Detention of vehicle - Jurisdiction - power to issue SCN - Challenge on the sole ground that the Checkpost Officer, by stepping into the shoes of the assessing officer, has straight away issued the notice on the basis that the petitioner has evaded the payment of tax under Section 67(3) (b) of the TNVAT Act, 2006, without there being any deduction thereon by following the due process of law - HELD THAT:- In the present case, a perusal of the impugned notice would show that he has detained the vehicle not for want of any of the documents. On the other hand, by stepping into the shoes of the assessing officer, he has reached a conclusion that the petitioner has evaded tax under Section 67 (3)(b) of TNVAT Act. This Court has time and again, by various rulings, held that the checkpost officer has no authority to pass any order detaining the goods on any flimsy reason. However, in the present case, the second respondent has passed the order almost assessing the tax payable by the petitioner without any valid reason. In my considered view, the same is not capable of being fortified by this Court.
As the second respondent has got power to detain the goods only for the limited purpose of ascertaining whether there has been sale or purchase of goods carried on and whether there has been any attempt to evade payment of tax due thereon, in the present case, on the face of the impugned order, he has not verified whether the vehicle carried the goods along with the requisite documents as per Section 68 of the TNVAT Act. As there is no reference whatsoever made and the goods have been transported along with all the requisite documents, the detention is unfounded - Petition allowed - decided in favor of petitioner.
Revision u/s 263 - Disallowance of purchases - rejection of books of accounts - HELD THAT:- AO had made inquiries about the purchases made by the assessee in pursuance of the information received form the Sales tax department, that he had issued a detailed notice to the assessee in that regard, that he had also recorded the statement of the director of the company, that he made certain disallowance with regard to purchases.In these circumstances, we are of the opinion that it was not case of no inquiry.
AO had adopted a particular method to deal with the alleged purchases.If the CIT was of the opinion that the assessment should have been passed after making inquiries in different manner then it cannot held that the order of the AO was erroneous or prejudicial to the interest of Revenue.
It is possible that had the AO made the inquiries as desired by the CIT he would have collected higher revenue.But, that alone would not justify the invoking of the revisionary powers by the CIT.As the AO had applied his mind and passed the order after rejecting the book of accounts u/s. 145(3) of the Act, so, we are of the opinion that the order of the AO was not neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of the assessee.
Disallowance u/s 14A - HELD THAT:- Assessee has made fresh investments in 9 schemes of mutual funds during the year under consideration and it has closed investments made in six schemes, which were standing at the beginning of the year. The assessee has also received dividend income to the tune of ₹ 15.29 lakhs.
Assessee has indulged in quite number of transactions during the year and hence, we see no merit in the contentions of the assessee that it did not incur any expenses for earning the dividend income.
Considering the number of transactions, quantum of aggregate expenditure as well as fact that the assessee has received dividend income we are of the view that a reasonable disallowance should be made as required under the provisions of section 14A - we are of the view that the disallowance of ₹ 50,000/- made by the AO is on the higher side. We hold that a disallowance would be reasonable in the facts and circumstance of the case. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the AO to restrict the disallowance to ₹ 25000/-, as referred above.
Penalty u/s 271(1)(c) - disallowance on account of cost of Audio CDs to 20% of the expenses claimed - HELD THAT:- Ultimately part of the disallowance has been confirmed on estimate basis. It is almost settled now that penal action cannot be taken on the basis of estimated additions. A reference may be made to the decisions of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs Ravail Singh and Co.[2002 (1) TMI 52 - PUNJAB AND HARYANA HIGH COURT] & CIT Vs Sangrur Vanaspati Mills Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT]. Therefore, in our considered opinion, this is not a fit case for levy of penalty because the part of the disallowance was confirmed on estimated basis.
For the sake of completeness, a perusal of the assessment order shows that the impugned addition has been made by the AO at para-9 of his order. Admittedly, no satisfaction has been recorded for the initiation of the penalty proceedings whereas in respect of every disallowance made. The AO has specifically mentioned that penalty proceedings u/s. 271(1)(c) are initiated separately. Since there is nothing to show that AO had recorded his satisfaction as required by the statute for initiation of penalty proceedings. Therefore, order levying penalty cannot be sustained.- Decided in favour of assessee.
Disallowing proportionate deduction u/s 80IB - as per AO assessee has constructed some residential units which are more than 2000 sq.ft. and the maximum built up area permissible for residential unit as per sec. 80IB(10) is 1500 sq.ft. therefore AO disallowed the claim for deduction under sec. 80IB(10) - CIT-A directed AO to allow deduction u/s.80 IB(10) to the appellant on proportionate basis.HELD THAT:- We find that the CIT(Appeals) has followed the decision of the Hon’ble Madras High Court in the case of M/s. Vishwas Promoters Pvt. Ltd. [2012 (11) TMI 1117 - MADRAS HIGH COURT] while allowing proportionate deduction under sec. 80IB(10) to the assessee on the housing projects. The Departmental Representative has simply relied on the order of the Assessing Officer and could not cite any contrary decision which was in favour of the Revenue. The Authorized Representative of the assessee also could not cite any decision of the High Court/Supreme Court which was in favour of the assessee for allowing deduction on entire income under sec. 80IB(10) even in case where the units constructed were of more than 1500 sq.ft. Therefore, we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) which is hereby confirmed and the ground of appeal of the assessee as well as that of the Revenue are dismissed.
Block assessment u/s 158BD - whether the assessee has right to file an application under Rule 27 of the ITAT Rules? - HELD THAT:- As relying on SMT. GURINDER KAUR. [2006 (6) TMI 144 - ITAT DELHI-A] we admit this application under Rule 27 of the ITAT Rules as the assessee has raised a ground before the ld CIT(A) and the ld CIT(A) discussed the issue but had not given a decision on the same.
Whether notice barred by limitation ? - “immediate” or immediately proximate - HELD THAT:- On merits we find that the block assessment in the case of M/s Bemco Jewellers P Ltd was completed on 29.08.2002 u/s 158BD consequent to search conducted on 03.08.2000. Notice u/s 158BD was issued to the assessee on 10.02.2006. Thus the period of more than three years has elapsed since the completion of the assessment in the case of M/s. Bemco Jewellers Pvt. Ltd.
As relying on Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] we hold that the period of above three years cannot be considered as “immediate” or “immediately proximate” in point of time to the completion of the block assessment u/s 158BD. In consequently we hold that the assessment itself is bad in law. Thus this application under Rule 27 of the ITAT Rules is allowed. Appeal of the revenue is dismissed.
Rejection of books of accounts - trading addition - application of gross profit rate of 21.44% as against declared gross profit rate of 19.97% - HELD THAT:- There is merit in the arguments of the AR that in semi precious stones and gems trade the number of stones are innumerable which are procured in various shapes, sizes and it is practically impossible to maintain shapewise, size-wise and colour-wise stock of manufacturing & wastage as required by the AO. Since no defect whatsoever is pointed out in the sales, purchases and trading results of the assessee consequently, in our considered view the books of account cannot be rejected.
Our view is fortified by the judgment in the case of Malani Ramjivan Jagan Nath vs. ACIT [2006 (10) TMI 145 - RAJASTHAN HIGH COURT]. We uphold the maintenance of books of account of the assessee and finding of ld. CIT(A) for rejecting them is reversed.
Quantum addition, since books of account of the assessee are upheld then nothing material remains to dwell on the estimate of income. It is trite law that if the books of account are proper then lesser earning of gross profit does not attract any addition besides the TO has gone up in this year. There is no justification in retaining addition, looking from other angle also, the issue is only about estimation of closing stock.
Assuming an addition on account of closing stock is somehow made, the same is to be allowed to the assessee in the next year as opening stock which will reduce the profits of next year. This exercise is essentially revenue neutral between two years. In the case of CIT vs. Excel India [2013 (10) TMI 324 - SUPREME COURT] has held that addition in such revenue neutral exercise should not be made by the Department. Thus on both the counts, there is no justification in retaining the addition which is deleted. - Decided in favour of assessee.
Deduction u/s 80IA - as per revenue scope of work undertaken by the assessee was both rehabilitation and strengthening of the existing two lane highway apart from widening thereof to four lanes deduction u/s 80IA would not be available on the project income as per clarificatory circular of CBDT No. 4/2010 - HELD THAT:- In the light of clarificatory circular issued by CBDT and respectfully following the decision of ITAT Pune Bench in the case of Rohan & Rajdeep Infrastructure [2013 (4) TMI 758 - ITAT PUNE] and order of the ITAT Mumbai [2015 (6) TMI 1206 - ITAT MUMBAI] in assessee’s own case for subsequent assessment year 2008-09 we are inclined to hold that section 80IA of the Act mainly speaks about development of infrastructure facility and whether widening of roads would also fall under the ambit of development of infrastructure facility has been further clarified by the CBDT by circular no. 4/2010 which is obviously biding on the revenue authorities.
On logical analysis of the operative part of CIT(A) from para 4.1 to 4.3 of the impugned order. We note that the CIT(A) after properly considering circular no. 4/2010 of CBDT and relevant provision of section 80IA(4)(i) of the Act. Rightly drawn a conclusion that the project of development and widening road under taken by the assessee qualifies the definition of new infrastructure facility for the purpose of claiming deduction u/s 80IA(4)(i) and the CIT(A) was correct and quite justified in deleting the addition made by the AO in this regard. - Decided against revenue.
Inability of Ms. Justice Reva Khetrapal, a former judge of this Court, appointed by this Court as an Administrator, has expressed her inability to continue with the matter - HELD THAT:- A copy of the order dated 14th January, 2015 along with the digital copy of the entire records of this matter be made available with Mr. Justice Anil Kumar (Retd.) by the Registry within four days from today.
List this matter for further consideration on 16th September, 2015.
Enhanced compensation in view of an order under Section 18 of the Land Acquisition Act, 1881 - Assessee taking a contention before the CIT (Appeals) - HELD THAT:- The appeal is identical to [2014 (7) TMI 1326 - ITAT DELHI] which has been dismissed by our separate order and judgement of the even date wherein as held that admittedly the land in question was agricultural land. That has not been challenged. The compensation is, therefore, not liable to be taxed. Thus, on merits, there is no case. there is nothing that prevented the assessee from taking such a contention before the CIT (Appeals).
Assessee taking a contention before the CIT (Appeals) - HELD THAT:- Assessee received enhanced compensation in view of an order under Section 18 of the Land Acquisition Act, 1881. However, admittedly the land in question was agricultural land. That has not been challenged. The compensation is, therefore, not liable to be taxed. Thus, on merits, there is no case.
Only issue is whether such a contention could have been taken for the first time before the CIT (Appeals). It does not appear from the order that this technical ground was pressed before the Tribunal, though it has been raised in the memo of appeal. There has been no application by the appellant for modification of the order before the Tribunal either. Prima-facie, at least there is nothing that prevented the assessee from taking such a contention before the CIT (Appeals).
Remuneration and perquisites payable to the original Petitioner before the CLB - HELD THAT:- Appellant submits that his clients would like to seek certain clarifications of the earlier orders passed by the CLB in this behalf, which has a bearing on the subject matter of the present appeals.
Compensation for acquisition of land - Whether the allottee Company (M/s. Ultra Tech Cement Ltd.) is either a beneficiary or interested person entitled for hearing before determination of the market value to award just and reasonable compensation in respect of the acquired land of the Appellants either before the Deputy Commissioner or Reference Court? - Whether the Writ Petition filed by the allottee Company before the High Court is maintainable in law? - Whether the order of remand allowing the Writ Petition of the allottee Company to the Reference Court is legal and valid? - HELD THAT:- The provisions of the KIAD Act and KIADB Regulations make it abundantly clear that the acquisition of the agricultural land in the notified Industrial Area vide notifications issued Under Section 28(1) and (4) of the KIAD Act, empowers the State Government to acquire the land for the purpose of industrial development by the KIADB after the acquired land possession is transferred in its favour by the State Government - Sections 29 and 30 of the KIAD Act read with Sections 11, 18 and 30 of the L.A. Act would clearly mandate that both the state government and the KIADB are liable, jointly or severally, to pay the compensation to the owners or interested persons of the acquired land. The market value of the acquired land is required to be determined by the Reference Court by applying the provisions of Section 18 of the L.A. Act, after passing an award as provided Under Section 11 and notifying the same to the landowners or interested persons Under Section 12(2) of the L.A. Act if the owners are not satisfied with either the compensation awarded by the Deputy Commissioner or with regard to the area of acquisition of land.
The land acquired shall be disposed off by the KIADB by inviting applications from the eligible applicants, notifying the availability of land, prescribing the manner of such disposal and fixing the last date for submitting applications and giving such particulars as it may consider absolutely necessary by publishing it in the newspapers having wide circulation in and outside the state of Karnataka - From a careful reading of the clauses of the lease agreement along with the provision Section 32(2) of the KIAD Act and Regulation Nos. 4, 7, 10(b), (c) and (d) of the KIADB Regulations, it is clear that the Company is only the lessee by way of allotment of the land as the same has been allotted by the KIADB in its favour and has executed the lease deed in its favour in respect of the allotted land.
Thus, it can be safely concluded by us that the acquisition of the land involved in these proceedings is for the purpose of industrial development by the KIADB in the Sedam Taluk. Therefore, the beneficiary of the acquired land is only the KIADB but not the Company as claimed by it. A reading of Section 28(5) of the KIAD Act makes it clear that the land which is acquired by the State Government statutorily vests absolutely with it - A careful reading of the provisions of the L.A. Act, KIAD Act and the KIADB Regulations would clearly go to show that the Company is neither a beneficiary, nor an interested person in the land as on the date of acquisition of the land, as the land was acquired by the state government in favour of KIADB who is the beneficiary and it has allotted in favour of the Company after the acquired land was transferred in its favour by the State Government and executed the lease agreement.
The acquisition of land under the provisions of the L.A. Act in favour of a Company the mandatory procedure as provided under part VII of the L.A. Act and Rules must be adhered to, that is not the case in the acquisition of land involved in these proceedings as the acquisition of land is under the provisions of KIAD Act and therefore the reliance placed upon the provision of Section 3(f)(viii) of the Karnataka L.A. Amended Act of 17/1961 is not applicable to the facts of the case on hand and therefore, the said provision cannot be made applicable to the case on hand.
Enhancement of Compensation - HELD THAT:- The statutory notifications of acquisition of land would clearly go to show that the land of the Appellants was acquired way back in the year 1981 for the purpose of establishment of industries The land of the Appellants has non-agricultural potentiality, which fact is proved from the notifications published by the State Government Under Sections 28(1) and (4) of the KIAD Act, as the State Government specifically mentioned therein that the acquisition of the land of the Appellants is for the industrial development and establishment of industries which is for non agricultural and commercial purpose - Further, the land which has been covered under notification in 1988 is also adjacent to the residential sites which were formed. The land owners in that case produced the sale deeds of the year 1986 and 1988 respectively, which was 2 years and 2 months earlier respectively to the notification issued in the year 1988 and some of which were two to three years earlier.
Considering the fact that acquisition of the land was made in the year 1981, it would be just and proper to fix the compensation calculated at ₹ 1,92,000/- per acre, with all statutory benefits such as solatium at 30% as provided Under Section 23(2) and statutorily payable interest Under Sections 23(1-A) and 28 of the L.A. Act, from the date of taking possession of the land till the date of payment. The Appellants are also entitled to costs throughout as provided Under Section 27 of the L.A. Act - The Respondents are directed to pay the compensation to the Appellants-landowners as directed above, within eight weeks from the date of the receipt of the copy of this judgment and award after proper computation in the above terms.
Business Auxiliary service - service being rendered by the assessee for the Transport Department under the Motor Vehicle Act - service rendered to public authorities - it was held by the High Court that Work done by the respondent assessee pertains to discharge of statutory function by the Department under the Motor Vehicle Act and the same does not amount to customer care, promotion, marketing of services, incidental or auxillary to the support services - HELD THAT:- Decision by High Court upheld - Appeal dismissed.
Validity of assessment order - case of petitioner is that the petitioner has not been furnished with some of the details which have been sought for - TNVAT Act - HELD THAT:- Without going into the merits of the matter, while setting aside the impugned orders passed by the respondent dated 29.05.2015, keeping in mind that there was inspection conducted by the Enforcement Wing Officials in the premises of the petitioner on 07.11.2013 for the purpose of VAT Audit, under Section 64 of the TNVAT Act, directs the Assistant Commissioner (CT), Peddunaickenpet Assessment Circle to furnish the names of the sellers given in the respective Annexures II of the respective assessment years to the petitioner. It is needless to mention that if the above said particulars are not available with the Assessing Officer, he is directed to make a request to the Enforcement Wing Officials who conducted surprise inspection on 07.11.2013 to provide all the information and after receiving such information, the same shall be furnished to the petitioner.
The petitioner, on receipt of such information, thereafter within a period of three weeks, shall file a detailed reply for each of the assessment years and after receipt of such replies from the petitioner, it is for the Assessing Officer to pass detailed orders on merits, by applying his mind independently on all issues uninfluenced by the proposal of Enforcement Authority - Petition disposed off.
Revision u/s 263 - whether the assessment has been made on an incorrect assumption of facts or an incorrect application of law? - HELD THAT:- AO has taken a view which may be different from the view of the Ld. Commissioner and assuming that the view taken by the AO is a loss to the Revenue but the Hon’ble Supreme Court in Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] has held that “ every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue,” for e.g. when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the ITO has taken one view with which the Ld. Commissioner does not agree, it cannot be treated as an order which is erroneous or prejudicial to the interest of Revenue unless the view taken by the Income Tax Officer is unsustainable in law.
The assessment order is neither erroneous nor prejudicial to the interest of the revenue. We, therefore, set aside the impugned order passed by the Ld. Commissioner u/s. 263 and restore that of the Assessing Officer passed u/s. 143(3) of the Act. - Decided in favour of assessee.
Addition u/s 2(24)(x) and 36(1)(vi) - not depositing the contribution of employees towards provident fund of the employees of the assessee - obligation to make the payment of PF to the Trust within any due date - HELD THAT:- The explanation to section 36(1)(va) defines the due date means the date by which the assessee is required as an employer to credit an employees contribution to the employees account in the relevant fund, under any Act, Rules, order, or notification issued thereunder or under any standing order, award, contract of service or otherwise.
NO SPECIFIC DATE FOR DEPOSIT OF THE P.F. BY BOARD
Thus in the case of the MPSEB the PF is governed by its own Rules. There is no specific date of payment but the internal arrange is such the payments are made regularly on adhoc basis and the amount remaining unpaid, if any, is treated as invested with the MPSEB and carries interest,. The amount is deemed as paid and invested with the Board and carries interest accordingly to Rule 11 as mentioned above - Decided in favour of assessee
Assessment u/s 153A - Disallowance of sales tax incentive - capital receipt or revenue receipt - CIT-A held that Sales Tax incentive availed for setting up of industrial undertaking claimed by assessee as capital receipt - HELD THAT:- On identical facts and circumstances we have taken a view in a group of cases of M/s Narendra Vegetable Products Pvt. Ltd. [2015 (7) TMI 1298 - ITAT NAGPUR] as held scheme of the State Government, the assessee is entitled for the exemption of the sales-tax incentive being a capital receipt in the hands of the assessee and that the claim being lawful in nature ought to have been entertained by the Assessing Officer while completing the assessment under section 153A of I.T. Act. - Decided in favour of the assessee.
Dispensation with the scheme of arrangement - mandatory requirement of Section 101 of the Companies Act - pendency of reference before the BIFR - HELD THAT:- It is clear that when the petitioner has preferred this petition in September, 2008, the reference filed by the petitioner was pending before BIFR. The same was recently disposed off by BIFR by an order dated 16.7.2014 on Miscellaneous Application moved by the petitioner-company. Thus, when the present petition was filed in September, 2008, the petitioner was not entitled to file this petition and it was not maintainable. This Court is required to consider what was the position on the date of filing of this petition. If on the date of filing of this petition, the same is not maintainable, merely because now it is pending since last seven years, the same cannot be considered on merits. Thus, this Court is of the opinion that this petition is required to be dismissed
The petitioner-company has not proceeded with this petition within reasonable time. After a period of eight years, now the proposed scheme cannot be sanctioned in the present format and learned advocate Mr.Maulin Raval appearing for the objector is right in submitting that this scheme can be said to be a stale scheme. Hence, the same is not required to be sanctioned on this ground also.
It is also clear from the record that SEBI has passed an order on 6.6.2008 which is produced by the objector at page 289 of the compilation. The said order was passed giving direction under Sections 11 and 11(B) of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Security Market), Regulations of 2003 against the company and its directors. SEBI, by way of the said order, restrained the petitioner-company from accessing the securities market and prohibiting from buying, selling or dealing in securities directly or indirectly for a period of five years - It appears from the record that this aspect is also not stated by the petitioner-company in this petition nor it was pointed out before the respective shareholders and lenders that such proceedings are pending before the SEBI.
It is clear that though the petitioner-company was not a party to the said proceedings, however, the proceedings were initiated in pursuance to the transactions with the petitioner-company. Therefore, the petitioner-company and its group companies were described as target companies. Thus, from the record it is clear that the petitioner-company has not placed aforesaid important details with regard to pendency of proceedings before SAT in the respective meetings of the shareholders as well as lenders - The petitioner-company has also not disclosed the material fact with regard to the order dated 5.6.2008 passed by SAT in this petition also and, therefore, this petition is not required to be entertained on this ground also.
It is clear from the record that all the material facts were not disclosed before the voters in the respective meetings nor the same was placed before this Court along with the petition and, therefore, this Court is not satisfied with the scheme proposed by the petitioner-company and, therefore, also the present petition is required to be dismissed on this ground also.
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