Valuation of closing stock - Method of valuation of inventory - change in method of valuation - Tribunal reversing the finding of AO that the assessee had valued the work in progress at material cost (closing stock) contrary to Accounting Standard-2 as opined by the assessee’s statutory Auditor that profit before tax and profit after tax are understated by the assessee - HELD THAT:- If the change is bonafide and is accepted by the revenue then the question of changing the opening stock would not arise. If such a change is not bonafide, it will be open to the Revenue not to accept such a change in valuation and assess without such valuation. Once the said change in the valuation is accepted by the Revenue, the consequence is the value of the closing stock in the previous year would become value of the opening stock in the succeeding year.
But if the assessing authority rejects the assessee’s valuation of the closing stock then to arrive at the correct figure of profit, the assessing authority should value the opening stock in a similar fashion. If the assessee’s method of valuation of the opening stock is accepted and at the same time his valuation of the closing stock is rejected then a highly distorted figure of profit will be arrived at. This will be the scope of charging section.
When the assessee changes the valuation of the closing stock, there is no necessity to change the opening stock. But when the assessing authority changes the closing stock it becomes obligatory that the opening stock valuation has to be correspondingly changed on the basis of which the valuation of the closing stock is changed in order to arrive at correct figure of tax which is chargeable as tax under Section 4 - order passed by the Tribunal holding that the opening stock should also be revalued cannot be found fault with. Accordingly, the substantial questions of law 1 and 2 framed are answered in favour of the assessee.
Nature of expenditure - expenditure towards professional charges, press announcements and statutory fees - revenue or capital expenditure - assessee formulated the proposal to buy back equity shares from existing share holders on aproportionate basis and through a tender - HELD THAT:- The increase in the capital results in expansion of the capital base of the company and incidentally that would help in the business of the company and may also help in the profit-making. The expenses incurred in that connection still retain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. Issue of bonus shares does not result in the expansion of capital base of the company. It does not lead to any inflow of fresh funds into the company. The capital structure is not expanded. On the contrary the consequence of such buy-back of shares is the capital base of the company gets reduced and the capital structure will go down. It is not of an enduring effect so as to bring the expenditure incurred in this regard as capital expenditure. Where there is no flow of funds or increase in the capital employed, the expenditure incurred would be revenue expenditure. Therefore, rightly the Tribunal held that it is in the nature of revenue expenditure and allowed the same. - Decided against revenue.
Nature of expenditure - replacement of software - revenue or capital expenditure - HELD THAT:- Uncontroverted position that the impugned payments were made for the purpose of upgrading the software that the assessee was using and that no new asset came into existence. It is also well settled legal position that the expenses incurred on upgrading the software are to be treated as revenue expenditure. DR did not bring on record any material to dislodge the findings of the CIT(A) or seriously dispute the same. - Decided against revenue.
Addition on account of software development charges paid to Partha Development Corporation - HELD THAT:- This ground is clearly ill conceived inasmuch as the amount of ₹ 2,00,000 for financial accounting software was paid to Partha Development Corporation in two instalments – one of ₹ 1,40,000 and the other of ₹ 60,000. While the Assessing Officer took the entire amount of ₹ 2,00,000 for disallowance, he also made a separate addition of ₹ 60,000. This aspect of the matter has been highlighted in the CIT(A)’s order and no defects are pointed out in the said finding. In view of this uncontroverted factual finding, revenue’s this ground of appeal is based on a simple misconception of facts. We need not deal with this matter in any more detail and dismiss the same as based on misconception of facts.
Addition on account of difference in arm’s length price - assessee used Resale Price Method for benchmarking its international transactions so far as purchase of books is concerned - as per TPO comparison of profit earned on imported books with profit earned on other books is incorrect because the latter is an entirely uncomparable activity on the facts of this case - CIT- deleted addition - HELD THAT:- All the details were before the TPO, yet has proceeded to compute the hypothetical sale price of the books in the hands of the distributor on the basis that it will be equivalent to 402.414869% (i.e. 100/ 24.85 X 100) of the purchases in the hands of the assessee. This approach, including the presumption underlying therein, is clearly erroneous. The computation of profit margins of the wholesale distributor, as computed by the AO, are, therefore, are also incorrect. TPO has not adopted the profit margin by the wholesale distributors on the basis of actual figures or the undisputed discount policies on cover prices but based on certain hypothesis which turns out to be based on misconception of facts and is, in any case, unsubstantiated by material on record. We are, therefore, of the view that the very foundation of impugned ALP adjustment is unsustainable in law. Our reasoning may have been different but our conclusion is the same as arrived at by the CIT(A).
TP study may be erroneous but it is not open to us to enlarge the scope of issue before us. In the present case, the TPO has disputed only the margin of the wholesaler on the basis of certain calculations which turned out to be erroneous. He, however, does not dispute the fact that the margins of the wholesale distributor can be compared with the margins of the assessee. It is a matter of record that the assessee’s margin from this segment are over 38% whereas going by the business model adopted by the assessee, maximum permissible margin for the wholesale distributor is 30%. In these circumstances, and within the limitations that we have, there is no good reason to disturb the relief given by the CIT(A). It is not for us to supplement the work done at the assessment level or to step into the shoes of the AO and TPO for deciding what more could have been done in a particular case. We have also noted that right from 2004-05 to 2012-13 the ALP benchmarking on this basis has been accepted by the revenue and even though a reference was made to TPO in the assessment year 2010-11, the TPO did not disturb this ALP determination either - we approve the conclusions arrived at by the CIT(A) on this issue - Decided against revenue.
Eligibility of deduction u/s. 80IA(4) - income derived by the assessee from undertaking contract work - claim for deduction was declined by the lower authorities on the plea that the contract awarded to the assessee, it contributed only part of the whole Krishna water supply project and therefore the work of the assessee was not regarding entire water supply project - as per CIT-A the assessee is a developer of infrastructure facilities and eligible for claiming deduction - HELD THAT:- Assessee is entitled for deduction u/s 80 IA(4) of the Act. We have already held that assessee is entitled for deduction under section 80 IA(4) in respect of A.Y. 2004-05 and 2005-06 as relying on ABG HEAVY INDUSTRIES LIMITED [2010 (2) TMI 108 - BOMBAY HIGH COURT].That decision will be applicable for A.Y 2007-08 in case of both the assesees. Therefore, these appeals of the assessee are also allowed.
Advances made to rural branches u/s 36(1)(viia) - Deduction of provision for bad debts in terms of Section 36(1)(viia) - basis of classifying Branches of the Bank as Rural Branches and other Branches - Deduction of 10 per cent of the aggregate average advances - Applicability of definition of rural branch in Explanation (ia) to section 36(1)(viia) to co-operative banks - HELD THAT:- Tribunal dismissed the appeal following the judgment of this Court in CIT v. Lord Krishna Bank [2010 (10) TMI 860 - KERALA HIGH COURT]. The appellant also does not have a case that the principles laid down in Lord Krishna Bank (supra) are inapplicable to this case and instead what is contended is that SLP filed against the judgment in Lord Krishna Bank is pending consideration of the Apex Court. The fact that the SLP is pending does not in any manner dilute the precedent value of the judgment in Lord Krishna Bank's case. Further, yet another Division Bench of this Court has also followed the judgment in Lord Krishna Bank case in Kannur District Co-operative Bank Limited v. Commissioner of Income Tax [2014 (8) TMI 635 - KERALA HIGH COURT]. Appeal dismissed.
Revision u/s 263 - investment made by the assessee in the construction of the function hall - HELD THAT:- Survey u/s 133A was carried on in the case of the assessee, during the course of which the assessee was found to have made investment in the construction of a function hall. During the assessment proceedings, the issue relating to the said investment made by the assessee was examined by the AO and the explanation of the assessee in respect of source of the said investment with reference to the entries made in his two bank accounts maintained with IndusInd Bank and State Bank of Hyderabad was partly accepted and partly rejected by the AO.
Assessee has filed copies of the written submissions made by the assessee before the Assessing Officer during the course of assessment proceedings and it is worthwhile to reproduce the relevant portion thereof, as contained in letter dated 13.10.2011.
As during the course of assessment proceedings before the AO as well as relevant portion of the as order passed by the AO dealing with the said explanation/submission, entries in the bank account of the assessee maintained with IndusInd Bank were not only considered by the assessing officer, but the source of deposits found to be made in the said bank account as explained by the assessee as the money received by him from his son and daughter in law in USA through proper banking channel was accepted by the AO, after applying his mind.
Therefore, cannot be said that the source of deposits found to be made in the bank account of the assessee with IndusInd Bank was not verified by the AO and there was an error in the order of the AO, as alleged by the CIT in his impugned order u/s 263. If the learned Commissioner contemplates that the AO should have enquired into the source of funds in the hands of the son and daughter-in-law of the assessee, the same, in our opinion, would amount to verifying the source of source, which is not permissible. As such, considering all the facts of the case, we are of the view that there was no error in the assessment made by the AO as alleged by the learned Commissioner in his impugned order passed under S.263 - Appeal of the assessee is allowed.
Disallowance @ 5% on account of various general expenses - disallowance by restricting @ 5% on account of business expenditure can be made or not in the absence of any reasoning? - HELD THAT:- Disallowance purely by resorting to ad hoc method cannot be made. These are business expenditure, and in the absence of cogent reason, the disallowance should not have been made. We hold that disallowance made by AO is without any basis and hence deserves to be deleted. Accordingly, we delete the disallowance. This issue of assessee’s appeal is allowed.
Disallowance of employees’ contribution to ESI & P.F. - HELD THAT:- We find that in all the three AYs, the dates are noted by the AO and the payments are made within the due date of filing of return of income u/s.139(1) of the Act as is evident from the assessment order. Now, this issue stands covered in favour of assessee and against the Revenue by the decision of Hon’ble jurisdictional High Court in the case of CIT v. M/s Vijay Shree Limited [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Decided in favour of assessee.
Assessment u/s 153A - HELD THAT:- there is no seized incriminating materials found during the course of search in this case, and without any evidence the AO has made addition of deemed dividend. The issue is squarely covered in favour of assessee and against the Revenue by the decision of Special Bench in the case of All Cargo Global Logistics Ltd., v. DCIT [2012 (7) TMI 222 - ITAT MUMBAI(SB)]as well as by the decision of Jai Steel (India) [2013 (6) TMI 161 - RAJASTHAN HIGH COURT]. As the issue is covered in favour of assessee, we confirm the order of CIT(A) deleting the addition. This common issue of Revenue’s appeals is dismissed.
Disallowance of loss incurred on account of expenses - HELD THAT:- As the issue is exactly identical and no incriminating materials were found during the course of search as noted by CIT(A), we confirm the order of CIT(A) in deleting the addition. This common issue of Revenue’s appeals is dismissed.
Classification of goods - Liquid Medical Oxygen IP - Medical Grade Oxygen - Nitrous Oxide IP - whether fall under Entry 88 of the IV Schedule to the A.P. VAT Act, 2005 or are they liable to tax as unclassified goods under Schedule-V to the Act? - HELD THAT:- Section 4(3) of the Act requires every VAT dealer to pay tax on every sale of goods taxable under the Act on the sale price at the rates specified in Schedules III, IV and V subject to the provisions of Section 13. Schedule IV is the list of goods taxable at 4% prior to 14.09.2011, and at 5% thereafter - Under Schedule V to the Act all goods, other than those specified in Schedules I, III, IV and VI, are taxable at the standard rate of 12.5% prior to 15.01.2010, and at 14.5% thereafter. If Medical Oxygen IP and Nitrous Oxygen IP fall under Entry 88 of Schedule IV, they are then liable to be taxed at 4% or 5%. If not, they are taxable, as unclassified goods, at 12.5% or 14.5% under Schedule V to the Act.
Going by the user test and the functional test, it is evident that medical oxygen and nitrous oxide serve as medicines. As medical oxygen IP and Nitrous Oxide IP are used in the treatment and mitigation of disorders in human beings, and as they are generally understood in the trade to be surgical aids, both these substances would fall under the definition of drug under Section 3(b)(i) of the Drugs Act and, consequently, fall under Entry 88 of Schedule IV to the Act liable to tax only at 4%/5%.
Entry 100 of the IV Schedule to the Act relate to goods when sold as industrial inputs. Under sub-entry (36) thereof, Hydrogen, rare gases and other non-metals, when sold as industrial inputs, fall within Entry 100 of Schedule IV and are liable to be taxed at 4%/5%. However, in view of its specific exclusion, medical grade oxygen, when it is sold as an industrial input, would not fall within the purview of Entry 100 of Schedule IV to the Act. Exclusion of medical oxygen from the ambit of Entry 100(36) does not mean that it is, automatically, excluded from all other Entries in Schedule IV for, if the Legislature had so intended, medical oxygen would then have been excluded from Entry 88 of Schedule IV also. Entry 88 specifically excludes (a) medicated goods; (b) products capable of being used as cosmetics and toilet preparations including Tooth Pastes, Tooth powders, cosmetics, Toilet articles and soaps; and (c) mosquito repellants in any form - Entry 88 not only includes drugs and medicines as defined in Section 3(b)(i), (ii), and (iii) of the Drugs Act, but also includes hypodermic syringes, hypodermic needles, perfusion sets, urine bags, catguts, sutures, surgical cotton, dressings, plasters, catheters, cannulae, bandages and similar articles. All articles, similar to the goods aforementioned, would also fall within the ambit of Entry 88. There is no reason why medical oxygen IP and Nitrous Oxide IP, which are admittedly surgical aids used for or in the treatment and mitigation of disorders in human beings, would not fall under similar articles in Entry 88 of Schedule IV to the Act.
Both medical oxygen IP and Nitrous Oxide IP fall under Entry 88 of Schedule IV, and are liable to tax only at 4%/5%, and not at 12.5%/14.5% - Petition allowed.
Compensation for acquisition of land - HELD THAT:- Consistent view taken by this Court is that one third deduction is made towards the area to be used for roads, drains, and other facilities, subject to certain variations depending upon its nature, location, extent and development around the area. Further, appropriate deduction needs to be made for development cost, laying roads, erection of electricity lines depending upon the location of the acquired land and the development that has taken place around the area.
We have referred to various decisions of this Court on deduction towards development to stress upon the point that deduction towards development depends upon the nature and location of the acquired land. The deduction includes components of land required to be set apart under the building rules for roads, sewage, electricity, parks and other common facilities and also deduction towards development charges like laying of roads, construction of sewerage.
In the instant case, having regard to the extent of the land acquired and the development in and around Vasant Kunj area, in our view, it is appropriate to make 35% deduction towards utilization of the land area in the layout for roads, drains, parks, playgrounds and civic amenities. So far as the expenditure for development of the large extent of land into a developed area by construction of proper roads, underground drainage, sewerage and erection of electricity lines, it is appropriate to make further deduction of 25%.
Interest - HELD THAT:- When the High Court enhanced the compensation, the High Court held that the appellants shall be paid interest in terms of Section 28 of the Act. On the enhanced compensation, High Court ordered payment of interest at the rate of 9% from 19.02.1997 to 18.2.1998 and thereafter at the rate of 15% per annum till the date of payment.
The language of Section 27(1) is clear and very wide and it gives power to the courts to order costs to be paid by what persons and in what proportions they are to be paid. In making order for costs under Section 27(1), the court may have regard to the provisions of Section 35 C.P.C. Analysing sub-section (2) of Section 27, it appears to consist of three parts, viz., (i) When the award of the Collector is not upheld, the costs shall ordinarily be paid by the collector as directed by the Court; (ii) the court is not bound to do so in every case. If the court forms opinion that the claim of the claimant is extravagant or that he was so negligent in putting his case before the Collector, then the court may make a different order as regards costs and (iii) the court may in such cases direct, that some deduction be made from the costs of the claimant or that he should pay a part of the Collector’s costs.
Exemption u/s 10(23G) - AO’s reasons for denying the claim that the assessee has not classified the loans as investments and further those companies have not invited funds by open offer from the public - HELD THAT:- As decided in RABO INDIA FINANCES LTD. [2012 (4) TMI 772 - BOMBAY HIGH COURT] allowed the claim of the assessee on noticing that the deduction u/s 10(23G) is being allowed consistently from the assessment year 2002-03 onwards.
AO’s reasons for denying the claim that the assessee has not classified the loans as investments and further those companies have not invited funds by open offer from the public are not material as classification of amounts in the books of accounts are not a criteria, for considering the long term finance given by the assessee and further there is no stipulation that there should be an open offer in inviting long term finance under the rules. The conditions considered by the AO are not supported by the provisions of the Act and therefore the AO’s action in denying the claim on infructuous reasons cannot be upheld.
Interest u/s 234D - Whether interest would not arise, if both the additions made by the AO are deleted?- HELD THAT:- In the earlier paragraphs, we have directed the AO to allow the exemption u/s 10(23G) of the Act and further disallowance of interest has since been rectified by the AO in the order passed u/s 144 of the Act. Hence, as agreed by both the parties, the question of charging interest u/s 234D would not arise. Accordingly, we reject the ground urged by the revenue.
Correct head of income - interest income earned by the assessee from fixed deposits - ‘Income from Business’ or ‘Income from Other Sources’ - claim of deduction under Section 10B - HELD THAT: This Court in the case M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] where it was held the interest received or the consideration received by sale of import entitlement is to be construed as income of the business of the undertaking, then there is a direct nexus between this income and the income of the business of the undertaking. Though it does not par take the character of a profit and gains from the sale of an article. In view of the definition of ‘Income from Profits and Gains’ incorporated in Subsection (4), the assessee is entitled to the benefit of exemption of the said amount as contemplated under Section 10B of the Act. Therefore, the interest derived from the said deposit is also exempted from payment of tax. - Decided in favour of assessee.
Nature of expenditure - rent paid to the landlord and registration expenses of Chennai unit - revenue or capital expenditure - HELD THAT:- 5th unit at Chennai was set up in a rented premises. After taking the premises on rent for two months, they were involved in making interior infrastructure. It is only after two months, they were able to commence the unit. The rent paid subsequent to the period is allowed as revenue expenditure.
Rent of two months prior to the commencement of the unit is disallowed, on the ground that it constitute the capital expenditure and ₹ 2,500/- is disallowed on the ground that the same being registration fees. If the assessee has taken the premises on rent, merely because the date on which the premises is taken on rent, is unable to carry on the business, would in law, make no difference and the rent paid would not become the capital expenditure if two months is taken to commence the business of the unit. The finding recorded by the three authorities that two months prior to the commencement of the unit constitutes the capital expenditure is unsustainable. Similarly, the payment of registration fees constitutes capital expenditure is unsustainable and therefore,the findings recorded by the three authorities are hereby set aside and the 1st substantial question of law is answered in favour of the assessee and against the revenue.
Telecommunication expenses inclusion - excluded from the export turnover when such expenses were not part of negotiated price and hence did not originally form part of negotiated price and hence did not originally form part of export turnover? - HELD THAT:- As relying on M/s.Sasken Communication Techonologies Ltd. [2014 (9) TMI 1210 - KARNATAKA HIGH COURT] had remanded the matter to the Tribunal to record the findings on merits as well as on the alternative grounds. Following the said judgment, the findings recorded on the 2nd substantial question of law by the authorities, are hereby set aside and the matter is remitted back to the Tribunal for fresh consideration and in accordance with law
Benefit of tax holiday under Section 10-A - interest income although the same formed part of business income of the appellant - HELD THAT:- As relying on M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] the benefit of tax holiday under Section 10-A of the Act is available even in respect of interest on income. Accordingly, the 3rd substantial question of law is answered in favour of the assessee and against the revenue.
Statutory deduction u/s 36(1)(viia) - provision for bad and doubtful debts in excess of provision made in the account - HELD THAT:- If a provision is made in excess of the limits prescribed under the section, the assessee would not be entitled to deduction of the excess amount. At the same time, when the section speaks about the deductions in respect of any provision for bad and doubtful debts made unless such a provision is made, the assessee would not be entitled to the deduction. Once such a provision is made and the said amount is within the limit prescribed under statute, the assessee would be entitled to the amount that is provided for in the accounts. The argument is that when the provision made is less than the amount prescribed under the law, the assessee is entitled to the maximum as prescribed cannot be accepted. The language employed is clear and unambiguous. This is a provision in any fiscal legislation. Therefore, the question of going into the intention or object behind the provision in the light of those clear words would not arise. Therefore, when once a provision is made for bad and doubtful debts and such a provision is less than the limit prescribed under the section what the assessee would be entitled to deduct would be the amount mentioned in the said provision and not the amount prescribed in the section. In that view of the matter, the orders passed by the authorities are not in accordance with law and the judgment of the Tribunal rendered in Syndicate Bank’s case on which reliance is placed runs counter to the statutory provision and therefore, the said order passed by the Tribunal does not lay down the correct law. Decided against the assessee.
Deduction u/s 36(1)(vii) without adjusting the said amount of bad debts against the provision available under Section 36(1)(viia) of the Act brought forwarded and created during the year - HELD THAT:- In view of the judgment of the Apex Court in the case of CATHOLIC SYRIAN BANK LTD., Vs. COMMISSIONER OF INCOME TAX, THRISSUR in [2012 (2) TMI 262 - SUPREME COURT] the issue has been correctly answered by the Tribunal in favour of the assessee and against the revenue.
Input tax credit - LPG stock transferred to places at outside the State from the Devanagunthi bottling plant - maintenance of separate records - rule 131 (3) of KVAT Rules, 2005 - HELD THAT:- In order to decide the questions of law which are framed in these petitions, there should not be any dispute of facts. The assessee contends from Devanagunthi bottling plant in respect of non domestic LPG, there are no stock transfers. All that LPG is purchased within the State sold within the State as is reflected from the invoices. The authorities have not applied their mind to these contentions nor have recorded any finding based on facts.
Under the circumstances the proper course is to set aside the order impugned in these petitions - matter remanded back to the first appellate authority to consider the documents produced by theassessee and then decide from Devanagunthi Bottling plant, whether there is a stock transfer in respect of non – domestic LPG purchased from local registered dealer and if there is no such stock transfer and if all these purchases is sold within the State, then whether the assessee is entitled to the benefit of input tax credit.
Permission for withdrawal of petition - Counsel for the petitioners prays that this writ petition may be dismissed as withdrawn - HELD THAT:- In view of the statement made by counsel for the petitioners, the writ petition is dismissed as withdrawn.
The High Court of Telangana and Andhra Pradesh dismissed an appeal (I.T.T.A. No. 305 of 2014) on identical issues on 5.6.2014. The current appeal was also dismissed with no order as to costs.
TP Adjustment - computation of operating profit, the assessee did not take into account superannuation contribution as it pertained to an earlier year, and it pertained to payment for software which was put to use in a later year - HELD THAT:- There is a categorical finding by the CIT(A) that superannuation contribution pertains to the assessment year 2000-01 and 2001-02. This finding remains uncontroverted.
There cannot indeed be any rationale in taking into account this expenditure for computation of operating profits of the assessee for the current year. Similarly, there is a categorical finding that Catia software, in respect of which amount of ₹ 8,21,628 was excluded, was not used for the purpose of any work in the relevant previous year and it was only subsequent year that this software was actually used. This finding also remains uncontroverted. Clearly, therefore, this expense cannot be included in the computation of operating profit for the current year.
As regards forex gain, the relief granted by the CIT(A) is only a natural corollary to the stand taken by the TPO to the effect that the forex losses are to be included in computation of operating income. When he does so, it cannot be open to him to take a stand that income from forex gain is to be treated as non operational income. In any event, forex gains cannot be considered in isolation of the revenues generated. It is in respect of such revenues that forex gains are received.
As for the exclusion of bad debts, amortizations and provisions, in computation of the PLI of the comparables, we are unable to see any rationale in the same nor has it been justified before us. In view of these discussions, in our considered opinion, the stand taken by the CIT(A) does not merit any interference by us.
Expeditious investigation in the crime - Petition is one of the accused in the crime - HELD THAT:- Now, the officer in charge of investigation has submitted report that the investigation is over practically, and that report on facts has already been submitted to the concerned authority. The investigating agency is now waiting for sanction to submit final report. In such a situation, the two writ petitions can be closed. The main prayer in both the petitions is to expedite the investigation. Once investigation is over, the other prayer need not be considered.
The investigating officer has conducted investigation in all ways possible, and there are no irregularity or flaw in the investigation conducted by him. In the particular situation, there is no necessity to grant the second prayer made by the writ petitioner, ordering investigation by somebody else.
Export of services - testing agency - privity of contract - technical inspection and certification agency services - Technical Testing and Analysis Agency Service - goods imported by customers located abroad - Circular no.56/5/03ST dated 25th April 2003 - destination based taxation - clarification regarding rescinding of N/N. 6/99 dated 9th April 1999.
Revision u/s 263 - deduction u/s. 80P(2)(a)(i) - HELD THAT:- In a recent judgment in CIT v. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT] took the view that when the status of the assessee is a co-operative society and not a co-operative bank, the order passed by the AO extending the benefit of exemption from payment of tax 80P(2)(a)(i) of the Act is correct and such an order is not erroneous and therefore, jurisdiction u/s. 263 of the Act cannot be invoked.
We set aside the order of the ld. CIT and uphold the order of the AO allowing deduction u/s. 80P(2)(a)(i) of the Act to the assessee.
Interest earned on deposits with Davangere Urban Co-op. Bank - HELD THAT:- In the present case, the interest in question is from the deposits maintained with Davangere Urban Co-op. Bank, which is a co-operative Bank and the making of such deposit has no nexus with the business of the assessee. The interest earned on such deposit can therefore be not considered as income derived from the business of providing credit facilities U/s.80P(2)(a)(i) of the Act or interest derived by a co-op. society from its investments with any other co-op. society, as contemplated by the provisions of s. 80P(2)(a)(d) of the Act. Therefore, following the decision of the Tribunal in the case of Sri Basaveshwara Credit Co-operative Society Ltd., Hirekerur [2013 (5) TMI 1010 - ITAT BANGALORE] we hold that the order of the ld. CIT u/s. 263 of the Act on this issue calls for no interference.
Maintainability of appeal - non-compliance with the requirement of payment of 12.5% of the disputed sales tax - HELD THAT:- A Division Bench of this Court, in Ankamma Trading Company [2011 (2) TMI 1254 - ANDHRA PRADESH HIGH COURT], held that payment of the admitted tax, and 12.5% of the disputed tax, beyond the period of sixty days, from the date of receipt of a copy of the order of the assessing authority, would disable the appellate authority from admitting the appeal.
The power available to the Supreme Court under Article 142 of the Constitution of India, is not available to the High Court and, in the light of the judgment in Ankamma Trading Company1, this Court would not be justified in passing any order contrary thereto on sympathetic considerations - the reassessment order of the Commercial Tax Officer and the VAT returns, both of which form the basis for the petitioner’s claim to have excess input tax credit, were passed and filed after the period of sixty days, for pre-deposit of the disputed sales tax of 12.5%, had expired.
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