TMI Tax Updates - e-Newsletter
January 5, 2013
Case Laws in this Newsletter:
Income Tax
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Corporate Laws
Service Tax
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CST, VAT & Sales Tax
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Notifications
Circulars / Instructions / Orders
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Case Laws:
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Income Tax
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2013 (1) TMI 97
Penalty u/s 271(1)(c) - Concealment of income - Evasion of Tax - Whether penalty u/s 271(1)(c) can be levied even when after disallowing certain sum while computing income as per the P&L account, the same had no impact on the tax liability of the assessee - Held that:- It was held that even after such disallowance, tax finally required to be paid, as per Section 115 JB of the Act, would remain the same. It cannot be stated that the assessee evaded tax. In favour of assessee
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2013 (1) TMI 90
Revision of orders prejudicial to revenue by CIT(A) - relief granted u/s 80 IA was not deducted from the profits and gains of the business before computing relief u/s 80 HHC - ITAT quashed the orders of CIT(A) passed u/s 263 - Held that:- As decided in Asstt. CIT Vs. Rogni Garments & Ors [2007 (4) TMI 122 - ITAT, CHENNAI] Section 80HHC is part of Chapter VI-A. CIT v. Sharon Vancers P. Ltd.(2007 (2) TMI 121 - HIGH COURT , MADRAS) has made it clear that it is not correct to say that Section 80HHC is a self contained provision. The deduction cannot be allowed ignoring the restrictive clause contained in Section 80-IA(9). The restrictive clause in Section 80-IA makes it abundantly clear that wherever deduction under any other section of Chapter VI-A(C) is claimed, the computation will be subject to the restrictions laid down in Section 80-IA (9). It precludes 'pro tanto', all the deductions of such profits and gains claimed under Chapter VI-A(C). Section 80HHC is part of Chapter VI-A(C). The respondent-assessee, in the present case, had in its return of income tax, claimed deduction under Section 80IA at Rs. 12.01 crores and Section 80HHC at Rs. 5.75 crores and declared the total income of Rs. 82.47 lacs. The AO allowed the deduction under Section 80IA to the tune of Rs. 14.04 crores and deduction under Section 80HHC to the tune of Rs. 2.42 crores. The CIT on perusal of the assessment order found the assessment order to be both erroneous and prejudicial to the interest of Revenue and rightly so as deduction under Section 80HHC was allowed on eligible profits of business without reducing the profits of business on which deduction under Section 80IA had been allowed. There was, thus, contravention of Section 80IA(9), which clearly indicates the extent of restriction to which the deduction under other provision of Chapter VI-A of IT Act can be allowed in cases where relief has been given on the profits and gains under Section 80IA. As decided in Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] an incorrect assumption of facts or an application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. Thus set aside the order of ITAT and restore that of CIT-I - against assessee.
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2013 (1) TMI 89
Waiver or remission of the liability of the loan - Capital or Revenue receipt - Held that:- The amount which was advanced as a loan to the respondent-assessee was for the purposes of relocating its office premises. The loan taken was utilised for the purposes of acquiring a office at Godrej Soap Complex, Vikroli, Mumbai. Therefore, the loan in the present fact was taken for acquisition of capital asset and not for the purposes of trading activity as in the case of Solid Containers Ltd (2008 (8) TMI 156 - BOMBAY HIGH COURT). The present case is therefore covered in favour of the respondent-assessee by the decision of this court in the matter of Mahindra & Mahindra Ltd (2003 (1) TMI 71 - BOMBAY HIGH COURT) - in favour of assessee.
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2013 (1) TMI 88
Bogus purchases - suppliers were nonexistent and one of the parties had denied having any business dealings with the Assessee Company - ITAT deleted the addition made by AO - Held that:- From the order of the Tribunal it can be concluded that it has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. Books of Accounts of the assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. Merely because the suppliers have not appeared before the AO or the CIT(A), one cannot conclude that the purchases were not made by the assessee. Disallowance merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them is not warranted- thus the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of ₹ 1.33 crores was not bogus - in favour of assessee.
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2013 (1) TMI 87
Unexplained cash credit - ITAT deleted the addition - Held that:- CIT(A) as well as the Tribunal have arrived at concurrent finding of fact that the credit aggregating to Rs.43.75 has been explained by the assessee and the same cannot be added to the income of the assessee. This finding was reached after detailed examination of each of the cash credits. The revenue has not been able to show that a concurrent finding of fact arrived by the authorities below is either perverse or arbitrary. The CIT(A) has made a distinction between monies advanced by a creditor all by himself and monies advanced by him after collecting funds from his close relatives - in favour of assessee.
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2013 (1) TMI 86
Transfer Pricing Adjustment - assessee-company is an Indian company engaged in the manufacture and trading of automobiles - operating expense adjustment - assessee contested against violation of natural justice - Held that:- No evidence has been brought on record by the assessee to establish the violation of the principles of natural justice by the AO as claimed and therefore rejecting this ground raised by the assessee as infructuous. Reference to TPO - Held that:- As decided in Tally Solutions Pvt. Ltd. (2011 (9) TMI 196 - ITAT BANGALORE) there is nothing in section 92CA to suggest that the AO should hear the assessee or record reasons before making a reference to the TPO and therefore in the instant case there is no infirmity in the action of the Assessing Officer in referring this case to the TPO. The Explanation to section 92(1) clarifies that the allowance for any expense or interest arising from an international transaction shall also be determined having regard to the ALP. As these are anti-avoidance provisions of the Act, and also special provisions to protect the tax base of the country from being eroded, they will over-ride all other provisions of the Act. Therefore, see no merit in this ground raised by the assessee that the definition of 'income' under the Act is not amended to include the T.P. adjustments as income and accordingly dismiss this ground TP adjustment without demonstration - Held that:- As in Coca Cola India Inc. v. Asstt. CIT [2008 (12) TMI 67 - PUNJAB AND HARYANA HIGH COURT] it is not necessary for the AO/TPO to demonstrate that profits are shifted out of India in order to determine the arm's length nature of any international transaction - thus no merit in the ground raised that no T.P. adjustment could be made in the assessee's case without there being any material against assessee. Use Of Multiple Year Data - Held that:- TPO is both empowered and also duty bound to determine the ALP using such contemporaneous data for this purpose even if it is not available to the assessee in the public data bases at the time of preparation of its report on the T.P. study - as mandated by rule 10B(4) of IT Rules, 1962, the TPO used data pertaining to the current year i.e. FY 2002-03 rightly rejecting the assessee use of multiple year data as the assessee failed to demonstrate as how such data pertaining to the prior years had an influence or bearing on prices in the current financial year. Methodology and process in arriving at ALP - segregation of trading and manufacturing segments - Held that:- The sale of spare parts is triggered as a result of the manufacturing activities, including warranty commitments. Therefore, it would not be in the fitness of things for the sale of spare parts and components to be considered in isolation from the sale of manufactured vehicles. This view is supported by the OECD T.P. Guidelines, 2010. As the comparable companies are also trading in spare parts and components it can be concluded that trading in spare parts is closely inter-linked with the manufacturing segment of the assessee. No meaningful purpose would be served in segregating the trading and manufacturing segments when the assessee and the comparable companies are at par with regard to the nature and scale of combined activities - direct the AO/TPO to compute the ALP at the entity/enterprise level by combining the trading and manufacturing segments. Operating Efficiency Adjustment - bringing the operating expenditure of the comparables at par with that of the assessee - Held that:- TPO has concluded that the assessee is very efficient as its operating expenses are lesser when compared to that of the comparable companies. Briefly, the TPO has equated operating efficiency to operating expenditure. Before the CIT (Appeals) detailed submissions were made on this issue and a remand report was called for thereon, CIT (Appeals) however was of the view that since these submissions were not filed before the TPO during the assessment proceedings they could not be entertained at the appellate stage. Before us apart from the submissions made, expert opinion has been filed on this issue by the assessee which was not available before the TPO. In these circumstances, this matter of operating efficiency adjustment be remanded back to the file of the TPO for re-examination. Admission of Additional Evidence - Held that:- As decided in CIT v. Salig Ram Prem Nath [1989 (2) TMI 51 - PUNJAB AND HARYANA HIGH COURT] that in order to do substantial justice, the ITAT is vested with the requisite authority to admit additional evidence. As found that the assessee had made submissions on the said matter on which the experts opinion is now filed the experts opinion for being considered in the disposal of this ground of appeal admitted. Excise Duty Adjustment - Held that:- Assessee's ground on excise duty adjustment needs to be allowed as assessee collects excise duty as levied by the Central Government and there is no profit element involved in collecting the same and remitting it to the Government. TP regulations are based on the actual margins and 'pass through' items like excise duty are not to be considered while computing margins as is also the case with the comparable companies. DR too did not appear to have serious objections to the exclusion of excise duty in arriving at the margins. Customs duty adjustment - Held that:- Remand the matter, of examining the necessity of whether customs duty adjustment is to be allowed, as claimed by the assessee, to the file of the TPO. The TPO directed to examine the contentions keeping in mind the observations made in the light of the decision in the case of Skoda Auto (P.) Ltd.'s case (2009 (3) TMI 249 - ITAT PUNE-A) relied on by the assessee and the case of Sony India Pvt. Ltd.'s case (2008 (9) TMI 420 - ITAT DELHI-H) relied on by revenue. Cash PLI (Profit Level Indicator) or PBDIT (Profit Before Depreciation, Interest and Tax) to sales - profit margin for determining ALP - Held that:- The assessee is in the asset intensive automobile industry thus cash PLI or PBDIT to sales is not the appropriate PLI and also note that the TPO has given depreciation adjustment for differences in relative level of depreciation cost with reference to sales. Commission Income - Held that:- In agreement with the TPO's action in excluding commission income for the reason that the commission income earned by the assessee is not derived from out of the assessee's business operations of manufacture and sale of passenger vehicles or the sale of spare parts and components. Provision for Warranty Costs - Held that:- The one time special warranty provision, arising out of an extra-ordinary viz. manufacturing defect in exhaust of passenger vehicle in the relevant period should be considered as non-operating expenditure. Marketing Expenses - Held that:- Marketing expenses incurred for launch of a new passenger vehicle in the relevant period, is incurred in the normal course of its business operations and forms part of its operating expenditure, hence disallowed. Benefit +/- 5% Safe Harbour - Held that:- +/- 5% variation is allowed only to justify the price charged in the international transactions and not for adjustment purposes. The amendment to 92C(2A) has settled the issue, thus the 5% benefit is not allowable in the assessee's case. CIT(A)exceeded his jurisdiction u/s 251 - Held that:- ALP adjustment is to be restricted to the extent of purchase of components from its AE's & CIT(A) has only directed the TPO to compute the ALP adjustment, in accordance with his finding and for this purpose to make necessary verification. No reason to hold that the CIT(A)in directing the TPO to recompute the ALP adjustment has exceeded his jurisdiction u/s 251.
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2013 (1) TMI 85
Exemption u/s 80-P (2) (a) (i) - Interest earned on deposits of non-SLR funds - assessee is a Co-operative Bank - Held that:- Ratio of the judgments, which are applicable to SLR funds would also be equally applied to non-SLR funds as it cannot be said on the basis of the judgment of the Supreme Court in Bihar State Co-operative Bank Ltd. (1960 (2) TMI 8 - SUPREME COURT). Short-term deposits by the Bank was income from normal banking business and was, therefore, exempt from the liability to pay Income Tax. It was further specifically held in that case that since the society in that case was engaged in banking activity, its normal business was to deal in money and credit and, therefore, the money laid out in the form of short-term deposit did not cease to be a circulating capital and interest earned thereon, could not be other than income generated from the business of banking, and, was therefore exempt from tax The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P(2)(a)(i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank - thus ITAT committed no error in arriving at findings that the interest are not deposits of non-SLR funds and the cooperative bank will qualify for exemption under Section 80P(2)(a)(i) - in favour of the assessee.
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2013 (1) TMI 84
Additional income toward additional value of WIP - Revised return - AO stated that there was no provision in the Act for allowing deduction for additional income offered for earlier years(s) to cover up the deficiencies in the books of account - Held that:- There is no question in the said Statement of Shri C.Sivarama Prasad, Director, either in relation to any discrepancy in accounts, including WIP or its valuation, or inadequacy of profits disclosed, or share application money, or the question also alluding to land purchased by the assessee company, in the said Statement. In fact, even the assessee referred only to this part of the Statement. There is no whisper of the WIP or its valuation, much less of any discrepancy therein, in the said Statement. As such, the CIT(A) is correct in stating so, holding that the disclosure during survey - implying thus to be for both the years - was not made on account of difference in WIP or stock. The assessee’s claim of the said aspect having attained finality in view of its revised return for AY 2005-06, offering additional income (of Rs.75 lakhs) toward additional value of WIP is without merit. This is as the same (revised return) is only based on, or in terms of (or ought to be so), the declaration made during the Survey, and which is de hors and without reference to any material or evidence as to WIP. The revised return, thus, to the extent it is inconsistent with the same cannot be considered as in pursuance thereto or arising therefrom. The same would therefore require a finding by the AO, accepting the increased value of the closing WIP for that year, to claim for its inclusion as a part of the WIP for the current year. No evidence to substantiate its said claim stood adduced by the assessee either in the assessment proceedings or before the first appellate authority - The increase in the closing stock, is only on account of admission of the corresponding expenditure thereon, which, where not adjusted against the income for the year, gets carried forward in the form of unbilled expenditure. However, as the expenditure is not admissible, there is no question of it being adjusted either against the income for the current or any subsequent year, i.e., by being carried over as unbilled expenditure, so that it would result in a net increase in the income for the year of expenditure, with no implication for any other year. The appellate order by the CIT(A), holding that the disclosure of Rs.50 lakhs for the current year as toward reconciling all differences, while rejecting an attempt by the AO to disturb the assessee’s valuation method, thus, has to be viewed as correcting this anomaly. No infirmity therein. Method of valuation - Held that:- Nothing on record to hold it as inadequate. Further, there is also nothing on record to show that the changed/enhanced allocation has been insisted upon and applied by the Revenue for the succeeding years as well, as any change has necessarily to be regularly followed, or else would lead to a distortion in profits across different years. As such, confirm the assessee’s valuation method for the current year, so that no interference therewith, as made by the AO, is called for. Disallowance for Rs. 2 lakhs qua ‘Entry Tax’ - CIT(A) deleted the addition - Held that:- While the AO presumes that entry tax is only for fresh purchase, the CIT(A) admits and accepts assessee’s explanation at face value, i.e., de hors any material. The question is not if the machinery is old or new, as the assessee could well have purchased some old machinery, but whether it is a purchase or acquisition of a capital asset or not, from where to where, and for what purpose, is the machinery being moved - the matter is restored back to the AO for proper examination and a decision in accordance with law, consistent with the facts of the case Disallowance of fees paid to the Registrar of Companies - same is paid toward increase in share capital - Held that:- As clarified by the assessee, with reference to the various forms for which the filing fees stands paid, and to which reference was also made by the during hearing, it is only in respect of registration of charges, appointments of Directors, etc. No case for disallowance, under the circumstances, is made out, and the same stands rightly deleted by the ld. CIT(A).
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2013 (1) TMI 83
Royalty payment - AO disallowed 25% of payment treating it as an intangible asset following the decision of Southern Switch Gear [1997 (12) TMI 105 - SUPREME COURT] - CIT(A) deleted the addition - Held that:- The assessee company was granted only a non-exclusive and non-transferable right to use the intangibles. The ownership remained with the licensor and are continued during the currency of the agreement. The basis for payment of the amount was of net sales. No lump-sum payment was made for the right to use the intangibles. The licence acquired during the agreement was not to establish manufacturing base. Assessee is engaged in service industry. It was only in providing staffing and recruitment services which is a service industry. Thus the assessee had not acquired any enduring benefit. The agreement was also for a limited period. In view of these facts, no fault in the order of CIT (A) - the facts of the Southern Switchgear Ltd. are distinguishable from the facts of assessee’s company as the right of the assessee in the case of Southern Switchgear Ltd. was granted exclusive licence to manufacture, use and sell the scheduled products within India. While in assessee’s case, the assessee was granted non-transferable intangibles acquiring no ownership or proprietary right in the intangibles - in favour of assessee. Addition towards stale cheques issued to ex-employees - CIT(A) deleted the addition - Held that:- The original cheques of ₹ 31,74,343/- issued to the ex-employees and the same were pertaining to the financial year 2006-07 and 2007-08. Out of these, only cheques of ₹ 1,85,519/- were encashed. All other cheques became outdated on account of not claiming the same from the bank of the assessee. CIT (A) entertained the statement of stale cheques filed before him and observed that ₹ 4,62,883/- were encashed after the close of financial year. CIT (A) has also granted the relief relying on the audited accounts of the assessee. Such approach of CIT (A) is not as per law. The cheques issued are barred by limitation and became not payable by operation of law. CIT (A)’s observation that as soon as assessee reaches it conclusion that the liability of stale cheques have come to end the necessary right back to take place in the year of such conclusion is not based on any evidence. On what basis this finding has been recorded by CIT (A) is not clear. How these cheques remained uncashed for almost two years is not clear. CIT (A) was not justified in granting the relief to the assessee, thus remit the issue to the file of the AO for deciding afresh - in favour of revenue for statistical purposes. Disallowance of loss arising on account of non-receipt of TDS certificates - CIT(A) deleted addition - Held that:- As decided in Shreyans Industries case [2006 (11) TMI 187 - PUNJAB AND HARYANA HIGH COURT] the assessee had offered gross amount of interest including TDS to tax in the assessment year 1992-93. It is also a fact that the assessee was not allowed credit for the TDS for want of TDS Certificates & in spite of best efforts, the assessee could not obtain TDS certificates. Thus, it was a case of loss which has arisen to the assessee during the course of its business. In the case of Sutlej Cotton Mills Ltd. v. CIT (1978 (9) TMI 1 - SUPREME COURT), Hon'ble Supreme Court has held that what is material is the factors or the circumstances which cause loss & if the loss occurred during the course of carrying on the business, it is incidental to it and, hence, allowable. Admittedly, in this case, the assessee suffered loss during the course of carrying on its business therefore, same is allowable - as the issue involved is having the similar facts as involved in the case of CIT vs. Shreyans Industries Limited, the order of the CIT (A) on this issue sustained - in favour of assessee. Disallowance of professional tax not paid before the due date of filing the return of income - CIT(A) deleted of addition made by AO u/s 43B - Held that:- Certain facts are not clear which are necessary to decide the issue. What is the salary debited by the assessee in the profit & loss account whether it was net of professional tax or it was the gross amount including the professional tax. This fact has not been brought on record. In absence of this, it cannot be said that the amount of professional tax has not been debited in profit & loss account while computing the total income of the assessee. Secondly, under the Professional Tax Act, whether the assessee was liable to deduct the tax from the salary or it was deducted on the instruction of the employees to meet their obligation. This aspect also requires examination to decide whether it is covered u/s 43B or not - remit the issue to the file of the AO to bring correct facts on record.
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2013 (1) TMI 82
Non granting benefit u/s. 11 - assessee contested as the income is exempt u/s. 10(23C)(iiiad) - Held that:- As decided in U.P. Forest Corpn v. Dy. CIT (2007 (11) TMI 303 - SUPREME COURT) that registration u/s. 12A is a condition precedent for availing of benefit of section 11 & 12 of the IT Act. The assessee in this case has admitted before the AO at the assessment stage that the assessee society is not registered u/s. 12AA therefore, the assessee would not be entitled for any deduction u/s. 11. Even during the course of arguments, the assessee admitted that the assessee is not registered u/s. 12AA Since the assessee applied for registration before the CIT on 06.09.2005 he has neither refused to grant registration nor granted registration, therefore, it would amount to deemed registration granting benefit of deduction provided u/s. 11 - Held that: - Whether the CIT has granted registration or did not refuse to grant registration is an independent and distinct matter from the computation of income on the basis of regular assessment passed by the AO. In section 246A several provisions have been mentioned in which if any order is passed by the Assessing Authority, it would be appealable order before the Commissioner (appeals). No remedy is provided if the CIT did not pass any order u/s. 12AA for filing the appeal before the CIT(A). According to section 253(1)(c), the order passed by the Commissioner u/s. 12AA is appealable before the Appellate Tribunal if the assessee was aggrieved against the order of the CIT u/s. 12AA. It would mean that no remedy lies for grant of registration or refusal to grant registration before the CIT(A). As from the 'Smriti Patra' of the assessee that the assessee did not exist solely for educational purpose and it has other objects also. When the annual receipts exceed Rs. one crore, the approval of prescribed authority is required in the above provisions. In the case of assessee, aggregate annual receipts of the assessee were found exceeding Rs.1,00,00,000/-. As noted above, in the case of assessee, there is neither any registration u/s. 12AA nor is there any evidence to support the case of the assessee that the donations were received with specific direction that it will form part of corpus of the assessee Institution. Therefore, such a benefit could also not be given to the assessee. The CIT(A) on proper appreciation of facts and applying correct law rightly held that the donations were part of the annual receipts of the assessee and shall be treated as income of the assessee finding support from the provisions of section 12(1) - CIT(A) rightly declined benefit of exemption u/s. 10(23C)(iiiad) - against assessee.
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2013 (1) TMI 81
Unexplained investment in immoveable properties - ITAT deleted the addition - order passed by the AO adopting the Fair Market Value - assessee is a Hindu Undivided Family - Held that:- Following the decision in the case of Shri Dinesh Jain Versus DCIT, Central Circle-21, NEW DELHI [2009 (9) TMI 676 - ITAT DELHI] It is undisputed fact that department has not referred any incriminating material having been found during the course of search and investigation made thereafter which indicate that assessee had paid anything more than what has been stated in the sale deeds. It was also not the allegation of the Department that there was any difference in the value of the property as accepted by the Sub Registrar for the purpose of stamp duty valuation. As decided in K P Verghese Vs. ITO [1981 (9) TMI 1 - SUPREME COURT] onus lies on the department to prove that some consideration over and above the consideration stated in the sale deed have been invested, no addition can be made on presumptions and suspicions. As decided in CIT Vs. Ashok Khetrpal [2007 (7) TMI 36 - HIGH COURT , DELHI] by referring to the report of valuation officer in the absence of any incriminating documents found in the course of a search no addition could be made by treating investment as undisclosed on the basis of any DYC’s report - thus CIT(A) in the present case was not justified in estimating the value of the investments in the properties contrary to the amount mentioned in the conveyance deeds. Accordingly, set aside the order of the CIT(Appeals) and direct the AO to accept the value of the properties as declared in sale deeds - in favour of assessee.
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Customs
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2013 (1) TMI 80
Import by Post – Postal import - Exemption of Basic Customs Duty - Section 82 of the Customs Act, 1962 - Notification No. 25/2005-Cus dated 1.3.2005 - Duty as assessed was paid by the respondent - Subsequently, they filed a refund claim stating that the goods were eligible for exemption of BCD - Refund claim was rejected by the original authority on the ground that the original assessment order was not challenged – Held that:- It is clear that the appellant could not have challenged the assessment based on the postal receipt without knowing the details of the assessment. It has not been shown that there was any opportunity given to the addressee of the parcels for claiming benefit of the notification before the assessing authority. The declaration accompanied by the parcel receipt has been treated as Bill of Entry. The postal department had practically undertaken the different roles which are clearly assigned to the custodian, CHA and the Bank, in addition to their normal role of receiving and delivery of the postal parcels. The refund claim filed by the respondent challenging the assessment made and seeking benefit of notification has to be treated both as a challenge to the assessment and as a claim for refund. In favour of assessee
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2013 (1) TMI 79
Suspension of CHA License - Held that:- The enquiry report has been accepted by the Commissioner and he has revoked the suspension of CHA License vide order in original dated 26.4.2012. The said CHA license was suspended vide order dated 08.7.2011. Since the suspension of CHA License has been revoked, no necessity for passing any order in the appeals filed by the assessee on this issue.
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Corporate Laws
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2013 (1) TMI 78
Winding up petition - company-in-liquidation was the lessee under the Corporation, subject to payment of lease rent and other statutory and contractual outgoings - company not clearing their dues with the Corporation - Official Liquidator tried for sale of assets of the company -in-liquidation - Company Judge confirmed the sale in favour of Pollen Laboratories but offer does not match the valuation report - Corporation contested against the sale as lease did not provide liberty to create any sub-lease or power to assign the same - Held that:- The company-in-liquidation was a small scale unit. To support this small scale unit a meagre amount of rent at the rate of Rs. 500/- per month was fixed for a land comprising of about 10 cottahs at the prime location of the city. The terms of the lease as a whole would depict, it was nothing but an incentive to a small-scale unit given at the behest of the Corporation. That facility could not be used for commercial purpose by assigning the same to any outsider. Admittedly, the company-in-liquidation did not have a valid lease on the date of winding up. It was not the case of the Official Liquidator, there was no rent in arrear as on the date of the winding up. Hence, there was no valid lease. Corporation was entitled to repossess the land in question. The sale that was held by His Lordship was for the movable assets and the sheds and structures, belonged to the company-in-liquidation. The company was being sold as a going concern with an undertaking to engage all employees, would mean, the unit was to be run by the new purchaser along with the existing machinery and the workforce. Where it would be run, was the headache of the purchaser. The purchaser might approach the Corporation for a fresh lease. The order of His Lordship might help them to have a fruitful negotiation with the Corporation. If the bid would fail, the purchaser would have to look for a different venue. The order of His Lordship could not be construed to mean, sale as a going concern, would also include the unexpired lease - Corporation being a public sector undertaking should sympathetically consider retention of the unit, provided they make an independently approach to the Corporation for a fresh lease being obtained on such terms and conditions as may be mutually agreed upon. The Corporation should wait for three months to have such approach and to take lawful step to remove the purchaser from the premises and repossess the plots in question, but after observing due process of law.
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2013 (1) TMI 77
Dissolution of the Company - The Company was wound up on 17.09.1999 - no signboard of company name found on registered office & factory premises - Held that:- No useful purpose would be served in keeping the company alive. As per the books of account maintained by the office of Official Liquidator the fund position of the company as on 20.11.2012 is Rs. 89,724/-. As decided in Meghal Homes (P) Limited Vs. Shree Niwas Girni K.K. Samiti & ors. (2007 (8) TMI 447 - SUPREME COURT OF INDIA) when the affairs of the Company had been completely wound up or the Court finds that the Official Liquidator cannot proceed with the winding up of the Company for want of funds or for any other reason, the Court can make an order dissolving the Company from the date of that order. This puts an end to the winding-up process. In view of the this decision and the facts and circumstances of this case, the liquidation proceedings deserve to be brought to an end. The Official Liquidator is permitted to transfer the balance fund i.e. Rs.89,724/available in the Company’s account to the Reserve Bank of India after creating provision for payment of government fee, audit fee and other liquidation expenses. A copy of this order shall be communicated to the Registrar of Companies within 30 days by the Official Liquidator.
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Service Tax
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2013 (1) TMI 93
Rejection of refund claim - Held that:- Tribunal vide order dated 15.5.2012 has set-aside the said orders in appeal which was relied to reject the refund claim and allowed the refund claims filed by the appellant. Thus the base of the first appellate authority to reject the claim has already been decided by this Tribunal in favour of the assessee and hence, these appeals also need to be allowed.
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2013 (1) TMI 92
Short payment of Service Tax - GTA services - period January 2005 to March 2007 - Held that:- This issue needs to be appreciated factually as the first appellate authority has recorded that the appellant has produced challans which were not in respect of the period for which the demand has been raised, while it is the claim of the appellant that they have paid differential Service Tax liability. Since the issue needs to be factually verified and concluded set aside impugned order and remand the matter back to the adjudicating authority to reconsider the issue afresh, after following the principles of natural justice - assessee's appeal allowed by way of remand.
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2013 (1) TMI 91
Condonation of delay of 104 days - petitioner has paid around Rs.68,00,000/- towards service tax and Rs.5,00,000/- towards interest - Held that:- The writ petition is disposed of directing the respondents not to initiate or pursue any coercive steps against the petitioner under Section 87 of the Finance Act, 1994 or any other appropriate provision, till disposal of the petitioner's applications for condonation of delay and for grant of interim relief in the appeal preferred by the petitioner to the Tribunal on 26-9-2012. The Revenue shall however be at liberty to pursue appropriate steps for recovery of the liability as determined in the Order-in-Original dated 30-1-2012 after disposal by the Tribunal of the aforementioned applications of the petitioner.
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Central Excise
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2013 (1) TMI 98
Clearance by 100% EOU to DTA - Without permission - Clearances other than the panel meters such as multimeters, transducers and accessories to the DTA would not be eligible for the benefit of concessional rate of duty under - Notification No. 2 of 1995 dated 4.1.1995 - Held that:- During the pendency of the appeal, the Development Commissioner’s Office clarified that as per the policy all manufactured goods which are exported can be cleared to the DTA to the extent permitted under the policy. In the light of the clarification given by the Development Commissioner, the CESTAT allowed the claim of the Assessee and held that the concessional rate of duty is available in respect of multimeters, insulation testers, transducers, energy meters and electrical / electronics measuring instruments, spares and accessories. Since the decision of the CESTAT is based on the clarification given by the office of the Development Commissioner, no fault can be found with the decision of the CESTAT to the effect that the assessee was entitled to the benefit of the Notification No. 2 of 1995 in respect of multimeters, transducers and accessories, etc. In favour of assessee
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2013 (1) TMI 96
Limit prescribed for preferring the appeal - Refund claim for unutilized CENVAT Credit - Held that:- Since in the instant appeal the amount involved is Rs.1,87,623/- only, in view of the circular dated 20.10.2010, it is below monetary limit prescribed for preferring the appeal. As after circular dated 17.08.2011, no other circular has been issued by the Ministry of Finance, Department of Revenue Central Board of Excise and Customs, Government of India, New Delhi, authorizing the Department to file appeals where the amount is less than Rs. 10 lacs.
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2013 (1) TMI 76
Cenvat credit wrongly availed - whether the damaged parts were put into use or not - assessee contested against invoking extended period of limitation - Held that:- A final claim bill which clearly shows that the appellant informed the Insurance Company that they had availed the cenvat credit on the parts and while settling the claim, the insurance company has specifically disallowed the amount of Rs. 4,00,206/-, treating it as available as cenvat credit. The fact that appellants made claim before the insurance company that they have availed the cenvat credit and they are eligible for the same would show that they apparently entertained belief that they are eligible for the credit in respect of damaged parts. Appellant having not suppressed any fact even before a private party like insurance company it has to be held that appellant had entertained bonafide belief regarding availability of cenvat credit and therefore, extended period is not invokable - in favour of assessee.
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2013 (1) TMI 75
Wrong credit taken based on fake units - manufacturers of Yarn non-existent - provisional invoice - manufacturing premises declared by assessee was not in existence as stated in Panchnama dated 20.7.2005 - Held that:- Both sides could not confirm that there was a statutory requirement during the relevant time for merchant manufacturer to compulsorily declare supporting manufacturer or manufacturing premises. If there was no such requirement, just because respondent declared a premises, it cannot bind for all times to come. If the assessee had chosen to send the Yarn to some other manufacturer and got the grey fabrics manufactured, this should have been examined by the adjudicating authority and considered. Further, the claim of the assessee that cenvat credit was taken on Yarn and not on grey fabrics and therefore, credit taken could not have been denied without showing that manufacturers of Yarn were non-existent is also valid. The assessee had filed stock declaration on 01.4.2003 which was actually that of Polyester Yarn and this also shows that the claim of the respondent that credit was availed on Yarn and not on fabrics, seems to be correct - both the lower authorities have not considered the issue in proper perspective, thus the matter is remanded back to the original adjudicating authority for reconsideration - in favour of assessee for statistical purposes.
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2013 (1) TMI 74
Demand u/s 11D - Levy of penalty u/s 11AC - Charge and collect excise duty without being registered with department - Suppression of facts - Collection of excise duty and not deposit with department - Appellants have paid the entire amount of duty along with interest before adjudication - Held that:- Extent demand has been made only of Rs.69,281/- u/s 11A(1). Rest of the demand has been confirmed u/s 11D. There is no provision either in the Act or in the Rule for imposing of penalty, where demand has been paid u/s 11D. Therefore, penalty can be imposed only on the demand of Rs.69,281/- or u/s 11A(1). Therefore, penalty is restricted to 25% of Rs.69,281/- which is payable by them within 30 days of the communication of this order. In favour of assessee
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2013 (1) TMI 73
Pre-deposit of ₹ 35 lacs for the purposes of hearing the appeal on merits - Held that:- Order directing the petitioner to deposit of ₹ 35 lacs is non-speaking order as it does not consider and/or examine submission made by the petitioner in support of its prima facie case to take a prima facie view. At the time of disposing of the stay application directing the petitioner to deposit or not deposit any amount for the purposes of entertaining the petitioner's appeal on merit, the same is required to be exercised by showing that he has at least prima facie considered the submissions of the parties before him. Merely because the petitioner has not pleaded any financial hardship, it would not follow that the amount of duty and/or penalty adjudicated by the lower authority has to be pre-deposited for the purposes of hearing of the appeal on merits. Thus quash the order dated 18.10.2012 passed by the Commissioner (Appeals) Central Excise, Pune-I and remand the matter to him for fresh disposal of the stay application after considering the submission of the petitioner.
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2013 (1) TMI 72
Credit of service tax paid on services of Customs House Agent/port services - appeal rejected as duty involved in a case is two lacs with equal mandatory penalty - monetary limit for filing appeal in High Court - Held that:- Since in the instant appeal the amount of service tax involved is Rs. 2,02,472/- only and penalty of Rs. 2,02,472/- only. Therefore, in view of the circular dated 17.08.2011, the appeal could not be preferred by the Central Excise and Customs Department before this Court as limit was Rs. 10 lacs. As after circular dated 17.08.2011 no other circular has been issued by the Ministry of Finance, Department of Revenue Central Board of Excise and Customs, Government of India, New Delhi, authorizing the Department to file appeals where the amount is less than Rs. 10 lacs.
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CST, VAT & Sales Tax
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2013 (1) TMI 95
Rejection of application for refund as it was time barred - Refund of excess tax paid than due - Delhi Value Added Tax Act, 2004 – Form DVAT-39 - Delay in filling of refund application - Condonation of delay - Assessee omitted to include the input tax credit in VAT return - Filling an objection under Section 74(1) read with Section 28(2) Held that:- Where self-assessment is made, and upon later reconsideration, the assesse feels that he has deposited excess amount as tax, the only mechanism provided is an objection under Section 28. That can be filed within four years of his filing the return. However, where assessment is completed in other manner, or after notice issued by the concerned authorities, the route prescribed is under Section 74. It is in such cases that there is a shortened limitation period. Furthermore, the nomenclature adopted or the provision of law mentioned in the application would not detract from the remedies available to an applicant in law, or limit him to what he says in the claim. Invariably, applicants are guided by their advice; if that is defective, they cannot be deprived of the remedy. The Objection Hearing Authority (OHA) has to decide the merits of the objections filed by the Petitioner dealer. If it is found that the objections are duly supported by materials, maintained in due course of the business and the claim that the dealer has paid excess VAT is established from such documents, orders relating to the revised return for claiming the refund of the same have to be made in accordance with law. The case is therefore, remanded to the OHA. In favour of assessee
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