Revision u/s 263 - deduction under section 80IB - Held that:- Assessing Officer did not make any enquiry or investigation at assessment stage so as to qualify deduction under section 80IB of the Act to the assessee on surrendered income as well as on job charges. The accounts of the assessee revealed that assessee declared income of ₹ 6 crores as business advances written off, therefore, it could not be said to have any nexus with the Industrial Undertaking of the assessee. The surrendered income was, therefore, undisclosed income from other sources and assessee failed to establish that source of unaccounted income invested in advances which were written off had any nexus with the Industrial Undertaking of the assessee. The assessee, during the course of survey as well as assessment proceedings have not filed any documentary evidence to establish that income of ₹ 6 crore has been earned through manufacturing activities eligible for deduction under section 80IB of the Act. Thus, the Assessing Officer has failed to make any enquiry or investigation on claim of assessee of deduction under section 80IB at the assessment stage on the above surrendered income as well as on job charges
It is well settled law that failure by the Assessing Officer to make enquiry at assessment stage would render his order to be erroneous and prejudicial to the interest of revenue and jurisdiction under section 263 of the Act have been properly exercised by the Ld. Commissioner of Income Tax. Considering the totality of the facts and circumstances, it is clear that Assessing Officer has passed the assessment order without conducting enquiry and investigation and has allowed claim of assessee under section 80IB of the Act without making any enquiry and investigation. Therefore, the order was correctly treated as erroneous and prejudicial to the interest of revenue. The ld. CIT was, therefore, justified in setting aside the assessment order and directing the Assessing Officer to pass the assessment order afresh denovo by giving opportunity of being heard to the assessee. In this view of the matter, no further directions are required to the Ld. Commissioner of Income Tax in the matter as is argued by ld. counsel for the assessee. The appeal of the assessee has thus no merit. The same is accordingly, dismissed. - Decided against assessee
CENVAT credit - Held that:- As certain amounts have been recovered from the employees in respect of the canteen services provided. To the extent of such recovery, CENVAT credit shall not be allowed. Only the unrecovered part shall get the benefit of CENVAT credit. The adjudicating authority shall re-compute the liability and issue proper demand notice to the appellant. Consequential benefit if any shall be permissible in accordance with law.
Clearance of POY made to their sister/own unit - adoption of assessable value available with them in relation to the transaction value adopted for sale to independent buyers, in accordance with Rule 4 of Valuation Rules, 2000 or the said clearances are to be assessed @ 110% of cost of production based on CAS 4 certificates in accordance with Rule 8 of Valuation Rules, 2000 as per the orders of Adjudicating authority - Held that:- The issue is no more res integra. The Tribunal in the case of Steel Complex Ltd Vs CCE, Calicut (2003 (9) TMI 252 - CESTAT, BANGALORE ), on the identical issue, allowed the appeal of the Assessee. The said decision was upheld by the Hon'ble Supreme Court as reported (2015 (10) TMI 500 - SUPREME COURT). It has been held that Rule 8 of the Valuation Rules, 2000, which was prevailing at that time, will have no application, where the goods are only partly sold under ex-factory basis and partly cleared for captive consumption.
The Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Bhavnagar Vs Ultratech Cement Pvt. Ltd (2014 (9) TMI 187 - GUJARAT HIGH COURT ) dismissed the appeal filed by the Revenue. It has been held that the captive consumption partly and sale to independent buyers partly, value is to be determined under Rule 4 of Central Excise Valuation Rules, 2000 and not under Rule 8 of the said Rules. We have also noticed that Rule 8 of the Valuation Rules, 2000 was amended by Notification No.14/2013-CE(NT), dt.22.11.2013. The present case is for the period prior to 22.11.2013. - Decided in favour of assessee
Unaccounted income addition - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding of fact holding assessee’s unaccounted income to be ₹ 1,43,68,982/- disclosed in its individual capacity to the tune of ₹ 1,04,11,752/- and the balance sum of ₹ 42,15,000/- in the HUF’s hands. The Revenue’s reliance is only upon the assessee’s bald statement. The lower appellate order considers a catena of case law holding therein that such a statement recorded in the course of survey does not form the sole basis for making additions in absence of supportive evidence. A more recent one we find is CIT vs. Golden Finance, (2012 (9) TMI 952 - GUJARAT HIGH COURT ) echoing the very principle. The Revenue fails to point out any exception on facts or law to the contrary. We uphold the CIT(A) order in these circumstances and reject the Revenue’s sole substantive ground. - Decided against revenue
Disallowance u/s 14A - Held that:- We direct the ld. Assessing Officer to follow the aforesaid order of the Tribunal holding that 1% of the exempt income will be reasonable disallowance on account of administrative expenses u/s 14A of the Act.
Disallowance u/s 36(1)(viii) - Held that:- Under the existing provisions of the Act, the deduction is allowable to a “financial corporation” which is engaged in specific activities viz., providing long term fiancé for industrial or agricultural development or development of infrastructure facility etc.,. The term “financial corporation” was defined in an inclusive manner so as to include a Government Company and a Public Company. By very nature of this definition being an inclusive definition and not an exhaustive definition, an entity incorporated under a statute carrying on the business of financing would come under the definition of “financial corporation”. It shall not be presumed that only Govt. company and Public company are entitled for above deduction. Any financial corporation which is engaged in the activities specified in the said section are entitled to claim deduction specified in the said section. Decided in favour of the assessee.
Valuation loss in respect of permanent investments allowed in favour of assessee
Depreciation claim on the lease asset - Held that:- There is uncontroverted finding that for A.Y. 2002-03 and 2003-04, this issue was decided in favour of the assessee and the same has been accepted by the Department. Identically, for A.Y. 2004-05 and 2005-06, there was no change in facts, therefore, it was decided in favour of the assessee.
Claim of exemption u/s 10(37) - Addition of long term capital gains - treating assessee’s agricultural income under the head “other” sources - CIT(A) deleted the addition - Held that:- We reiterate that the assessee’s land is situated within the Surat municipal corporation limits u/s 2(14) (iii) (a) of the Act. The Revenue strongly relies upon the Assessing Officer’s finding denying the assessee exemption u/s 10(37) of the Act. This section reveals that there are four conditions to claim exemption i.e. the land has to be situated in an area referred to under section 2(14) (iii)(a) or (b). Such a land is to be used for agricultural purposes during the period of two immediately preceding years. The third one is that the transfer in question has to be by way of compulsory acquisition.
The fourth and last condition is that such a transfer is on or after 1.4.2004. The assessee duly fulfils the first condition as the land is well within municipal limits. Coming to land’s use during the immediately preceding two years, we find that the revenue record form 7/12 as relied upon in the lower appellate proceedings forming part of record contains all details of the crops sown since financial year 2003-04. We deem it proper to observe that the same is public record prepared by agrarian authorities under respective land and tenancy laws which cannot be brushed aside without any specific evidence to the contrary. There is no such evidence much less a specific one forthcoming. Therefore, the assessee satisfies the second stipulation as well. Now we come to Assessing Officer’s objection that the land is not transferred under compulsory acquisition. The case record file states purpose of the sale deed to be a sewerage treatment plant. The Revenue does not point any infirmity therein. Therefore, this argument also fails. The fourth condition of the transfer effected on 28.3.2010 is automatically satisfied since the same is after 1.10.2004. It is also to be seen from the case file that assessee led sufficient oral evidence of the concerned panchas in favour of his plea of having cultivated the land. The TDS deduction form is not in order since it categorized assessee’s payment to be contractor bill in spite of the fact that it pertains to land transfer. The assessee’s three other co-owners namely – Smt. Mayuriben, Rekhaben and Geetaben have already been granted section 10(37) exemption in question. The Revenue fails to rebut all the above stated facts on record. We accordingly reject its both arguments on the issue of the impugned capital gains and agricultural income. The CIT(A)’s order stands upheld. - Decided against revenue.
Disallowance of subscription of UP, Co-operative Sugar Factories Federation Ltd. - CIT(A) deleted the disallowance - Held that:- CIT followed his order for the assessment year 2003-04 and allowed the claim of the assessee. In fact the AO in his order disallowed the amount by merely following his order for the assessment year 2003- 04. The department accepted the order of the first appellate authority for the assessment year 2003-04. Under these circumstances we see reason to interfere in the order of the first appellate authority, specifically as the subscription is allowable u/s 37 (1) of the Act. The amount paid as subscription to federation is necessary business expenditure. The necessity / requirement of incurring this expenditure is explained. - Decided against revenue
Disallowance of interest paid to federation - Held that:- CIT(A) gave a finding that the assessee has taken loan from Govt. of India and UP Government, for the purpose of business, and that this is evident from the sanctioned letters and hence the interest in question is allowable u/s 36(1). As the interest in question is payable to Govt. Of India and the statement of UP Government, section 43(B)(d) does not apply. - Decided against revenue
Disallowance of additional income on the ground that it is in the nature of penalty - Held that:- CIT(A) has rightly held that the expenditure in question i.e additional interest, is a contractual obligation and hence allowable as expenses. He followed his predecessor’s order on the same issue for the assessment year 2002-03 and revenue has accepted this order. Thus we dismiss this ground of the revenue. - Decided against revenue
Assessment u/s 153C - suppression of sales - Held that:- In the case before us, no material was found to indicate that the assessee either suppressed the sales or inflated the expenditure during the course of search operation. Only on the basis of statement recorded from the partner of the assessee-firm on the basis of the books of account, the addition was made. Therefore, this Tribunal is of the considered opinion that in the absence of any material to indicate the inflation of expenditure, there cannot be any addition on the basis of the statement alone. Accordingly, this Tribunal is unable to uphold the orders of the lower authorities for assessment years 2006-07 and 2007-08. Therefore, the orders of the lower authorities for the assessment years 2006-07 and 2007-08 are set aside and the addition made by the Assessing Officer is deleted.
Assessment year 2011-12, from the orders of the lower authorities it appears that no return of income was filed u/s 139. The return was filed only consequent to the notice issued u/s 153C of the Act. Therefore, this Tribunal is of the considered opinion that even though there was no search material and the proceedings were not pending on the basis of the return filed, the Assessing Officer has to pass a composite order for the undisclosed income and the normal income. In other words, one order has to be passed for the block period computing the taxable income including the undisclosed income. Therefore, the Assessing Officer has to compute the total taxable income on the basis of the material available on record. Since the assessee itself admitted that the weaving charges and staff salary were inflated to the extent of 20% and calendaring and washing charges to the extent of 10%, this Tribunal is of the considered opinion that the Assessing Officer has rightly made the addition for the assessment year 2011-12. The CIT(A), on the basis of the admission made by the partner of the assessee-firm, has rightly confirmed the addition. This Tribunal do not find any infirmity in the order of the CIT(A) for the assessment year 2011-12. Accordingly, the same is confirmed.
The Delhi High Court disposed of a writ petition as the representation had already been decided. Another writ petition challenging the order on the representation was filed separately.
Seeking correct tax rate - Sale of metal polishing soap used abrasively for polishing and smoothing the various metals - Whether to be classified under Entry 67 of Part B of I Schedule to the Act levying 14.5% VAT or under Entry 67-A of I Schedule levying 5% VAT - Held that:- in view of the clarification issued by Advance Ruling Committee , the goods are to be classified under Entry 67-A of I Schedule levying 5% VAT. - Decided in favour of petitioner
Penalty under section 271(1)(c) - natire of satisfaction - Held that:- The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing The scope of Section 27l(l)(c) has also been elaborately discussed in Union of India vs. Dharmendra Textile Processors (2008 (9) TMI 52 - SUPREME COURT) and CIT vs. Atul Mohan Bindal (2009 (8) TMI 44 - SUPREME COURT).
The principle laid down in our view, has been correctly followed by the Revenue and we find no illegality in the department initiating penalty proceedings in the instant case. - Decided against assessee
Deemed dividend u/s 2(22) - Held that:- HC order upheld [2015 (2) TMI 731 - PUNJAB AND HARYANA HIGH COURT] - The assessee having proved a tangible business expediency between the assessee and the company, the question of invoking Section 2(22)(e) of the Act does not arise. We find no reason whether in law or in fact to interfere with these findings of facts, which are neither perverse nor arbitrary. - Decided against the revenue.
Deemed dividend addition U/S 2(22)(e) - Held that:- Based on the judgement of CIT vs. Universal Medicare Pvt. Ltd.(2010 (3) TMI 323 - BOMBAY HIGH COURT ) is liable to be upheld, thereby resulting in deletion of an addition in the hands of the assessee company. Accordingly direct the Assessing Officer to delete the addition made in the hands of the assessee on the ground that such dividend could not be taxed in the hands of the assessee as it is not a shareholder in M/s. Tainwala Holdings Pvt. Ltd.
Addition of cess on green leaf - whether production of green leaf which is 100% agricultural activity and not an admissible deduction under income chargeable ? - Held that:- Expenditure on cess should be allowed as a deduction before computing the composite income under Rule 8 and the apportionment is to be made after the income is so computed.
TDS on the interest paid by it to New Okhla Industrial Development Authority (NOIDA) - Held that:- As payment of interest by the banks to NOIDA does not require any tax withholding as the same is covered u/s 194A(3)(iii)(f). Resultantly, the order passed by the Addl CIT(TDS) u/s 201(1) and 201(1A) read with section 194A has been set aside.- Decided in favour of assessee.
Direction to make pre-deposits - Held that:- In the facts of the present case, the Tribunal after erroneously recording that the petitioners had indulged in delaying the adjudication proceedings, has directed to deposit a sum of ₹ 20,00,000/- which is clearly discriminatory.
In the aforesaid premises, the impugned order passed by the Tribunal being based upon an erroneous finding of fact as well as being discriminatory qua other assessees, cannot be sustained to the extent the same directs the petitioners to deposit ₹ 20,00,000/- and report compliance to the adjudicating authority.
For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 5th February, 2014 passed by the Tribunal (Annexure “A” to the petition) is hereby quashed and set aside, to the extent the same directs the main appellant therein to deposit an amount of ₹ 20,00,000/- within a period of eight weeks and report compliance to the adjudicating authority and further observes that upon verification of payment of such deposit, the adjudicating authority will decide the case afresh in de novo adjudication. Accordingly, the adjudicating authority shall decide the case afresh, de novo, after providing all relied upon documents to the petitioners and after extending them an opportunity of personal hearing.
Delay in filing an appeal before Commissioner (appeals) - condonation of delay - delay even beyond the statutory period of limitation prescribed in section 35 - The question is whether the appellant can challenge the order passed by the Additional Commissioner, as there is patent illegality as contended by the appellant, and calls for intervention in the writ jurisdiction.
Held that:- In our view, if we accept the submission of the appellant that the writ petition challenging the order passed by the Additional Commissioner has to be heard on merits though dismissed on the ground of limitation, in an appeal under section 35, it would render the said section as otiose and would open a flood gate of litigations. The very object of section 35 would be defeated. It would encourage the litigants to approach the High Court under the writ jurisdiction at any point of time in breach of the provisions contained in section 35.
It has to be borne in mind that the law of limitation does not render the right of a litigant bad in law but it merely prohibits him from pursuing his remedy beyond a point of time. Hence, the judgments relied on behalf of the appellant are not applicable.
Import of gold jewellery - assessment - whether the Directorate of Revenue Intelligence 'Alert Circular' dated 19th June, 2015, which is sought to be relied upon by the customs authorities, has any relevance or not in the given facts of the instant case. - Verification of original documents submitted by the importer in respect of the imported consignment of gold jewellery - Held that:- Customs authorities have simply shifted their responsibility to the Directorate of Revenue Intelligence, which is certainly not the true scope, purport and effect of the 'Alert Circular' dated 19th June, 2015, issued by the Directorate of Revenue Intelligence. - The Customs authorities are directed to take immediate steps to finally assess the imported consignment of gold jewellery in accordance with law.
Petitioner challenges at pre-detention stage his detention - Conservation of Foreign Exchange and Prevention of Smuggling Act, 1974 (COFEPOSA) - smuggling of gold - Arguments heard. - Judgment reserved. - Later pronounced as reported in [2015 (9) TMI 1192 - DELHI HIGH COURT]
Smuggling of Gold into India - Proceeding under COFEPOSA Act - detention order - Learned counsel for petitioner seeks permission to withdraw the present petition, with liberty to challenge/impugn the detention order at an appropriate stage. - petition is dismissed as withdrawn.
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