a demonstrative proof that the dues have become actually bad. - there is a possibility that these patients may be related to some of the trustees, there is no instance or material available on record to suggest any specific allegation - Claim of bad debt allowed - Decided in favour of assessee.
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2014 (1) TMI 1630
Reopening of assessment - Notice u/s 148 - DRP failed in appreciating the fact that actual profit made by the appellant is less than 10 percent on the total percent on the total sales - Held that:- The assessee, a non-resident, operating in India through liaison office and project office had formed a consortium which was awarded a contract by DMRC for a lump sum consideration. For assessment year 2002-03 it was found that assessee did not include sales to DMRC effected through project office which amount represented milestone payments received abroad in foreign currency and same was not offered to tax in India as income of project office. The AO reopened and concluded assessment. However it was found that turn over or sales made to DMRC and expenses of project office which was a permanent establishment was disclosed at time of original assessment. - Since this issue was a matter of conclusion to be drawn from the material facts and not a matter relating to furnishing material details and particulars i.e. primary facts, conclousion drawn by the AO could not be attributed to failure of petitioner to disclose fully and truly all material facts. It was held that since no new facts or particulars had come to the knowledge of AO reopening was not justified.
Levy of interest u/s 234B - Held that:- High Court [2010 (8) TMI 37 - DELHI HIGH COURT] has been pleased to hold that if a person who had to make payments to non resident, had defaulted in deducting tax at source from such payments, non-resident would not be absolved from payment of taxes thereon, however in such a case non-resident would be liable to pay tax and question of payment of advance tax would not arise. It was held that since assessee was a nonresident, entire tax was to be deducted at source on payments made by payee to it and there was no question of payment of advance tax by assessee and therefore it would not be permissible for revenue to charge any interest u/s 234B from the assessee. - Decided in favour of assessee.
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