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Showing 401 to 420 of 1407 Records
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2015 (2) TMI 1012
Denial of CENVAT Credit - reduction on account of Cenvat credit attributable to inputs - Held that:- Main raw material for manufacturing the fabric is yarn and as per the Show Cause Notice and the order impugned, it has been alleged that the respondent has purchased the inputs i.e. yarn to the tune of ₹ 77,27,761/- but it is not coming out from the investigation from where this figure they have got when the respondent has made a statement that he has destroyed the purchase invoices. The investigation was not conducted to verify the invoices issued by the suppliers and it is alleged that the invoices issued by the dealers are not Cenvatable invoice. It is a mere presumption that the invoices issued by the suppliers are not Cenvatable but no verification is done in this case at the suppliers end during the course of investigation. Therefore, at this stage, it cannot be alleged that the invoices issued by the suppliers are not cenvatable, in the absence of any concrete evidence brought on record by the Revenue during the course of investigation that the invoices issued by the suppliers are not cenvatable. In the impugned order the learned Commissioner (Appeals) has considered all the aspects and thereafter he has arrived at a decision that for the purchase of yarn to the tune of ₹ 77,27,761/- the respondent is entitled for Cenvat Credit on these inputs which works out to ₹ 5,48,401/-. In these circumstances, when the investigation is weak therefore I do not find any infirmity in the impugned order. The same is upheld - Decided against Revenue.
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2015 (2) TMI 1011
Cenvat credit - Cenvat credit has been availed with inordinate delay - Held that:- In Cenvat Credit Rules, 2004 there is no time period prescribed of taking the Cenvat Credit on inputs. In the case of SGS India Pvt. Ltd. (2011 (3) TMI 759 - CESTAT, MUMBAI) the issue came up before this Tribunal and the Tribunal held that Cenvat credit can be taken at any time after purchase of the goods. Further the case law cited by the learned A.R. has no relevance to the facts of the present case as in that case the assessee took the credit within one year of the purchase of the inputs and this Tribunal held that the credit is taken within a reasonable time. Therefore it does not mean that if the credit is not taken within one year it is not entitled to take credit. With these terms, I do agree with the findings of the learned Commissioner (Appeals) holding that the respondents are entitled to take credit. Therefore the impugned order has no infirmity and the same is upheld. - Decided against Revenue.
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2015 (2) TMI 1010
Denial of input service credit - Job worker - Held that:- The main argument of the learned A.R. is on the admissibility of credit on the service tax paid for job worker service but in that case this Tribunal has not held that job worker is not entitled to take credit but in case if the job worker has not taken exemption under Notification No. 8/2005-ST in that case the principal manufacturer is entitled to take Cenvat credit of input services. Therefore, the facts are not relevant to the facts of the present case but the facts of the case in Aurangabad Auto Engg Pvt Ltd (2011 (6) TMI 171 - CESTAT, MUMBAI) are identical to the facts of this case wherein the Tribunal held that the appellant is entitled to Cenvat Credit. Therefore, relying upon the decision of the decision in Aurangabad Auto Engg Pvt Ltd (supra) I hold that in this case also the appellant is entitled to Cenvat credit. - Decided in favour of assesse.
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2015 (2) TMI 1009
Denial of refund claim - Cash refund of accumulated CENVAT Credit - refund claims were disallowed on the ground that the CHA services and courier services are not eligible for Cenvat credit and secondly the export proceeds have not been received by the appellant - Held that:- There is no dispute that the refund amount under Rule 5 of the Cenvat Credit Rules, 2004 which have been disallowed is in respect of the Cenvat credit availed in respect of CHA service availed for export of the goods and courier service availed in connection with manufacturing business of the appellant company. The department has denied the refund claims on the ground that the Cenvat credit in respect of these two services is not admissible. However, this issue stands decided in appellant's favour in the appellant's own case by the Commissioner (Appeals) in previous case. In view of this, the first ground on which the refund claims have been denied would no longer be valid.
As regards the other ground for denial of the refund claims that the sale proceeds in respect of goods exported have not been received, it is seen that this condition is neither there in Rule 5 of the Cenvat Credit Rules nor this condition has been prescribed in the Notification No. 5/2006-CE (NT) issued under Rule 5 of the Cenvat Credit Rules. In view of this, the denial of refund claim on the ground that the export proceeds have not been received is not sustainable. - impugned order is not sustainable. The same is set aside. - Decided in favour of assessee.
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2015 (2) TMI 1008
Enhancement in rate of duty - Enhancement from date of Finance Bill or from the date it received the assent of President - Held that:- Issue is no more res integra in view of the Board’s Circular F. No. 345/01/2013-TRU dated 11.2.2014 in respect of effective date of levy of excise duty on cigarettes at the enhanced rate vide Finance Act, 2012. The Board has clarified that the amendment in the Finance Act, 2012, shall be applicable from the date of enactment of the said Finance Act i.e. on 28.5.2012 and not from 17.3.2012. - Finance Act, 2012 shall be applicable only from 28.5.2012; date of assent. Accordingly, we set aside the impugned order - Decided in favour of assessee.
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2015 (2) TMI 1007
Issues:
1. Duty liability on clearance of damaged HDPE bags as scrap without payment of central excise duty.
2. Applicability of Rule 3(5) of the Cenvat Credit Rules, 2004.
3. Interpretation of waste and scrap arising during the manufacturing process.
Analysis:
Issue 1: The main issue in this case revolves around the duty liability imposed on the clearance of damaged HDPE bags as scrap without payment of central excise duty. The respondent, engaged in cement manufacturing, cleared a specific quantity of such bags without duty payment, leading to the demand confirmed by the adjudicating authority. The crux of the matter was whether the clearance of these damaged bags constituted a removal as such under Rule 3(5) of the Cenvat Credit Rules, 2004.
Issue 2: The applicability of Rule 3(5) of the Cenvat Credit Rules, 2004 was crucial in determining the duty liability in this case. The Revenue contended that the waste and scrap emerging from inputs, on which credit had been availed, were cleared without payment of duty in violation of Rule 3(5). On the other hand, the respondent argued that the waste and scrap of HDPE bags arising during the manufacturing process did not attract duty liability, citing precedents and interpretations.
Issue 3: The interpretation of waste and scrap arising during the manufacturing process was a significant aspect of the case. The respondent's counsel relied on a decision by the Tribunal in a similar matter involving Madras Cements Ltd., emphasizing that the waste and scrap generated during the manufacturing process should not incur duty liability. The Tribunal, in line with its previous rulings, dismissed the appeal of the Revenue, indicating a consistent approach in such cases.
In conclusion, the Tribunal's judgment upheld the respondent's position, citing precedents and interpretations to support the dismissal of the Revenue's appeal. The decision reaffirmed the principle that waste and scrap arising during the manufacturing process may not attract duty liability, as established in earlier cases such as Madras Cements Ltd. vs. CCE, Trichy.
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2015 (2) TMI 1006
Clandestine manufacture and removal of goods - Notification No.24/2005-CE(NT), dt.13.05.2005 - Maintainability of appeal - Held that:- Committee for Ahmedabad-II Commissionerate. When this preliminary objection was raised on 19.11.2012 by the Advocate of the Respondents during hearing, ld.A.R. sought time to satisfy the preliminary objection but no evidence is produced by the Department that on the date of signing the Review authorization Chief Commissioner of Central Excise Vadodara was also holding additional charge of Chief Commissioner Central Excise Ahmedabad. Further, both the Chief Commissioners have signed the authorization on different dates, which means that committee as such has not met on a single day. On this issue the case laws CST Vs L.R. Sharma & Co. [2013 (6) TMI 537 - CESTAT NEW DELHI] and CCE Vs Honda Motorcycles & Scooters India P. Ltd [2014 (2) TMI 587 - CESTAT NEW DELHI] have already decided the issue in favour of the assessees. Appeals filed by the Revenue filed on the basis of an invalid Review authorization deserve to be dismissed as not maintainable on this ground alone, without further going into the merits of these proceedings. - Decided against Revenue.
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2015 (2) TMI 1005
Valuation of goods - Inclusion of transportation charges of the inputs in the assessable value - Held that:- cost of the input will not only be the charges on which such goods have been purchased by M/s Indian Security Press, but also include the transportation cost upto the job-worker's place. Accordingly, we do not find any infirmity in the impugned order. - Decided against assessee.
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2015 (2) TMI 1004
Duty demand - Utilization of DEPB scrips on clearance of capital goods after issue of Public notice - Held that:- On a plain reading of the above Public Notice, it is clear that the payment of customs duty by utilizing the credit under DEPB cannot be utilized on capital goods imported after 07.04.2000. In the present case, we find that the Bills of Entry were filed on 03.06.2000, i.e ., after the Public Notice dated 07.04.2000. The respondent instead of paying the duty amount in cash, they produced two DEPB scrips dated 26.04.2000 and 31.08.1999, for value of capital goods. The duty amount was debited from the DEPB scrips . We find that there is no dispute that the goods in question are capital goods as held by the Commissioner (Appeals), which was not challenged by the respondent. The Public Notice had clearly imposed restriction of DEPB scrips for payment of customs duty from 07.04.2000, on capital goods. - after the Public Notice dated 07.04.2000, the respondent is not eligible to pay the customs duty by utilizing the DEPB Scrips on the clearance of capital goods. - Following decision of Sai Graphic Systems [2013 (5) TMI 650 - MADRAS HIGH COURT] - Decided in favour of Revenue.
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2015 (2) TMI 1003
Pre-deposit of penalty - Import of the capital goods by 100% EOUs, free of duty - Company floated with malafide intention;short span of the lease period - Held that:- The company itself was floated with a malafide intention, which is clear from the fact that the premises were rented only for a period of 8-9 months. The short span of the lease period for a company which is to be run as a call centre, is itself indicative of the fact that there was no intention to conduct the business of running a call centre for a longer period. All the three Directors including the appellant and the NRI Director joined hands for duty free imports, which were to be cleared subsequently to the domestic market. We also note that the evidence procured on record by the Revenue reveals the fact that the company was closed and the premises were vacated in May 2006 itself and the subsequent resigning of the present Director in May, 2006 and leaving India in July, 2006 i.e. subsequent to the completion of the fraud was by a malafide design. In view of the above, we find that appellant has no prima facie case. Decided against the appellant.
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2015 (2) TMI 1002
Waiver of pre deposit - Misdeclaration of value of goods - Demand of differential duty - Penalty u/s 112(a) - Held that:- chart showing comparison of the value declared at the time of export in Turkey and declared in India prepared by the First Secretary (Trade), Embassy of India, Moscow on the basis of documents of Turkish Customs would show that the exporter declared in Turkey as US$ 2500 per MT and it was declared in India as US$ 750 per MT. On a perusal of the invoice dt. 24.3.2006 of the supplier to the applicant would show that the value was declared as US$ 2500 per MT without reference on Turkish attested documents. We find that no attempt was made to get English translation of the Turkish documents from their supplier. applicant failed to make out a strong prima facie case for waiver of predeposit - Partial stay granted.
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2015 (2) TMI 1001
Benefit of Notification No. 21/2002-Cus dated 1.3.2012 - machine in question is imported by the appellant as a sub contractor and his name is not figuring in the contract entered by the M/s Essar Oil Ltd with the Government of India which is a requirement as per the condition No. 32 of the Notification - transfer of imported goods from one eligible project to another project - Held that:- Notification No. 12/2012-Customs dated 17.3.2012 is issued in supersession of the earlier Notification 21/2002 dated 1.3.2002 which is the subject matter of the present appeal. The Board has issued clarification vide Circular No. 21/2013-Customs dated 16.5.2013 - The circular is issued after the date of the impugned order. In these circumstances, we find that matter requires reconsideration by the adjudication authority afresh in view of the Board s circular. The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 1000
Invocation of Corporate Guarantees - Default in repayment of dues - Serious disputes involved - Guarantees not valid, void ab-initio - Winding up petition - Winding up petition in case of arbitration clause - Non compliance of provisions of sec.592 and 599 of the Companies Act - Place of business within India
Held that:- In the background of the assertion on the part of the petitioners, the respondent was required to prove that they have established a place of business in India as the mere fact that they are having business transaction with Indian customers would not be sufficient. Though the content downloaded purportedly from the website of the petitioner in Co.P.No.122/2012 is produced as Annexures-R8 and R9 to the objection statement, in the rejoinder of the petitioner it is denied that it pertains to them. In that light it is also explained that the screen shot of the web page of the Registrar of companies relied at Annexures-R10 and 11 is of no consequence when there is no requirement to register. Therefore, when it is not shown conclusively that the petitioners herein have established a place of business in India, the bar pleaded under Section 599 of the Act would not apply. The contention of the respondent in that regard is liable to be rejected.
A cumulative perusal of the decisions referred to by the learned senior counsel on either side would disclose that the decisions of the Hon'ble Supreme Court and a learned Single Judge of this Court cited by the learned senior counsel for the respondent company are not in the context of maintaining a winding petition as against a recovery proceeding. Further, the decision of the learned Single Judge of the Bombay High Court was on its facts and not as laying down a principle of law. On the other hand the decisions of the Hon'ble Division of this Court and Delhi High Court cited by the learned counsel for the petitioner Banks has held that the winding up petition would be maintainable even in the teeth of the other recovery proceedings initiated. In that view, I am of the opinion that the winding up petition cannot be dismissed by considering it as a parallel remedy as it is a distinct statutory remedy though in appropriate cases, on facts, the Company Court may refuse to exercise its discretion to entertain a winding up petition.
A collective perusal of the decisions cited by the learned counsel which has been referred in sufficient detail will disclose that irrespective of the ultimate decision taken in each of the cases cited, the decision leading to the same should be, as to whether the defence set up by the respondent-company is a substantial bonafide defence which is not a moonshine or a mirage of a defence used as a cloak to defeat the petition.n that light, if the facts herein are examined, the fact that the petitioners herein had entered into the transactions with 'Kingfisher' of which the respondent company herein was the holding company is evident. In that view, in respect of the amounts due and payable by 'Kingfisher' the respondent company has executed corporate guarantee to repay the amount. The petitioners despite having invoked the guarantee have not received the payment and in that regard alleging that the respondent company who is to honour the guarantee is unable to pay its debts are before this Court.
In that background, the fact that 'Kingfisher' owes the amount to the petitioners herein cannot be in serious dispute and to that extent, the debt is ascertained. For the purpose of reference, a perusal of the decision in the case of Kingfisher Airlines Limited v. State Bank of India and others (ILR 2014 Karn 1739)indicates that the petitioner Banks have initiated winding up proceedings in addition to their security interest, which has been approved by this Court. In so far as the petitioner Banks, the Master Debt Recast Agreement dated 21.12.2010 executed by 'Kingfisher' is produced at Annexure-C to their petition.
It is also observed therein that an attempt is being made by the respondent company by taking all possible technical defence only to wriggle out of the situation. In that view, all other contentions urged in the other petitions including the contention raised with regard to not being liable to pay interest as claimed in Co.P.No.99/2013 also will have to be considered as without merit and not as a bonafide defence. Though the learned senior counsel for the respondent company contended that they have deposited a sum of ₹ 1250 crores including FD receipts, the said amount will not satisfy the claim. Further, the said amount is not a voluntary deposit to establish their bona fides and raise the dispute, but the deposit made is pursuant to the orders of this Court in the fringe proceedings relating to the sale of shares.
For all the aforestated reasons, the above referred petitions are liable to be admitted. - Decided in favour of appellants.
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2015 (2) TMI 999
Variation in salaries of different members of the same Tribunal - Respondent in order to remove dissimilarity reduced the pay scale of those members who getting the higher salary - Held that:- Since the petitioner performed the same functions and discharged the same responsibilities as a member of the ATFP as any other member appointed under the NDPSA, 1985, at the time when the petitioner was appointed, he could not have been granted a pay scale or other service conditions, which were less advantageous when compared to a member appointed under the NDPSA, 1985. Such differentiation would be clearly discriminatory. The classification of members of the same Tribunal, i.e. ATFP on the basis of the enactment to which they trace their appointment could not be said to be a reasonable classification much less one having nexus to the object sought to be achieved. The members of the Tribunal being co-equals in terms of their functions, responsibilities and status, such classification was most unreasonable and arbitrary. Consequently, when the petitioner was appointed as the member of the ATFP vide order dated 13.04.1999, he was entitled to the same pay scale that is offered to the other members of the Tribunal appointed under NDPSA, 1985, i.e. ₹ 24050-650-26000.
The respondent effectively realized that the two pay scales offered to members appointed under the SAFEMA, 1976 and NDPSA, 1985 led to discrimination and, consequently, sought to amend the rules framed under the aforesaid two enactments by the impugned notification by equalizing the pay scales of the members appointed under both the enactments. However, while doing so, the pay scale permissible to members appointed under NDPSA, 1985 was lowered and made equal to that prescribed for members appointed under the SAFEMA, 1976. - As it is already held that the petitioner was entitled to the higher pay scale of ₹ 24050-650-26000 from the date of his appointment, i.e. 13.04.1999. That being the position, the respondent could not have varied, or altered the terms of his engagement to his disadvantage by reducing the pay scale admissible to him since the petitioner was already entitled to the higher pay scale of ₹ 24050-650-26000. The same could not have been lowered to ₹ 2400-525-24500. - impugned amendment notifications issued by the respondent, altering the conditions of service to the detriment of members of the ATFP by lowering their pay scale, are illegal, unjust and arbitrary, and are, accordingly, struck down.
Petitioner was entitled to the higher pay scale of ₹ 24050-650-26000 from the date of his appointment, i.e.13.04.1999. As the petitioner had retired from the post of member, ATFP on 31.12.2002, he is entitled to be granted back wages from the date of his appointment till his retirement. Therefore, we allow the present petition and quash notification No. 10/2001 dated 01.10.2001 amending the ATFP Rules, 1978 and notification dated 24.12.2001 amending ATFP Rules, 1989 and grant to the Petitioner the pay scale of ₹ 24050-650-26000. The petitioner shall be entitled to interest on the arrears on the arrears @ 8% per annum from the date of retirement till payment. - Decided in favour of appellant.
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2015 (2) TMI 998
Default in repayment of deposits - Contempt petition under Section 12 read with Section 10 of the Contempt of Courts Act, 1971 - Violation of the orders of the Company Law Board - Personal liability of promoter director in pursuance of undertaking signed by him, on behalf of company -
Held that:- Learned counsel for the respondent K.S. Raju argued that in the undertaking given by K.S. Raju, only this much has been stated that the Company will make the payment, as such it is not the personal liability of said respondent. But needless to say that Company functions through its directors, in its operations. Company is not such person which can be sent to jail. It is the director controlling the affairs of Company through whom it has committed the disobedience, if any, and as such, such director has to suffer the consequences of disobedience if it is wilful. We have already discussed above that from the affidavits filed before the High Court, it is clear that K.S. Raju was not only the Promoter Director of NFL, but the Managing Director of said Company, working for a decade, was his nominee, and practically all the powers to run the NFL vested with K.S. Raju, the Promoter Director, and his nominees, whom he appointed under Articles 104 and 140 of Articles of Association.
In our opinion, having considered the submissions of learned counsel for K.S. Raju, Promoter Director, and considering his role in the operation of the Company, as discussed above, the Division Bench of the High Court erred in law in holding that he was not guilty of wilful disobedience of the order of the CLB. It is pertinent to mention here that after giving undertaking dated 14.2.2000, respondent K.S. Raju submitted his resignation in September, 2000, which clearly reflects that the same was done in order to save himself and his company, from making the repayment directed to be made by the CLB, and thereby dishonestly made attempt in not making repayment to the depositor E. Bapanaiah.
It is not the case of respondent K.S. Raju, Promoter Director, who gave undertaking that he had no knowledge of the order of the CLB, or that he made any attempt to prevent the disobedience of the order. The arrangements made between the company and MFSL shall not be of any consequence in relation to the repayment schedule approved by the CLB. The company, its promoter Director and Group Holding Companies shall continue to be responsible for due compliance of the order stated.
The present case relates to a civil contempt wherein an undertaking given to Company Law Board is breached. Normally, the general provisions made under the Contempt of Courts Act are not invoked by the High Courts for forcing a party to obey orders passed by its subordinate courts for the simple reason that there are provisions contained in Code of Civil Procedure, 1908 to get executed its orders and decrees. It is settled principle of law that where there are special law and general law, the provisions of special law would prevail over general law. As such, in normal circumstances a decree holder cannot take recourse of Contempt of Courts Act else it is sure to throw open a floodgate of litigation under contempt jurisdiction. It is not the object of the Contempt of Courts Act to make decree holders rush to the High Courts simply for the reason that the decree passed by the subordinate court is not obeyed. However, there is no such procedure prescribed to execute order of CLB particularly after proviso is added to Section 634A of the Companies Act, 1956, vide Companies (Second Amendment) Act, 2002.
Therefore, having considered submissions of learned counsel for the parties, and material on record, and further considering the relevant provisions of law and the cases referred above, and exercising powers under Article 136 read with Article 142 of the Constitution, we think it just and proper to interfere with the order passed by the Division Bench of the High Court whereby the Division Bench erroneously set aside the finding and sentence awarded by the learned single Judge against K.S. Raju. In our opinion, respondent K.S. Raju wilfully disobeyed the order of CLB and breached the undertaking given to CLB, and thereby committed Contempt of Court subordinate to High Court as such the Division Bench of the High Court has erred in law in allowing the Contempt Appeal No. 3 of 2007 filed by K.S. Raju and setting aside his conviction and sentence.
For the reasons, as discussed above, we allow the present appeal filed against respondent K.S. Raju, and set aside the impugned order of the Division Bench of High Court. However, exercising powers under Article 142 of the Constitution of India, to do complete justice between the parties, we allow sixty days time to respondent K.S. Raju, with effect from pronouncement of this judgment to repay the entire amount to the depositor/appellant as directed by CLB, and if within the said period of sixty days payment is not made to the depositor/appellant, respondent K.S. Raju shall be taken into custody to serve out sentence as recorded against him by the learned Single Judge vide order dated 3.8.2007 in Contempt Case No. 915 of 2002. If the amount is paid to the present appellant as directed by this Court within sixty days, the sentence shall be reduced to the extent of fine only.
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2015 (2) TMI 997
Exclusion of values of land and house property from net wealth - renting out of property - commercial establishment or complex - assets are situated in urban area and have been shown under separate block in the audited accounts - Held that:- The facts emerges are that total area of land consists of 20164 sft out of which area is 10771 sft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The assessee rented out this premises to M. S. Dalmia & Co Ltd for a rent of ₹ 12 lakh per annum and this rent was assessed under the head ‘Income from House Property’. From the very reading of Sub-clause (5) it is clear that this covers all those properties which are in the nature of commercial establishment or complex meaning thereby that the property must be in the nature of commercial establishment or complex which in turn indicates that the property must also be actually used for the purpose of any business or trade carried on in those commercial establishments or complexes. We are of the view that this Sub-clause (5), "complexes or establishments" are qualified with an adjective 'commercial'. Establishment or complex, therefore, must be of a commercial in nature. The word 'commercial' means something which is used in or related to, a business or a trade. Commercial means relates to or engaged in or used for commerce or trade. The word 'establishment' means an organization, building, construction, shop, store, concern or corporation. Thus, commercial establishment means some kind of place or building or shop or store where business or trade is carried on.
Further, the Memorandum explaining the provisions in the Finance No. 2 Bill, 1998, under the head "Incentives proposed under the Wealth-tax Act", it is clarified that wealth-tax is not levied on productive assets. In view of this logic, it is proposed that wealth tax would also not be levied on such residential properties that have been let out for a period of a minimum of three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the ambit of Wealth-tax Act. It is, thus, clear that the Legislature has adopted a logic that wealth-tax is not levied on productive assets, and in view of that logic, it was proposed that wealth-tax would not be levied on such residential property that has been let out for a period of minimum 300 days in a year and to exempt commercial establishments and complexes from the ambit of wealth-tax. Therefore, while construing the meaning to Sub-clauses (4) and (5) inserted by the Finance No. 2 Act, 1998 with effect from 1.4.89. the intention of Legislature is that wealth-tax is not to be levied on productive assets and that is to be kept in mind. In view of the facts of this case and discussion in view of insertion of Sub-clause (5) as inserted by the Finance No. 2 Act, 1998 with effect from 1.4.89 wealth-tax is not to be levied on productive assets. Hence, in view of reasoning given above, we confirm the order of CIT(A) and dismiss both appeals of revenue. - Decided against Revenue.
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2015 (2) TMI 996
Disallowance of interest u/s 57(iii) - AO observed the transaction as colourable device / tax planning - Held that:- It is an admitted fact that the Revenue has not disbelieved the loan transaction of ₹ 3 crores with the company, namely, Arvind Mills Ltd. at the rate of 18.5% p.a. and payment of interest at the rate of 12% to the said four companies where, the appellant - Assessee made investment. It is not in dispute that the appellant - Assessee invested the amount equally in the above four companies so as to get interest at the rate of 12% p.a. It is not a case of the Revenue that the estimated book value of the shares of the said company, as reproduced hereinabove, is not true or correct. Thus, the transaction of borrowing of ₹ 3 crores and payment of interest at the rate of 18.5% made by the appellant - Assessee to Arvind Mills Ltd. and, in turn, receipt of 12% interest by the appellant - Assessee from the investment made by it in the above four companies are believed and, therefore, the said transactions are genuine in nature. To disallow the deduction under Section 57(iii) of the Act, the assessing authority considered the transactions as loan and not as OCDs. The investment made by the appellant - Assessee in the said four companies were not loss making concern at the relevant time and, therefore, the decision of the appellant - Assessee to borrow the money at a higher rate of interest and to invest the same in the said four companies at the rate of 12% with a hope to get shares in future was made to earn income. So, it appears that the Revenue splitted the transactions in such a manner that it upheld the genuineness of borrowing, payment and receipt of interest but when question of considering payment of additional interest of 6.5% came into consideration, it termed the said part of transaction as colourable device/tax planning. So, the question is whether the Revenue can split the transaction in the manner it did so.
It is true that the Court cannot re-examine/re-appreciate the findings of fact recorded by the Tribunal but as a matter of fact, after splitting transaction, as done in the case on hand, the Tribunal was required to term/treat the entire transaction as a whole colourable device. Had it been so, the matter would stand on different footing. In our opinion, the Tribunal cannot split the transaction into two parts or more. For that purpose, we made searching inquiry from learned advocate Mr.Bhatt to show any provision of law under the Act or precedent which empowers the Revenue to split transaction into two or more parts and then to hold any one particular part of said transaction as legal/permissible/admissible and other part of the same transaction being colourable device. Learned advocate Mr.Bhatt could not lay his finger on any provision/ precedent which empowers the Revenue to do so. So, once the primary transaction of lending, borrowing and passing of payment of interest is found to be genuine, merely because it resulted into equal amount of income, it would not become a colourable device and consequently earning any disqualification. - Decided in favour of Assessee.
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2015 (2) TMI 995
Deduction in respect of income of co-operative societies - Interest earned on short- term deposits - whether were only investment in the course of activity of providing credit facilities to members and that the same cannot be considered as investment made for the purpose of earning interest income - Held that:- In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of COMMISSIONER OF INCOME -TAX III, HYDERABAD VS . ANDHRA PRADESH STATE COOPERATIVE BANK LTD ., reported in (2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT). In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. - Decided in favour of assessee.
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2015 (2) TMI 994
Penalty under section 271(1)(c) - disallowance of capital expenditure of Research and Development - whether the Tribunal was justified in upholding the imposition of penalty pertaining to addition of Research and Development expenditure? - Held that:- In the present case at all stages, whether in Quantum Proceedings or Penalty Proceedings the materials were the bills which were required to be produced. It was not the case of the Assessee that these have been destroyed or lost. The claim was that there was other material. However, it has been concurrently found that the bills have not been produced. In these circumstances, the expenses were disallowed and the penalty was imposed. That was on the satisfaction that the Assessee has furnished inaccurate particulars. The facts material to the computation were, therefore, not produced and in relation to such an act on the part of the Assessee, it is open for the authorities to take assistance of section 271(1)(c) read with explanation 1(B). This was a case where the explanation gave was not sustained. The genuineness of the claim itself was in issue and in our opinion the Tribunal while upholding the order of Commissioner of Income Tax (Appeals) and that of the Assessing Officer partially did not act perversely nor committed an error of law apparent on the face of the record. No substantial question of law - Decided against assessee.
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2015 (2) TMI 993
Rejection of stay application - non recording of reasons - Held that:- As relying on Hitech Outsourcing Services Versus Income Tax Officer [2015 (2) TMI 209 - GUJARAT HIGH COURT] suffice it to observe that when the stay application is to be considered and decided, it would be required for the concerned authority to record the reasons and then to reach to the ultimate conclusion as to whether the stay should be granted or not and if yes on what condition. In absence of any reasons, the order cannot be sustained. The order can be said to be nonspeaking order since no reasons are mentioned.
If the facts of the present case are considered in light of the above referred view taken by this Court, the decision for rejection of the stay application at Annexure-S (Page 372) cannot be sustained in the eye of law. Hence, the same deserves to be quashed and set aside with the further direction that the stay application shall stand restored to the file of the competent appellate authority and the stay application shall be considered on merits and appropriate decision shall be taken after recording reasons. - Decided in favour of assessee for statistical purposes.
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