CENVAT credit - Outward transportation service - eligible input service or not? - Held that: - appellant had not produced any documentary evidence in support of their contention that ownership and property of the goods cleared by them remained with them till delivery of same at buyer's end and that freight and insurance charges were borne by them - proper course in this appeal is to remand the matter for de novo consideration - penalty set aside - appeal allowed by way of remand.
Validity of notice issued u/s 158BC - direction to file the return 'within 15 days' - Held that:- The issue is squarely covered by the decision of the Gujarat High Court in case of Commissioner of Income Tax vs. Amit K. Jain @ Anil K. Jain [2016 (8) TMI 1088 - GUJARAT HIGH COURT ] wherein held that fifteen days means, clear fifteen days which is the requirement under law. In that view of the matter, we are of the view that the notice which was issued by the authority asking the assessee to file the return within fifteen days is not in accordance with the provisions of the Income-tax Act and therefore it is invalid. In our view, the authority who is issuing the notice must be aware of the Act and must construe the provision strictly. The words `not less than fifteen days’ have to be interpreted correctly.
Since the Assessing Officer asked the assessee to file the return within fifteen days of the service of the notice, the notice issued by the Assessing Officer is invalid. - Decided in favour of assessee
Liability of interest - price escalation clause - whether interest is payable on differential duty paid on account of price escalation clause? - Held that: - reliance placed in the case of M/s. Steel Authority of India Ltd. Versus Commissioner of Central Excise, Raipur [2015 (12) TMI 594 - SUPREME COURT], where similar issue was raised and it was held that as on the date of clearance when excise duty was paid, it could not be treated as 'short paid' on the said date. As a consequence when the principal amount, namely, the excise duty itself was not payable (i.e. on the differential) on the date of clearance of the goods, there cannot be any question of law to pay interest - this appeal is remanded to the original authority to await the final view and judgment taken by the Hon’ble Apex Court in the matter and to adjudicate the matter on denove basis accordingly - appeal allowed by way of remand.
Reference to TPO - Held that:- It is an undisputed fact that no speaking order has been passed by the Assessing Officer while making a reference to the TPO, which is a requirement as per the Instruction No.3/2016 dated 10th March, 2016, issued by the CBDT. Before making a reference to the TPO, the assessee is required to be given an opportunity to showcause why the reference may not be made to the TPO and thereafter a speaking order is required to be passed by the Assessing Officer while making a reference to the TPO.
Under the circumstances, on the aforesaid ground alone, the impugned reference made by the Assessing Officer to the TPO deserves to be quashed and set aside and the matter is required to be remanded to the Assessing Officer to pass a speaking order while making a reference to the TPO.
The Appellate Tribunal CESTAT, Bangalore dismissed the appeal for non-prosecution as the appellant showed no interest in pursuing the case despite repeated adjournments. The appeal pertained to the year 2014. The order was pronounced on 30/11/2016.
Penalty under Section 271(l)(c) - Held that:- We find that in the notice issued u/s 271(1)(c), the charge is not specified. In other words, the AO has not specifically stated whether the notice was issued for concealment of particulars of income or for furnishing inaccurate particulars of income.
As decided in THE COMMISSIONER OF INCOME TAX & OTHS. Versus M/s MANJUNATHA COTTON AND GINNING FACTORY & OTHS. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] the findings recorded in the assessment proceedings insofar as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings - Decided in favour of assessee
Applicability of proviso to Section 2(15) to deny the benefit of Section 11 - Held that:- The assessee was a recipient of research and training grant and other income to the tune of ₹ 1.36 crores. The Assessing Officer (AO) determined that the latter were commercial receipts and guided by proviso to Section 2(15) and held that the assessee could not avail the benefit under Section 11(23) of the Act. The ITAT relied upon the judgment in the case of India Trade Promotion Organisation vs Director General of Income Tax (2015 (1) TMI 928 - DELHI HIGH COURT) which had observed that that as long as the predominant activity of an institution is not business or commerce, and that the so called suspect income is derived on the basis of some subsidiary or incidental activity, the exemption cannot be denied.
This court notices that the reasoning in India Trade Promotion Organisation (supra) has been affirmed and applied in several other judgments, therefore, no question of law arises.
Appeal admitted to consider the following substantial question of law.
“Whether the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 31,62,618/made on account of deemed dividend u/s. 2(22)(e) of the Act, by treating the transaction as current accommodation adjustment entries instead of loan and advance?”
Registration of selling dealer - effect of cancellation of registration on purchasing dealer - Held that: - reliance placed in the case of State of Maharashtra Versus Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA], where it was held that A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current - appeal dismissed - decided in favor of assessee.
Violation u/s.11(5) and 13(1)(d) - whether the exemption is to be withdrawn for the entire income or the portion of the income? - Held that:- No legal and valid ground for interference. The Special Leave Petition(s) are dismissed. HC order [ 2014 (6) TMI 980 - KARNATAKA HIGH COURT] confirmed. Entire income of the assessee cannot be assessed for the tax, for violating under Section 11(5) read with Sec.31(1)(d) of the Act and what would become the subject matter of assessment is only that income which is the subject matter of violation. - Decided in favour of the assessee
Pre-deposit - correctness of availment of duty drawback - Held that: - in the interest of justice, the Commissioner of Customs (Appeals) (when approached by the aggrieved parties) should proceed to deal with the merits provided the entities ensure that the principal deposit amount mandated (i.e. 7½ %) in respect of the basic duty drawback element (regardless of the penalty of like amount) is paid by each of the five entities. Likewise, if individual liabilities imposed by the adjudicating authority are appealed against vis-a-vis specific amounts indicated, ignoring the joint and several liability made generally (in the Order-in-Original) against such appellants, their appeals too shall be heard on the merits, subject to such pre-deposit - petition disposed off - decided partly in favor of petitioner.
CENVAT credit - GTA services - denial on the ground that the credit availed on GTA services received was irregular - the appellant have all the documents in the form of invoices raised on the customers during the relevant period and also lorry receipts raised by the transporters on the basis of which service tax was paid and credit availed during the relevant period but the authorities below have not considered these documents to arrive at a finding as to when the ownership in the goods has taken place - is denial justified? - Held that: - This Tribunal in the appellant’s own case [2015 (10) TMI 2594 - CESTAT BANGALORE] has allowed the appeal of the appellant by way of remand on an identical issue - I allow the appeal of the appellant by setting aside the impugned order and remanding the matter to the original adjudicating authority for fresh decision after considering the documents filed by the appellant - appeal allowed by way of remand.
Validity of re-oping of assessment - Held that:- Considering the documents on record it appears that the objections are raised against reopening by M/s. Accurate Finstock Pvt. Ltd. through its Authorized Signatory (which according to the petitioner is not in existence). Nothing is on record that the petitioner had raised any objection pointing out the aforesaid aspects.
Under the circumstances, let the petitioner raise a specific objection pointing out the aforesaid facts to the Assessing Officer and it is directed that if such objection is raised within a period of one week from today, the same may be considered by the concerned Assessing Officer within a period of 10 days thereafter and if by assigning the reasons the Assessing Officer still is of the opinion that the impugned notice is not required to be quashed and set aside on the aforesaid ground or any other ground, in that case, the Assessing Officer may not proceed further with the reassessment for a period of two weeks from passing of such order which may be communicated to the petitioner forthwith.
Income-tax on capital gains accruing from land acquisition compensation and sale of land - how the cost of acquisition is to be worked out for the purposes of deduction of such cost from the receipts so as to arrive at the correct quantum of capital gains exigible to tax? - tribunal thought it proper to determine the cost of acquisition at ₹ 50/- per square yard reversed by HC - Held that:- A declaration in the return filed by the Assessee under the Wealth Tax Act would certainly be a relevant fact for determination of the cost of acquisition which under Section 55(2) of the Act to be determined by a determination of fair market value. Equally relevant for the purposes of aforesaid determination would be the comparable sales though slightly subsequent in point of time for which appropriate adjustments can be made as had been made by the learned Tribunal (from ₹ 70/- per square yard to ₹ 50/- per square yard). Comparable sales, if otherwise genuine and proved, cannot be shunted out from the process of consideration of relevant materials. The same had been taken into account by the learned Tribunal which is the last fact finding authority under the Act. Unless such cognizance was palpably incorrect and, therefore, perverse, the High Court should not have interfered with the order of the Tribunal. The order of the High Court overlooks the aforesaid severe limitation on the exercise of jurisdiction under Section 260A of the Act.
That apart, it appears that there was an on-going process under the Land Acquisition Act, 1894 for determination of compensation for a part of the land belonging to the Assessee which was acquired [39 acres (approx.)]. The Reference Court enhanced the compensation to ₹ 40/- per square yard. The above fact, though subsequent, would not again be altogether irrelevant for the purposes of consideration of the entitlement of the Assessee. However, as the determination of the cost of acquisition by the learned Tribunal was on the basis of the comparable sales and not the compensation awarded under the Land Acquisition Act, 1894 (the order awarding higher compensation was subsequent to the order of the learned Tribunal) and the basis adopted was open for the learned Tribunal to consider, we take the view that in the facts of the present case the High Court ought not to have interfered with the order of the learned Tribunal.
Thus we are of the view that this appeal should be allowed which we hereby do. The order of the High Court is set aside and that of the learned Tribunal is restored.
NRI challenging the assessment order u/s 144 - HC [2016 (5) TMI 948 - ALLAHABAD HIGH COURT] held as not inclined to entertain this petition as the petitioner has an alternative remedy of filing an appeal under Section 246 (1) (a) - Held that:- It appears that the High Court has omitted to take note of the explanation under Section 246 of the Income Tax Act. Therefore, we are of the view that the petitioner should be granted liberty to approach the High Court by way of a Review Petition.
We permit the petitioner to file a Review Petition before the High Court within one month from today, in which case, the High Court shall consider the matter on merits.
Deduction u/s 80IA - Calculation of the profits from the eligible business - Deduction of losses set off against the profits from other business is to be taken into consideration as held by Tribunal - HC [2015 (4) TMI 678 - KARNATAKA HIGH COURT] held once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally - Held that:- Special leave petition (titled “Assistant Commissioner of Income Tax, Tirupur vs. M/s. Velayudhaswamy Spinning Mills P.Ltd [2016 (11) TMI 373 - SUPREME COURT ] and connected cases filed against the judgment of the Madras High Court has been dismissed.
The present case which pertains to a contrary view expressed by the Karnataka High Court will, nevertheless, require a detailed examination as the order of the Court dismissing the special leave petition does not contain any reasons therefor.Hence, we grant leave.
Assessment u/s 153(C) - whether ITAT findings that the satisfaction note was flawed and could not withstand scrutiny under Section 153(C)? - Held that:- A plain reading of the note clearly shows that search in the business premises of two individuals was carried out; equally, survey of premises of the assessee was also carried out. In the course of this search of Shri Ved Prakash Bharti – who also was a director and assessee, some pen drives were found and seized. Further documents listed in Annexure A-1 too were seized after their print outs were obtained. These documents detailed cash receipts for the sale of the shops and offices in the assessee’s other concerns.
Having regard to all these conspectus of facts, the AO expressed under Section 153C of the Act that the documents so seized “belonged” to the assessee. We are unpursuaded by the assessee’s submissions that the expression “belonged”, in the context in which it was used has to be understood as imputing “relating to”, or any other term. Plainly put, the AO was satisfied that the documents belonged to the assessee in view of what was contained or brought out on a fair reading of their contents. It must not to be overlooked that while construing a document, expressions should not be interpreted too literally as if they are, words, carved in stone or in a Statute - as the ITAT did in this case. For these reasons, we are of the opinion that the ITAT should not have allowed the appeal only on this hyper technical ground with regard to the satisfaction note. Those findings are, accordingly, set aside.
ITAT’s decision with respect to the satisfaction recorded by the AO under Section 153C of the Act is set aside. A further direction is issued to the ITAT to hear the appeals afresh on merits uninfluenced by the observations of this Court on the contentions of the parties.
Disallowance u/s 14A r.w.r. 8D - Held that:- The language of Section 14A presupposes that the AO has to adduce some reasons if he is not satisfied with the amount offered by way of disallowance by the assessee. At the same time Section 14A (2) as indeed Rule 8D(i) leave the AO equally with no choice in the matter inasmuch as the statute in both these provisions mandates that the particular methodology enacted should be followed. In other words, the AO is under a mandate to apply the formulae as it were under Rule 8D because of Section 14A(2). If in a given case, therefore, the AO is confronted with a figure which, prima facie, is not in accord with what should approximately be the figure on a fair working out of the provisions, he is but bound to reject it. In such circumstances the AO ordinarily would express his opinion by rejecting the disallowance offered and then proceed to work out the methodology enacted.
In this instance the elaborate analysis carried out by the AO – as indeed the three important steps indicated by him in the order, shows that all these elements were present in his mind, that he did not expressly record his dissatisfaction in these circumstances, would not per se justify this Court in concluding that he was not satisfied or did not record cogent reasons for his dissatisfaction to reject the AO’s conclusion. To insist that the AO should pay such lip service regardless of the substantial compliance with the provisions would, in fact, destroy the mandate of Section 14A. Thus this Court is satisfied that the disallowance which is otherwise in accord with Rule 8D(c) was justified.
Entitlement to set off interest finance and professional and other charges from the interest income for the next assessment year - prior period expenditure - Held that:- The note appended to the computation of income file along with the return by the assessee in this case clearly stated that interest and legal charges were excluded on the basis of the Income Tax Department’s stand in other group cases that they could be included in the case of land and were done by way of “abundant caution” as a disallowance.
Having regard to this circumstance and further the fact that other group company cases i.e. Kum Kum Cultivation involved a similar and identical exercise where ultimately the disallowance was set aside by the ITAT, the adoption of the same course of action in this case cannot be said to have been erroneous. Furthermore, in the eventuality of the transaction itself maturing the likelihood of the assessee being permitted to capitalize or include the interest component as part of the cost of land has not been disputed. If such is correct course of action, the reverse situation whereby the transaction does not mature, should also attract a similar treatment that the interest paid but not shown as deductible expenditure for the previous period should be permitted as prior period expenditure. - Decided in favour of the assessee
Unaccounted income from sale of property - CIT(A) deleted the addition holding that the seized document does not belong to the assessee - validity of assessment u/s 153C - Held that:- There is no absolute or limited ownership of the assessee over the seized documents apart from the fact that the transactions recorded therein pertain to properties owned by the assessee. Now the requirement under the law is not regarding the ownership of the properties mentioned in the seized document but it is regarding the ownership of the document itself. As there is no intimate connection between the contents of the seized documents and the assessee and neither there is any other corroborative evidence to the effect that the assessee had received the cash portion recorded in the seized document therefore the requirement under the law that the seized document should belongs to the assessee for initiation of proceeding u/s 153C of the IT Act are not fulfilled in the case of the assessee. Therefore, Ld. CIT(A) has rightly held that the addition made based on the papers seized from the computer at the residential premises of Sh. Sandeep Singh Khinda and Smt. Samta Khinda are not in accordance with law and was therefore rightly deleted by the Ld. CIT(A).
Also reference to the name of person in the seized document cannot be the basis to come to the conclusion that the document belonged to the said person. Proceedings initiated on the basis of the such assumption u/s. 153C were held to be without jurisdiction. See Vijaybhai N. Chandrani Versus Assistant Commissioner of Income-tax [2010 (3) TMI 770 - Gujarat High Court] - Decided against revenue
Addition unaccounted income or receipt during the year under consideration on sale of Property applying Sec 292C - non reference to DVO - Held that:- There is thorough lack of corroborative and confirming evidence and thorough lack of enquiry on the part of AO where all cases were with him only. No attempt is made to make reference to DVO by AO or CIT-A. There is no examination of any concerned witness/party to transaction. Only suspicion has weighed to make the colossal addition. There is no hidden bank a/c so as to transact the given money. There is no bayana agreement or any other adversarial document found during extensive search operation specific to charge made. The charge made against the assessee only resolves around a single piece of Paper which is not handwritten from any of the transacting parties. Even if the document is taken on face value than no gainful premium construction can be taken as neither the seller} nor the buyer is taken on board at the time when this subject paper was found. This paper is out of syllabus for Mr. Sandeep Khinda not being the owner of the property. Section 292C being rebuttable presumption cannot made assessee's burden to be infallable as the same can't be elevated to be proven to the hilt i.e as far as Sudhiksha is concerned, assumption of jurisdiction u/s 153C is concerned to make a document to be belonging to the assessee, presumption u/s 292C can't be resorted i.e belonging to criteria can't be satisfied on the basis of presumption & assumption. As per record Mrs. Sudhiksha Singh another assessee had disclosed this transaction voluntarily in normal course by paying due capital gain u/s 50C read with section 48 i.e there is no sanction & under the present law to tax a seller over & above the given transaction rate which is well considers the applicable rate otherwise sec 50c will become redundant. This can be a fiction in fiction i.e. 292 can't be infused a incorporated in section 50c. In our view, suspicion how grave & strong can't substitute the place of reliable cogent evidence to fasten a tax liability.
Thus as in the present case, the detail of the property i.e D-17 Pushpanjali, against which it has been alleged by the Ld AO that" On Money" has been received against the sale of property was never owned by the assessee. However, there is no iota of evidence with the Department to suggest that loose sheet disclose receipts resulting in an undisclosed income on the part of the assessee. Therefore there is no question of assessing any income in the hands of the assessee .- Decided against revenue
Protective addition of income - Held that:- CIT(A) has rightly observed that since the source of the investment in cash for ₹ 74 lacs is forming part of the cash of ₹ 3.50 crores which has been held as unaccounted income of Sh. Sandeep Singh Khinda in his appellate order for AY 2007-08, therefore, the amount of ₹ 74 lacs is a case of application of income already brought to tax on substantive basis in case of Sh. Sandeep Singh Khinda. Accordingly, he directed the AO to delete the protective addition of ₹ 74 lacs in the case of assessee i.e. M/s Habitat Royale Projects P Ltd. made by AO. However, as aforesaid, in the case of Sandeep Singh Khinda vide for the assessment years 2007- 08 and 2008-09, we have already deleted the addition of ₹ 3.50 crores and ₹ 17.50 crores respectively, therefore, the question of deletion of addition of ₹ 74 lacs does not arise as the investment in cash for ₹ 74 lacs was forming part of the cash of ₹ 3.50 crores - Decided against revenue
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