TMI Tax Updates - e-Newsletter
November 23, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Taxability of the income gained by the assessee from transfer of the assessee’s right in ‘5 office premises’ - the income accrued to the assessee relating to the above transaction has rightly been assessed by the lower authorities as income from other sources. - AT
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Income Tax:
Deemed dividend u/s Sec.2(22)(e) - The loan account is different from a current account with a shareholder and the transactions between the Assessee and BAPL are in the nature of current account and provisions of Sec.2(22)(e ) of the Act will not be applicable - AT
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Income Tax:
Disallowance u/s 40(a)(ia) - TDS not deducted u/s 194C or 194H - The provisions of section 40(a) (ia) of the Act in any case do not apply, the assessee having not claimed any deduction for any expenses on account of payment - AT
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Income Tax:
Principal requirement for the applicability of Section 41 - whether the assessee must obtain a benefit in respect of a trading liability by way of a remission or cessation thereof? - Held Yes - SC
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Income Tax:
Payment of remuneration made to a retired partner - assessee contended that AO’s observation to the effect that the clause of the partnership deed creating liability to pay certain amount to the retiring partner is “defeating the intention of the legislature” and thus, the clause supersedes the provisions of the Income–tax Act itself, is not only whimsical, but also fanciful; and that there is no basis for this wide sweeping, but wrong observation - Contention accepted - claim allowed - AT
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Income Tax:
Revision u/s 263 - in the very first year of changing of accounting standard, there was a lesser tax liability on the assessee but in the subsequent four years, the tax liability was much higher when the assessee adopted AS-7 as against AS-9 - Notice u/s 263 quashed - AT
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Income Tax:
Addition u/s 69B - claim of long term capital gain exempt from tax - If the Swan Securities Pvt. Ltd. has confidence of recovery of its amount incurred for purchase of shares at the instructions of the assessee, then, merely on account of the reason that payment was outstanding, transaction cannot be doubted. - AT
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Income Tax:
TDS u/s 195 - whether the payments made for acquiring the shrink-wrap Software amounts to royalty u/s 9(1)(vi) and also Indo-Ireland DTAA and, therefore, tax at source required to be deducted as per the provision of sec. 195? - Held Yes - AT
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Income Tax:
Penalty u/s. 271(1)(c) - Auditors report obtained by the assessee cannot override Income Tax provisions and just because the assessee's claim is supported by a chartered accountant's opinion, this fact per se cannot absolve the assessee from penalty under section 271(1)(c). - AT
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Income Tax:
Registration u/ss 12AA(1)b)(ii) and 80(G) denied - In addition to celebrating Dussehra and Ekadashi festivals which are to promote the heritage, culture and festivals of India, it is also engaged in the activity of helping the poor and needy - registration to be allowed - AT
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Income Tax:
Addition made u/s 68 in respect of corpus donation - When the corpus donations received by the assessee is specifically exempted u/s 11(1D) of the Act, Ld. CIT(A) has rightly deleted the addition. - AT
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Income Tax:
The provisions of sections 54 and 54EC of the Act are applicable only in respect of gain arising from transfer of long-term capital asset. In this case, the gain arose from the transfer was short-term capital gain. Therefore, the provisions of sections 54EC and 54 are not applicable at all. - AT
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Customs:
Demand of differential duty - Misdeclaration of goods - adjudicating authority came to the correct conclusion that the investigation has failed to establish the relationship of the seized goods with the goods imported vide three Bills of Entry dated 18.10.2005 and has therefore rightly dropped the proceedings - AT
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Customs:
Classification - Glucose meters are classifiable under heading 90.27 and are eligible for exemption under notification No. 24/05-CUS dated 01.03.2005 - AT
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Indian Laws:
Simply because the exemption earlier granted to power generating companies has been withdrawn so as to subject them to income tax liability under a special provision, cannot lead to any inference as suggested on behalf of the appellant that it is not an income tax but some other tax which is levied under Section 115JB of the Income Tax Act. - SC
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Service Tax:
Demand of service tax - Manpower Recruitment Service or Supply Agency Service - deputation of employees to other company - demand set aside - AT
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Service Tax:
Claim of refund of penalty deposited earlier - it is found that no further tax is found to be recoverable from the respondent assessee - appellant is entitled to the benefit both u/s 73(3) as well as also benefit u/s 73(4A) - refund allowed - AT
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Service Tax:
CENVAT Credit - whether Cenvat credit on the telephone Services, availed at the residences of the senior officers of the appellant, is admissible when such bills are paid by the appellant - Held Yes - AT
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Service Tax:
Denial of CENVAT Credit - credit of service tax paid on the insurance premium for the policy taken for stocks lying in the foreign warehouses allowed - AT
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Service Tax:
Whether the appellant is eligible to avail CENVAT credit of the service tax paid on insurance premium to the Insurance Company for Group Insurance and medi-claim policies taken for existing employees as well as for the retired employees - Held Yes - AT
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Central Excise:
Valuation of goods - whether the amount collected by the respondent assessee @ 1% on the invoice value, as incentive, is includible in the value of goods on payment of central excise duty - Held No - SC
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Central Excise:
Classification of goods - jute products or products of plastic - Product which is floor covering is made of jute and plastic coating is applied thereupon - the product is a floor covering with jute as its base - SC
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Central Excise:
Classification of goods - three wheeled tractor which are known as “Auto Track and semi-trailer” - classification under Chapter Heading 87.01 and not under heading 84.04 upheld - SC
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Central Excise:
Mandatory pre deposit - As the amended Section 35F has a retrospective operation and none of the petitioners herein has filed an appeal prior to 6/8/2014 before the appellate authority or if the appeal has been preferred subsequently has not deposited the requisite predeposit before the appellate authority, as the case may be, they are required to comply with the conditions of the amended Section 35F - HC
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Central Excise:
Adjustment of excess paid duty with the short paid duty - the duty excess paid by the appellant is more than the duty short paid by the appellant. Therefore, appellant is not required to pay any duty. Consequently, interest is not payable - AT
Articles
Notifications
Customs-
52/2015 - dated
20-11-2015
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Cus
Seeks to further amend Notification No 12/2012 -Customs dated 17.03.2012 so as to withdraw the TRQ of 15,000 MT for total imports of white butter, butter oil and anhydrous milk fat(AMF) at Nil import duty by omitting the said entry(S.No.9)
Income Tax-
S.O. 3074(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Jagadguru Rambhadracharya Handicapped University, Uttar Pradesh
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S.O. 3073(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Jamia Islamia Ishaatul Uloom, Maharashtra
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S.O. 3072(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Jamiah Uloomul Quran, Bharuch, Gujarat
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S.O. 3071(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Social Service Centre, Chennai
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S.O. 3070(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Jamia Islamia Ishaatul Uloom, Maharashtra
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S.O. 3069(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Chinmaya Organisation for rural Development (CORD), New Delhi
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S.O. 3068(E) - dated
10-11-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Vedanta Foundation, Mumbai
Indian Laws-
F. No.9/1/2015-CS - dated
17-11-2015
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Indian Law
Central Government appoints Shri Rajeev Kher, as Member of the Competition Appellate Tribunal with effect from the 28th September, 2015
News
Case Laws:
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Income Tax
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2015 (11) TMI 1013
Disallowance u/s. 14A - Held that:- We find that the assessee is in the business of share broking and share trading activity. Earning of dividend income is incidental to such business activity and whatever expenditure is incurred i.e. for the business. The assessee has earned total dividend income during the year under consideration at ₹ 2,72,349/- out of the total income declared at ₹ 15,39,12,042/-, which is a meagre 0.18% of the total income. Further, we have noticed from the assessment order that the AO has not recorded any satisfaction for application of the provisions of section 14A of the Act read with Rule 8D of the Rules. In fact, there is no whisper of any satisfaction in the assessment order that the provisions of section 14A of the Act are applicable. We find that the AO made disallowance mechanically calculating the figures solely on the basis of Rule 8D of the Rules. Here, the coordinate Bench of ITAT in the case of REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] has held that for applicability of Rule 8D of the Rules, satisfaction of the AO about the correctness of the accounts of the assessee is necessary - Decided in favour of assessee. Disallowance in respect to those unsold shares which have yielded dividend - Held that: - As the assessee undisputedly dealing in the shares and securities as admitted by AO itself while mentioning the nature of business as “dealing in shares and securities”. This earning of dividend on such shares is merely incidental to such business activities. Accordingly, on this aspect also the assessee succeeds. Hence, this issue of assessee’s CO is allowed and revenue’s ground is dismissed. - Decided in favour of assessee. Rebate u/s. 88E - CIT(A) restricted the rebate - whether the rebate u/s. 88E of the I. T. Act should be allowed after allocating expenses and after deducting the full amount of the STT paid? - Held that:- CIT(A) required the assessee to give calculation of the turnover in different business segments and found that the turnover of share business segment to the gross turnover was 5.87% under the head own business turnover in term of % of total turnover. Therefore CIT(A) apportioned the expenses on share segments and some of the expenses were apportioned @ 5.87% and some of the expenses i.e. balance other expenses on income basis as per calculation ‘c’ @68.83%. We find that revenue has not disputed the proportionate determination on turnover basis but has contested the AO’s method to bifurcate the expenses on proportionate of income basis. According to assessee, all the expenses should bifurcated in proportion to turnover of share business segment to the gross turnover. We find that qua the expenses, the plea of the assessee that all the expenses should be bifurcated in proportion to turnover of share business segment to that of the gross turnover is quite reasonable. Therefore, the part of the expenses, which were bifurcated by the CIT(A) on income basis is directed to be determined on the basis of percentage of turnover of own business @ 5.87%. - Decided in favour of assessee
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2015 (11) TMI 1012
Penalty u/s 271(1)(c) - additional income surrendered - Held that:- Under the present facts, the Assessing Officer has accepted the bifurcation of income, which was voluntarily surrendered by the assessee vide letter dated 30/05/2011. The foundation of satisfaction, arrived at by the Assessing Officer, is based upon the disclosure of additional income, which was pursuant to search action upon Ispat Group, thus, the allegation are based upon that group and nowhere it has been mentioned in the assessment order/penalty order that the assessee concealed its income or furnished inaccurate particular of such income. The additional income was offered by the assessee to buy peace with the department and further subject to the understanding that no penal proceeding will be initiated against the assessee in connection with the seized material, therefore, we find that the assessee has clearly demonstrated its intention/understanding with the department that conditional additional income was offered by the assessee, as discussed hereinabove. In view of the facts and the aforesaid documentary evidence, we are of the considered opinion that it is a fit case, where the penalty has to be deleted, thus, we find merit in the appeals of the assessee and direct the ld. Assessing Officer to delete the penalty imposed u/s 271(1)(c) of the Act, consequently, the appeals of the assessee are allowed. - Decided in favour of assessee.
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2015 (11) TMI 1011
Entitlement for benefit of section 10B - Held that:- Identical issue was examined by the Hon'ble High Court in earlier assessment year, in which it has been categorically held that the assessee is a manufacturer and is entitled for benefit of section 10B of the Income-tax Act, 1961 - Decided in favour of assessee. Disallowance of interest incurred on investment in shares of foreign companies - CIT(A) deleted the addition - Held that:- CIT(A) has deleted the disallowance made under section 14A of the Act having invoked rule 8D(2) of the Rules on the ground that the assessee was having sufficient surplus fund. Therefore, no disallowance under section 14A of the Act is called for. The Revenue has preferred an appeal against the order of the ld. CIT(A) on different grounds, but deletion of disallowance was not challenged before the Tribunal. Therefore, the order of the ld. CIT(A) has attained the finality and in the instant assessment year, the ld. CIT(A) has simply followed his aforesaid order. Therefore, we are of the view that once the Revenue has accepted the contention of the assessee with regard to the availability of surplus funds for investment in domestic companies, no further disallowance can be made in succeeding years. We accordingly confirm the order of the ld. CIT(A) on this issue. - Decided in favour of assessee. Disallowance under section 35D - CIT(A) deleted the disallowance -Held that:- A similar disallowance was made by the Assessing Officer in assessment year 2009-10, but it was deleted by the ld. CIT(A) and the Assessing Officer in the impugned assessment year has also made disallowance following his earlier order for assessment year 2009-10 and the same was deleted by the ld. CIT(A) following his order for assessment year 2009-10 which attained finality, as the Revenue has not challenged the findings of the ld. CIT(A) in this regard before the Tribunal though an appeal was filed on different grounds. Under these circumstances, we are of the view that the ld. CIT(A) has decided the issue following his earlier order which attained the finality - Decided in favour of assessee. Disallowance payment of bonus - CIT(A) deleted the disallowance - Held that:- Now the Revenue is in appeal before the Tribunal, but could not point out any specific defect in the order of the ld. CIT(A). Since payment of bonus was made in time, no disallowance is called for, as the Assessing Officer has made disallowance without pointing out any defect. - Decided in favour of assessee.
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2015 (11) TMI 1010
Taxability of the income gained by the assessee from transfer of the assessee’s right in ‘5 office premises’ - whether the same are to be assessed under the head ‘Long Term Capital Gains’ or as ‘Income from Other Sources’? - Held that:- In the case in hand neither the property in question i.e. the so called ‘office premises’ was in existence nor its building plan or specifications were approved from the Municipal Corporation and neither any construction activity or commencement of the project had started. There is no document on the file which may suggest that there was even very likelihood of the alleged property coming into existence in the near future giving any right to the seller to sale any interest in the same or any accrual of right in favour of the intending purchaser. Coming to the sale of the said rights. The excuse given by the assessee was that since he was not involved in any activity of information technology, hence the offices be sold to the another party. As observed above, the fact that the said office premises alleged to be allotted to the assessee could be used only for activity of information technology was very much in the knowledge of the assessee on the date of making the payment i.e. on 02.09.05 and even on 04.08.06 when the subsequent allotment letter was issued. The assessee did not revert back to the builder that since he was not in the activity of information technology, hence his principal amount be refunded. The facts itself speak that the assessee had advanced the money to the builder to make quick profits either by way of interest or by way of share in the profits which the builder may gain by selling the properties. The assessee neither executed any conveyance deed nor had been consenting party to any deed for conveyance executed between the builder and the actual purchaser of the property. The possession and ownership of the offices in question always remained with the builder. The assessee had been offered the amount of interest/profit on the finances provided by the assessee to the builder. Under such circumstances, the income accrued to the assessee relating to the above transaction has rightly been assessed by the lower authorities as income from other sources. We do not find any infirmity in the order of the Ld. CIT(A) in this respect and the same is therefore upheld. - Decided against assessee.
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2015 (11) TMI 1009
Deemed dividend u/s Sec.2(22)(e) - BAPL gave money to the Assessee and was of the view that the same was “Loan or Advance” within the meaning of Sec.2(22)(e) of the Act by a company (BAPL) to a person who holds substantial interest in the company (BAPL) and had to be brought to tax as deemed dividend to the extent the company possesses accumulated profits - CIT(A) deleted the addition - Held that:- In the present case the transactions in question does not benefit the shareholder i.e., the Assessee alone and the results in no benefit to the Company BAPL. The loan account is different from a current account with a shareholder and the transactions between the Assessee and BAPL are in the nature of current account and provisions of Sec.2(22)(e ) of the Act will not be applicable to the case of the Assessee. We therefore concur with the decision of the CIT(A) and dismiss the appeal of the Revenue. - Decided in favour of assessee.
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2015 (11) TMI 1008
Deduction in respect of PF & ESI payments - CIT(A) allowed the claim - Held that:- Once the issue is decided by Hon’ble jurisdictional High Court in the case of Vijay Shree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] where in it is held that the PF & ESI are paid on or before the due date of filing of return u/s. 139(1) of the Act, deduction in respect to the amount on which PF &ESI is so paid, is allowable. In the present case the assessee has paid the PF deducted on account of employees’ contribution before due date of filing of return u/s. 139(1) of the Act, hence, we dismiss this ground of appeal of revenue. Disallowance of puja expenses and temple expenses as business expenses - Held that:- The puja expense incurred on occasion of Diwali and Mahurat are customary expenses and going by the turnover of the assessee-company and the nature of the business of the assessee, we feel that these are incurred for the harmony of the assessee-company’s employees and these are for the purpose of business. Similar are the reasons for incurring temple expense. - Decided in favour of assessee. Addition made on account of cess on green leaf - CIT(A) allowed claim - Held that:- This issue is covered by the decision of Hon’ble jurisdictional High Court in the case of AFT Industries Ltd. V. CIT (2004 (7) TMI 81 - CALCUTTA High Court ), wherein it has been decided by Hon’ble jurisdictional High Court that cess on green leaf is a normal business expenditure and once the Hon’ble jurisdictional High Court decides the issue in favour of assessee, same is covered - Decided in favour of assessee. Non-deduction of TDS on expenses of commission payment u/s. 195(1) - CIT(A) allowed claim - Held that:- Considering the Assessee's claim that the commission paid to foreign agents, who are not having permanent establishment business place in India and they are providing services outside India and even the payment is directly made outside India in foreign exchange. Assessee's income does not accrue or arise in India and once income does not accrue or arise in India, the assessee is not liable to deduct TDS on foreign payments. - Decided in favour of assessee. Deduction of wealth tax while computing book profit u/s. 115JB - Held that:- No infirmity in the order of CIT(A) as he allowed the claim of assessee - Decided in favour of assessee. Disallowance of bad debt - CIT(A) allowed the claim - Held that:- after 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. See TRF Ltd. Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] - Decided in favour of assessee. Disallowance of Nursery Expenses - Held that:- The assessee has incurred expenditure for re-plantation in the existing area and plants grown in the nursery were used for replacement of dead plants within the plantation area. This fact has not been denied by revenue before CIT(A) or before us now. The AO also noted that this is re-plantation in the existing area and replacement of dead plants but by going through the volume of expenditure he made disallowance. Hon’ble Calcutta High Court in the case of Tasati Tea Ltd. [2003 (2) TMI 42 - CALCUTTA High Court] has considered the issue and allowed the claim of replacement of plants in existing area against dead plants - Decided in favour of assessee. Allow TDS and Advance Tax as per assessee’s claim - Held that:- CIT(A) has directed the AO to verify the TDS and advance tax challans, and accordingly allowed the claim of the assessee, and hence, revenue cannot be aggrieved on this count. Accordingly, we confirm the order of CIT(A) and this issue of revenue’s appeal is dismissed.- Decided in favour of assessee.
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2015 (11) TMI 1007
Disallowance u/s 40(a)(ia) - payment made to the consolidator for transfer of rights - TDS on amount paid to the consolidator u/s 194C or 194H - Held that:- Almost 2% of the sale value was being paid by the assessee to Vikram Electric Equipment P. Ltd. as consideration for transferring Vikram Electric Equipment P. Ltd.’s rights. This was in terms of the afore-mentioned clause 3.2. of the MOU between the assessee and Vikram Electric Equipment P. Ltd. It has not been shown if such payment is not a fair compensation paid by the assessee to Vikram Electric Equipment P. Ltd. which, anyhow, is not an impediment in holding, as above, that the transactions between the assessee and Vikram Electric Equipment P. Ltd. are on a principle to principle basis, not attracting the provisions of section 194 H of the Act. Pertinently, no addition having been made for the year by the AO, the alternate contention of the assessee to the effect that no addition can be made during the year, stands accepted by both the Authorities below. The provisions of section 40(a) (ia) of the Act in any case do not apply, the assessee having not claimed any deduction for any expenses on account of payment to Vikram Electric Equipment P. Ltd. either in its profit and loss account or in the computation of taxable income filed. It was only that the AO recorded a loss of ₹ 19,700/-. This obviously, did not include any addition of either ₹ 4.02 crores or ₹ 1.24 crores. - Decided in favour of assessee.
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2015 (11) TMI 1006
Penalty u/s 271E - whether penalty order is barred by limitation - Held that:- penalty order is time barred in the present case on the expiry of six months from the end of the month in which the action for penalty is initiated. In the facts of the present case, the date of reference by the Assessing Officer to Addl. C.I.T. for imposition of penalty is 21/10/2010 and if the period of six months is counted from 31.10.2010, the same expires on 30/06/2011 and the penalty order has been passed on 28th July, 2011 and hence, the penalty order is time barred as per the provisions of section 275 of the Act. - Decided in favour of assessee.
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2015 (11) TMI 1004
Principal requirement for the applicability of Section 41 - whether the assessee must obtain a benefit in respect of a trading liability by way of a remission or cessation thereof? - Held that:- The assessee had not been granted the benefit of the said cessation for the Assessment Years in question, the High Court [2010 (6) TMI 18 - BOMBAY HIGH COURT] has rightly held that one of the requirements for the applicability of Section 41(1)(a) of the Act had not been fulfilled in the present case. - Decided in favour of assessee.
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2015 (11) TMI 1003
Computation of capital gain - Transfer exigible to tax by reference to Section 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882 - JDA entered by assessee - Whether there was grant and assignment of various rights in the property by the appellant in favour of THDC alongwith handing over physical and vacant possession, the same tantamount to “transfer”? - Held that:- The issues involved in this appeal have already been decided by this Court in C.S.Atwal's case (2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT ) wherein it was concluded as under: Perusal of the JDA dated 25.2.2007 read with sale deeds dated 2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that the parties had agreed for pro-rata transfer of land. No possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.2.2007 so as to fall within the domain of Section 53A of 1882 Act. The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA dated 25.2.2007 having been executed after 24.9.2001, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply. In view of cancellation of JDA dated 25.2.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals are allowed.
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2015 (11) TMI 1002
Disallowance of claim under Section 80P(2)(a)(iii) - Held that:- The Tribunal had relied upon the decision of this Court in the case of Karnal Cooperative Sugar Mills Ltd's case (2001 (9) TMI 78 - PUNJAB AND HARYANA High Court) to deny the benefit of deduction under Section 80P(2)(a)(iii) of the Act to the assessee. However, Full Bench of this Court in The Budhewal Co-op. Sugar Mills Ltd's case (2009 (5) TMI 63 - PUNJAB AND HARYANA HIGH COURT) had overruled the said judgment against which the Supreme Court in Deputy Commissioner of Income-Tax v. Budhewal Co-operative Sugar Mills Ltd. (2015 (8) TMI 520 - SUPREME COURT) following its judgment in Morinda Co-operative Sugar Mills Ltd. v. Commissioner of Income Tax (2012 (9) TMI 847 - SUPREME COURT ) remanded the matter back for adjudicating the issue afresh. Thus the matter is remitted to the Tribunal to adjudicate the issue afresh in accordance with law after affording an opportunity of hearing to the parties. The appeals stand disposed of accordingly.
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2015 (11) TMI 1001
Entitlement to claim deduction under Section 80IC(4) - non placing on record any documents in support of his claim by assessee that the imported machines had not been used in India, especially since the machines were purchased by the assessee 7 months after their import - Held that:- A s held by Tribunal, being final fact finding authorities, find no force in the submissions of the Ld. DR that documents were not filed before the Assessing Officer. The reading of the assessment order for assessment year 2006-07 clearly show that documents were filed before the Assessing Officer also. - Decided in favour of assessee.
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2015 (11) TMI 1000
Exemption under Section 54 - tribunal has allowed relief by following its own decision in the case of J.K. Madan Vs. Income Tax Officer [2012 (5) TMI 316 - ITAT MUMBAI] i.e. the same building and identical agreement as the respondent-asseessee with the builder - Held that:- Revenue informs us that no appeal has been filed in the case of J.K. Madan(supra) in view of the low tax effect. However on reading of the order passed in the case of J.K. Madan (supra), it appears that the amount in dispute therein was a capital gain computed at ₹ 55.91 lakhs after deducting the indexed cost of acquisition from the sale consideration. Merely stating that the tax effect was low in an earlier order resulting in not filing of an appeal across the bar, without the same being specifically put in affidavit or in the appeal memo cannot be accepted. This manner of filing of appeals enables the revenue to pick and choose orders from which appeals are preferred and from which the appeals are not preferred rendering to a naught equal application of law on all. Thus unless in the appeal memo or in an affidavit filed before/at the hearing of the appeal for admission, the officer of Revenue should set out the reasons why the ratio of earlier orders is inapplicable in the present facts, the appeal itself will not be entertained. At this, Mr. Ahuja seeks four weeks time to take instructions and file an appropriate affidavit.
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2015 (11) TMI 999
Transfer of development rights - receipt of advance - whether could be treated as sale consideration in the circumstances of the case? - Held that:- In the instant case, since no sale occurred, no income can be said to have accrued to the assessee.The assessee's submission that sale is deemed to have taken place when proper conveyance is executed, in the circumstances is sound. In the absence of any sale, the revenue’s attempt to bring to tax the advances received by the assessee must also fail, given that such advances were not towards any income that the assessee was entitled to receive in the two assessment years. See CIT(a) v/s DLF Commercial Project Corporation [2015 (7) TMI 576 - DELHI HIGH COURT] - Decided against revenue. Non-deduction of TDS on the payments made on reimbursement of service charges - Disalllowance u/s 40(a)(ia) - Held that:- In the instant case, it is undisputed that M/s DLF Land Ltd. had deducted TDS on the payments made by it under various heads on behalf of the assessee. Further, it is also not disputed that the assessee deducted TDS on the service charge paid by it to M/s DLF Land Ltd. on the reimbursement expenses. In such circumstances, this Court holds that the entire amount paid by the assessee to M/s DLF Land Ltd. is entitled to deduction as expenditure. Neither provision obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than what is defined as "income". The law thus obliges only amounts which fulfil the character of "income" to be subject to TDS in such cases; for other payments towards expenses, the deduction to those entitled (to be made by the payeee) the obligation to carry out TDS is upon the recipient or payee of the amounts. See Commissioner of Income Tax-III v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2014 (4) TMI 235 - GUJARAT HIGH COURT )- See CIT(a) v/s DLF Commercial Project Corporation [2015 (7) TMI 576 - DELHI HIGH COURT]- Decided against revenue.
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2015 (11) TMI 998
Disallowance u/s.40A(3) - Held that:- Since in the instant case, there is nothing on record to suggest that any material was unearthed during the search or in 153A proceeding which would show that non-disallowance u/s.41(1) was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO. Addition u/s.69B - bogus claim of expenses in the name of labour contractors - CIT(A) delted the addition - Held that:- There is no dispute to the fact that the assessment in the instant case was completed u/s.143(3) prior to the date of search and the investment in purchase of lands were already declared in such return. No incriminating material whatsoever was found during the course of search to substantiate that unaccounted investment has been made by the assessee towards purchase of the lands. The addition was mainly based on the valuation report of the DVO. The Hon’ble Delhi High Court in the case of Puneet Sabharwal (2010 (12) TMI 846 - Delhi High Court) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. Further, the contention of the assessee before the AO as well as the CIT(A) that the agreements for purchase of lands were entered in the year 1996 and 2002 and the possession was also taken prior to 2004- 05 could not be controverted by the Ld. Departmental Representative. Under these circumstances, we find merit in the submission of the Ld. Counsel for the assessee that the DVO has erred in taking the sale instances of the year 2005 instead of taking comparable sale instances of 1996 and 2002. There is also nothing on record to indicate that land was undervalued. Under these circumstances we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO u/s.69B of the I.T. Act. - Decided in favour of assessee. Depreciation on windmill and MEDA charges - Held that:- the issue stands decided against the assessee by the decision of the Tribunal in the case of J-Sons Foundry Pvt. Ltd. [2015 (11) TMI 922 - ITAT PUNE] allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. - Decided in favour of revenue. Addition on account of cessation of liability u/s. 41(1) in respect of creditors outstanding for a period of more than three years - Held that:- No reason to hold that the liability has ceased in the hands of the assessee and such amount of old creditors constitute income u/s.41(1).- Decided in favour of assessee. Compensation received from Suzlon Energy Ltd.- whether taxable as a revenue receipt in the hands of the assessee? - Held that:- Since the compensation of ₹ 40 lakhs received by the assessee from M/s. Suzlon Energy Ltd. was for delay in executing the project, therefore, respectfully following the decision of Hon’ble Supreme Court in the case of Saurashtra Cement Ltd. ( 2010 (7) TMI 11 - SUPREME COURT ), we hold that the amount received by the assessee is capital in nature Interest u/s 234A - Held that:- Once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1). Therefore, the authorities below are not justified in levying interest u/s.234A of the I.T. Act for a period from 31-10-2009 to 20-07-2010. The ground raised by the assessee is accordingly allowed.- Decided in favour of assessee. Rework the interest chargeable u/s.234B and 234C on the balance tax liability - Held that:- AO appropriated the seized cash for adjustment against tax liability in the month of March 2011. We find the CIT(A) directed the AO to give credit for such cash seized w.e.f. 30-03-2010. We find no infirmity in the order of the CIT(A) since the assessee vide letter dated 30-03-2010 had requested the AO adjust such seized cash as self assessment tax. Until and unless the assessee makes a specific request, the AO is not duty bound to appropriate such tax either towards advance tax or towards self assessment tax. He can only adjust such seized cash from the tax determined after completion of assessment. Since in the instant case, the assessee vide letter dated 30-03-2010 only has requested the AO to adjust such seized cash towards self assessment tax for A.Y. 2009-10 and since the CIT(A) has accepted this plea of the assessee, therefore, we find there should not be any grievance on the part of the assessee. Unexplained business expenses in respect of Ghodzari Project - Held that:- CIT(A) allowed the claim of the assessee on the ground that an amount of ₹ 21.92 crores has already been considered in the hands of Mahalaxmi Infraprojects Ltd. on account of Ghodzari project which includes the amount of ₹ 1.4735 crores (Not ₹ 1.50 crores). Therefore, making addition of this amount in the hands of the assessee will amount to double taxation. We do not find any infirmity in the order of the CIT(A). The assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. However, if the assessee has paid more tax then the income that was returned then the excess tax to be refunded. We therefore, are of the considered opinion that the said decision is distinguishable and not applicable to the facts of the present case. The various other decisions relied on by the Ld. Departmental Representative are also not applicable to the facts of the present case. Therefore, this argument of the Ld. Departmental Representative is also without any force. In this view of the matter the ground raised by the Revenue is dismissed.
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2015 (11) TMI 997
Disallowance of depreciation on tenancy rights - Held that:- Since the Tribunal has consistently decided this issue against the assessee over the years and none of the orders of the Tribunal has been shown to have been either reversed or stayed on appeal, respectfully following the said earlier Tribunal orders, this issue is decided against the assessee for the year under consideration confirming the disallowance made by the AO on account of assessee’s claim for depreciation on tenancy rights - Decided against assessee. Addition of payment (remuneration) made to a retired partner - assessee contended that AO’s observation to the effect that the clause of the partnership deed creating liability to pay certain amount to the retiring partner is “defeating the intention of the legislature” and thus, the clause supersedes the provisions of the Income–tax Act itself, is not only whimsical, but also fanciful; and that there is no basis for this wide sweeping, but wrong observation. - Held that:- Apropos the applicability or otherwise of section 40(b) of the Act to the facts of the year under consideration, it cannot be disputed that the amount in question is not at all income of the firm, having been diverted by the overriding title of the charge stipulated by the relevant clauses of the partnership deed. - Decided in favor of assessee. Disallowance made u/s 14A read with Rule 8D - Held that:- The assessee’s argument of non-applicability of Rule 8D of the Rules to the year under consideration notwithstanding, it cannot be gain-said that the AO has reasonably calculated the disallowance. Finding no error therein, the action of the ld. CIT(A) in confirming this disallowance is upheld.- Decided against assessee. Addition being payment made to the legal heirs of a deceased partner, Sh. Anand Bhatt - Held that:- In the present case, the partnership deed nowhere stipulated that the amount to be paid was to be paid by way of the price of the share of the outgoing partner in the partnership. This is the material point of difference between the facts herein and those attending “V.G. Bhuta” (1993 (3) TMI 79 - BOMBAY High Court). The Ld. CIT(A) correctly confirmed the addition. - Decided against assessee.
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2015 (11) TMI 996
Deduction u/s 80IA(4) - whether the container freight station of the assessee is an inland port for the purposes of deduction u/s 80IA(4) ? - Held that:- The provisions of section 80IA(4), CBDT Circular, reply of the assessee dated 27/12/2011 mentioning CBDT Circular dated 23/06/2000 and 16/12/2005. Circular dated 16/12/2005 has done away with the requirement of agreement and the said circular was discussed by their lordship of the Hon’ble jurisdictional High Court in the case of CIT vs ABG Heavy Industries Ltd (2010 (2) TMI 108 - BOMBAY HIGH COURT). The Bench finally concluded that the claimed deduction cannot be denied to the assessee. So far as, contention of the ld. DR that the decision in the case of AlL Cargo Global Logistic Ltd. vs DCIT (2012 (7) TMI 222 - ITAT MUMBAI(SB)) has not been accepted by the department and appeal has been preferred before the Hon’ble High Court, we not that the decision of the Special Bench (aforementioned) has been affirmed by Hon’ble jurisdictional High Court in CIT vs Continental Warehousing Corporation and All Cargo Global Logistic Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) by following Container Corporation of India Ltd. vs ACIT (2012 (5) TMI 260 - DELHI HIGH COURT) wherein held having regard to the provisions of the Customs Act, the communications issued by the CBEC as well as the Ministry of Commerce and Industry, the object of including "inland port" as an infrastructure facility and also having regard to the fact that customs clearance also takes place in the ICD, the assessee's claim that the ICDs are Inland Ports under Explanation (d) of Section 80IA(4) requires to be upheld. - Decided in favor of assessee.
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2015 (11) TMI 995
Disallowance of bad debts - Held that:- Assessee had reversed the entry with regard to the amount written off during the year i.e.it had brought the amount in question under the head bad debts from the head provision for bad debts.The FAA without considering the above argument had decided the issue.Therefore,in the interest of justice we are remitting back the matter to the file of the FAA for verification purposes.He would allow the claim of the assessee with regard to the bad debts written off during the year under appeal amounting to ₹ 69.45 lakhs,if same have been transferred from the provisions of bad debts to bad debts - Decided in favour of assessee in part. Addition on account of change in the method of accounting - Held that:- In the case under appeal the assessee had changed method of accounting deferring more than 75% of its revenue to future period perpetually. Such a change in our opinion is not a bona fide change. With regard to other cases relied upon we find that the F AA has thoroughly distinguished them and has given a finding that facts of the case under consideration are different from those cases.We agree with him.Therefore,we hold that the order of the F AA does not suffer from any legal or factual infirmity. Thus confirming FAAs order - Decided against the assessee. While determining the income of an assessee for a particular income all the necessary facts have to considered. Income offered by an assessee cannot be taxed twice i.e.same income cannot be taxed in two A Y.s.Seocndly,if the assessee has offered portion of its income for taxation then while determining the total income for that year such income it has to be taken in to consideration. The claim made by the assessee has to be verified in light of the above observations. Decided in favour of the assessee in part. TPA - AO held that the royalty should not be allowed to be written off to the extent of the unpaid invoices during the year itself - Held that:- Such cases ought to be dealt with on the basis that no sales had occurred and that therefore, there was no question of payment of any royalty to that extent, as the payments were not received by the respondent and were written off in its books of account had not paid for the same, it would make no difference to the determination of the Arm's Length Price of the transaction. Once it is accepted that the ALP of the royalty is justified, there can be no reduction in the value thereof on account of the assessee's customers failing to pay the assessee for the product purchased by them from the assessee. Absent a contract to the contrary, the vendor or licensor is not concerned with whether its purchaser / licensee recovers its price from its clients to which it has in turn sold / licensed such products. The two are distinct, unconnected transactions. The purchaser's / licensee's obligation to pay the consideration under its transaction with its vendor / licensor is not dependent upon its recovering the price of the products from its clients. - Decided in favour of the respondent - assessee.
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2015 (11) TMI 994
Revision u/s 263 - change of accounting policy and standard as assessee started following AS-7 - Held that:- The assessee is following AS-7 not only in the Assessment Year under consideration viz. 2007-08, but the same was consistently followed in the subsequent Assessment Years for recognising revenue from Engineering Business Segment wherein the assessee company has followed percentage completion method as prescribed under AS-7 issued by ICAI for the accounting of contractors. At the cost of repetition, we may also point out that the assessee furnished letters dated 20.10.09 and 30.10.09 showing the cause of change of method of recognition of deferred revenue as per AS-7 instead of AS-9 along with detailed contract wise working which was considered by the Assessing Officer while passing the impugned assessment order. It is also pertinent to mention that there was a specific query from the Assessing Officer during assessment proceedings vide order sheet entry dated 20.10.09 and the same was replied by the assessee by filing two letters viz. first on 20.10.09 and 30.10.09 along with relevant details. As we have already noted that the assessee filed tabulation chart showing taxable income and tax effect due to change of accounting policy and standard (assessee's Paper Book page no. 11) wherein it is amply clear that tax surcharge and EC as per AS-7 was calculated at ₹ 8,34,63,477 and tax surcharge and EC payable as per AS-9 was ₹ 12,37,91,145 and in the very first year, the assessee changed its method of accounting from AS-9 to AS-7, there was an amount of refund of ₹ 4,03,27,668. At the same time, from the said tabulation chart we further observe that in subsequent Assessment Year from 2008-09 to 2011-12 the assessee was under obligation to pay higher amount of tax, surcharge and EC by following AS-7 instead of AS-9, therefore, in the totality of the facts and circumstances, it cannot be held that the assessee changed its method of accounting from AS-7 to AS-9 with an intention to avoid tax liability and therefore this resulted into lowering of profits. However, as we have already pointed out that in the very first year of changing of accounting standard, there was a lesser tax liability on the assessee but in the subsequent four years, the tax liability was much higher when the assessee adopted AS-7 as against AS-9. - Decided in favour of assessee.
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2015 (11) TMI 993
Assessment under section 153A - assessment of HUF - Held that:- Name of the HUF, who is separate taxable entity, is no where available in the Panchnama. It is also pertinent to note that all the members of the HUF were not covered under the search action. In section 153A, nowhere it has been provided that if the search is conducted on the partners, in their individual cases, then the firm would automatically deem to have been covered under search action. Similarly, there cannot be any implied search action on the HUF merely on the ground that some of the individual members of the HUF were covered under the search action. For invoking jurisdiction, there cannot be any implied operation of law. It should be specific and direct. Thus, no search was conducted on the HUF, and therefore, no order under section 153A ought to be passed. - Decided in favour of assessee. Addition under section 69B - claim of long term capital gain exempt from tax rejected - Held that:- Once the assessee has been pleaded that it has made purchase of shares through Swan Securities Pvt. Ltd. and Swan Securities Pvt. Ltd. has trust in the assessee of payment, then actual payment not made before 31st March would not create any dent in the transaction of the assessee. The ld.AO failed to point out any defect in the confirmation of Swan Securities Pvt. Ltd. or any documents furnished to him in response to his query under section 133(6) of the Act. The shares have actually been sold by the assessee. It means it must have been purchased. The purchase and sale both happen before the date of search. There cannot be any specific reason for the assessee to make such a claim after the search, because nothing discriminatory qua this transaction was found. If the Swan Securities Pvt. Ltd. has confidence of recovery of its amount incurred for purchase of shares at the instructions of the assessee, then, merely on account of the reason that payment was outstanding, transaction cannot be doubted. The payment has been subsequently made reflects the relationship between Swan Securities Pvt. Ltd. and the assessee. - Decided in favour of assessee.
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2015 (11) TMI 992
TDS u/s 195 - whether the payments made for acquiring the shrink-wrap Software amounts to royalty u/s 9(1)(vi) and also Indo-Ireland DTAA and, therefore, tax at source required to be deducted as per the provision of sec. 195? - Held that:- Respectfully following the decision of the Hon’ble Karnataka High Court in the case of Samsung Electronics Co. Ltd., (2011 (10) TMI 195 - KARNATAKA HIGH COURT ) and also decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case [2015 (11) TMI 923 - ITAT BANGALORE] we are of the opinion that the contentions raised by the assessee are not acceptable for the reason that the payment in question was consideration for the right to use copy right shrink-wrap software amounts to royalty within the meaning of sec. 9(1)(vi) of the Act and also Art 12 of the Indo- Ireland DTAA, therefore, grounds raised by the assessee are dismissed. In any view of the matter, in view of the provisions of section 90 of the Act, agreements with foreign countries DTAA would override the provisions of the Act. Once it is held that payment made by the respondents to the nonresident companies would amount to "royalty" within the meaning of article 12 of the DTAA with the respective country, it is clear that the payment made by the respondents to the non-resident supplier would amount to royalty. In view of the said finding, it is clear that there is obligation on the part of the respondents to deduct tax at source under section 195 of the Act and consequences would follow - Decided against assessee.
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2015 (11) TMI 991
Penalty u/s. 271(1)(c) - disallowance of the loss claimed - Held that:- A plain look at the profit and loss account shows that statutory auditor has opined that the assessee has incurred loss for the year ended on 31.03.2010. There cannot indeed be any quarrel with this proposition, but then this Auditors Report does not deal with the provisions of Income Tax Act. As per Income Tax Act expenditure incurred during pre-commencement period cannot be allowed as deduction while computing the income of the assessee. There was thus no reason for assessee to deviate from the provisions of Income Tax Act, when admittedly the assessee has not commenced its business activities in the assessment year under consideration. The onus is on the assessee to prove that the explanation is bonafide but there is nothing from the assessee to even indicate, leave aside proving, that there was any reason to believe that the expenditure is allowable. The Auditor’s report did not deal with this aspect at all. One can perhaps even understand ignorance about a legal provision, but once the assessee is on record not only being aware about this provision but also preparing the income tax return in the light of the said provision, there cannot be any justification about assessee ignoring the clear mandate of the provision. Such an action on the part of the assessee, in our considered opinion, cannot be said to be bonafide. In our humble understanding, the explanation of the assessee is not acceptable and we reject the same. In any case, Auditors report obtained by the assessee cannot override Income Tax provisions and just because the assessee's claim is supported by a chartered accountant's opinion, this fact per se cannot absolve the assessee from penalty under section 271(1)(c). Claim of the assessee towards administrative expenditure and finance charges as business expenditure is not at all admissible as the assessee has not commenced business during the relevant financial year under consideration. The Assessing Officer is of the view that the expenditure is not based on any sound reason as the assessee was fully aware of the facts that it is not revenue expenditure when it had filed its original return of income. Therefore, it cannot be said that the assessee discovered any omission or wrong statement subsequent of filing of original return of income on 14.10.2010. Being so, it cannot be believed that the assessee chose to revise its earlier return consequent upon knowing that there are omissions or wrong statements in the original return of income. The assessee is having full knowledge about the wrong claim made by it and therefore, it cannot take a plea that the error is bonafide and it is to be condoned. Being so in the present case the impugned penalty is not in respect of a bogus claim but in respect of making a claim which is patently inadmissible. In such a situation, it is difficult to understand, much less approve, this plea of the assessee that the assessee as bonafide in claiming the expenditure. In our opinion levy of penalty by Assessing Officer u/s 271(1)(c) of the Act is justified and accordingly, we reverse the order of the Commissioner of Income Tax (Appeals) and restore that of the Assessing Officer. - Decided in favour of revenue
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2015 (11) TMI 990
Registration u/ss 12AA(1)b)(ii) and 80(G) denied - Held that:- In the case in our hand, the assessee’s charitable activities are not restricted to any particular caste or section of society. In addition to celebrating Dussehra and Ekadashi festivals which are to promote the heritage, culture and festivals of India, it is also engaged in the activity of helping the poor and needy. It also incurs expenditure for marriage of poor girls and pays fees of poor students. It is not the case of the ld.CIT that the assessee has incurred expenditure other than for promotion of the objects of the society. Under these circumstances, we are of the considered opinion that registration u/s 12AA should be granted to the assessee society. Thus, we direct the ld.CIT to grant registration to the society u/s 12A of the Act. For the very same reason, recognition u/s 80G should also be granted to the society. The approval u/s 80G(5)(vi) should be granted to the assessee. - Decided in favour of assessee.
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2015 (11) TMI 989
Revision u/s 263 - loss on sale of repossessed assets and loss on sale of bad loan portfolio - Held that:- In this case, the Ld.CIT has not referred to any material from which it could be said that the acceptance of the assessee’s submissions and details by the A.O. was not warranted, either in law or on facts. The Ld.CIT has not given any material or evidence which would contradict the assessee’s version and which aspect has not been adverted to by the A.O. while completing the assessment. For all these reasons we allow both these appeals by the assessee for the A.Y. 2003-04 and A.Y. 2004-05, by holding that the Ld.CIT has erroneously invoked his powers u/s 263 of the Act. Coming to the A.Y. 2002-03, admittedly there is lack of enquiry on the part of the A.O. In the S.263 proceedings, the Ld.CIT has come to a definite conclusion that the loss in question is a business loss. This does not mean that the lack of enquiry by the A.O. would not be considered as erroneous and prejudicial assessment order passed by the A.O. The A.O. has not verified either (a) the allowability of the loss in principle or (b) where the claim is factually correct as quantification of the loss has not been verified by the A.O. In our opinion such exercise of powers u/s 263 of the Act is in accordance with law. Just because the Ld.CIT has come to a conclusion that in principle the loss in question is a business loss, it does not lead to a conclusion that the quantification has to be accepted based on audited accounts, though the A.O. has not made any enquiry on this issue. It is well settled that in case of no enquiry, it would be a case of non application of mind, resulting in an error in the assessment order which causes prejudice to the interest of the Revenue. The Ld.CIT has held the first issue in favour of the assessee and on the second issue, set aside the order for fresh adjudication. Coming to the third ground of revision i.e. excess provision of securitised assets, the Ld.CIT could have verified whether the assessee had suo moto disallowed the provision and the revision on this count would result in a double disallowance. Without coming to a firm conclusion on this issue, despite the submissions and evidences submitted by the assessee, it is wrong on the part of the Ld.CIT to simply set aside the matter to the file of the A.O. for fresh adjudication. In any event as we have upheld the order passed u/s 263 of the Act on the first two issues, we dismiss the appeal filed by the assessee for the A.Y. 2002-03 and allowed for the A.Y. 2003-04 and 2004-05.
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2015 (11) TMI 988
Entitlement for depreciation on assets - CIT(A) allowed the claim - as per revenue assessee has already claimed as application of income or that the complete amount spent on purchase of the said assets and as such correctly claimed 100% deduction in the initial stage itself and by doing so, Ld. CIT(A) has in fact granted double benefit to the assessee - Held that:- Keeping in view the fact that the income of the appellant is exempt u/s 11 of the Act and when certain assets purchased by the assessee was claimed to be the part of application of income for charitable purposes, and the same has been sold, the income thereof has been disclosed, the addition cannot be made for the reason that the application of income is not computation of income and the provisions of calculating the income applied for charitable purpose is attracted only after the income eligible for exemption is determined. Since the entire amount of ₹ 70,395/- used for purchasing fixed assets, is application of income for charitable purpose, the income earned on the sale of such assets is part of income even for taxation purposes. So, Ld. CIT(A) has rightly deleted the addition of ₹ 70,395/- - Decided in favour of assessee. Addition made u/s 68 in respect of corpus donation - Held that:- When the assessee has provided the complete details of corpus donors in the form of individual confirmations from such donors, their names and addresses as well as PAN, it was for the A.O. to confirm the same. Merely issuance of notices by the A.O. to the corpus donors u/s 133(6) of the Act is not enough to discharge the onus. The A.O. has not even disputed the existence, genuineness and creditworthiness of the said donors nor he has disputed the individual confirmations filed by them. It appears that the A.O. has not made any effort whatsoever to verify the genuineness of the corpus donors as per letters filed by the assessee and arbitrarily proceeded to add the corpus donation to the income of the assessee. So, consequently, the amount spent by the assessee towards charitable cause, during the year under consideration, is more than the income earned if the allegation of the A.O. is taken as correct. So, under these circumstances, no addition can be made u/s 11(1A) of the Act. Even otherwise, when the amount of ₹ 25,32,000/- has been added in the income again, making addition u/s 68 of the Act would amount to double addition/taxation. When the corpus donations received by the assessee is specifically exempted u/s 11(1D) of the Act, Ld. CIT(A) has rightly deleted the addition. - Decided in favour of assessee.
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2015 (11) TMI 987
Depreciation on Plant & Machinery, Furniture & fixtures, Office equipments - addition made during the year between as per block of assets as per companies Act and block of asset as per Income Tax Rules - Held that:- We have observed that assessee has claimed depreciation on furniture & fixture of ₹ 67,98,208/- in distillery & chemical division and furniture & fixture of ₹ 40,65,104 in sugar division and has claimed lower depreciation while merging the office equipment into furniture & fixture an no prejudice is caused to the Revenue and hence the claim of assessee is hereby allowed. - Decided in favour of assessee. Disallowance of amount paid as stamp fees for the agreement pertaining to the Co- Gen project in respect of the agreement entered into for US grant/aid - Held that:- We are of the considered view that the expenditure was incurred by the assessee towards the stamp fee is a capital expenditure which inextricably linked to the capital subsidy of ₹ 167.30 lacs and thus we find no reasons to interfere with the orders of authorities below and the same is hereby affirmed. - Decided against assessee. Additional sugar cane price assessee claimed on the basis of purchase of sugar cane - Held that:- We hold that assessee is following the mercantile system of accounting. Assessee is entitled for the claim of expense on Revenue/trading account on crystallization of the law. In the said amount in assessment year 2005-06 although it might pertain to assessment year 2002-03. Hence assessee will be entitled for the said claim for the assessment year 2005-06 subject to verification on merits by authorities below about the bonafide and genuineness of the claim. The authorities below are also directed to verify that the assessee's claim is allowed not more than once. The assessee has claimed that this amount in assessment year 2002-03, 2004-05, 2005-06 and 2006-07. Subject to above verification additional claim should be allowed only in assessment year 2005-06 subject to verification and checking by the authorities below and hence the claim of assessee for impugned year is rejected. - Decided in favour of assessee by way of remand. Deduction u/s 80HHC - Held that:- A decided in case of Ajanta Pharma Ltd. Vs. CIT [2010 (9) TMI 8 - SUPREME COURT] If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then section 115JB will cease to be a self-contained code. In section 115JB, as in section 115JA, it has been clearly stated that the relief will be computed under section 80HHC(3)/(3A), subject to the conditions under subsections (4) and (4A) of that section. The conditions are only that the relief should be certified by the Chartered Accountant. Such condition is not a qualifying condition but it is a compliance condition. Therefore, one cannot rely upon the last sentence in clause (iv) of Explanation to section 115JB [Subject to the conditions specified in sub-sections (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department. - Decided in favour of assessee.
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2015 (11) TMI 986
Deduction of dividend income under section 80P(2)(d) disallowed - Held that:- Certificate from the managing director which shows that the Bundi Central Co-operative Bank has jurisdiction to provide finance/loan to small professionals and agriculturists living in the village and towns. It gives direct loan also which comes in primary loan. Whatever loan given through the co-operative society, which is debited in the name of society but given directly to the customers and also regulated through the society for interest and recovery purposes. Therefore, the bank was providing loans at primary level as well as at the level of village/town for farmers as well as customers. Therefore, it is entitled to allow deduction under section 80P(2)(d) of the Act. On the basis of evidence enclosed by the assessee, it is fact that the assessee has been advancing loan to the farmers and villagers as a primary loan. It is not clear from the record that from where the assessee was getting dividends, therefore, matter is set aside and remanded to the Assessing Officer for de novo enquiry and decide the case by providing the reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes only.
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2015 (11) TMI 985
Deduction under section 80-IA - CIT(A) allowed the claim - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (11) TMI 984
Rectification of mistake - allowing the brought forward losses of the assessment year 2005-06 - CIT(Appeals) cancelling the order passed under section 154 - Held that:- The exercise of power under section 154 in the present case is totally invalid. As can be seen, the loss of ₹ 92,85,891 was quantified and allowed to be carried forward while processing the return filed by the assessee under section 143(1) of the Act for the assessment year 2005-06. However, the loss and depreciation involved was not verifiable. Therefore, if at all there is a mistake, then, it is in the quantification and carry forward of loss in the assessment year 2005-06 because of the fact that loss could not have been carried forward due to delayed filing of return of income. However, once loss was quantified and allowed to be carried forward in the assessment year 2005-06, we are not able to understand how it can be rectified in the assessment year 2006-07 wherein the brought forward loss has only been set off. Therefore, there being no mistake apparent on record in the assessment order passed for the impugned assessment year, exercise of power under section 154 of the Act is invalid. Accordingly, there being no infirmity in the order of learned Commissioner of Income-tax (Appeals), we uphold the same by dismissing ground raised. - Decided in favour of assessee.
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2015 (11) TMI 983
Transfer of property - AO treating the capital gain as short-term capital gain - Held that:- We are conscious that the partnership firm under the common law is not a legal entity. However, under the Income-tax Act, it is a separate and distinctly assessable unit. This distinction has to be borne in mind and the partnership firm carried on its business through its partners. Therefore, for all practical purposes, under the provisions of the Income-tax Act, the partnership firm is the owner of the property and the assessee became the owner on the date on which it was re-transferred from the partnership firm. Therefore, the gain, if any, on transfer of property, has to be assessed only as short-term capital gain and not as long-term capital gain. Therefore, this Tribunal do not find any infirmity in the order of the lower authority and accordingly, the same is confirmed. The provisions of sections 54 and 54EC of the Act are applicable only in respect of gain arising from transfer of long-term capital asset. In this case, the gain arose from the transfer was short-term capital gain. Therefore, the provisions of sections 54EC and 54 are not applicable at all.
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2015 (11) TMI 982
Exemption under section 11 denied - According to the Assessing Officer, the assessee had committed an act in violation of section 13(1)(c) - Held that:- In this case, the funds have been transferred from the assessee-trust to the accounts of Mahalakshmi Garments Exports, wherein Shri S. Kunjithapatham is the proprietor. The peak debit balance in the books of account of the trust as on October 8, 2009 was at ₹ 20,98,480. According to the learned authorised representative, the outstanding balance due to one of the trustees, Smt. Mahalakshmi Kunjithapatham was ₹ 2,22,74,985. If these two accounts are jointly considered, there is no question of any benefit to the trustees. In our opinion, these arguments of the learned authorised representative are farfetched. Each trustee has to be considered independently and distinctly. In the present case, there is a transfer of funds to one of the trustees' benefit, Shri S. Kunjithapatham, who is the proprietor of Mahalakshmi Garments Exports. In our opinion, the expression person used in section 13(1)(c)(ii) includes a person, who is the trustee. Thus, the amounts are transferred to Shri S. Kunjithapatham for his benefit and the outstanding balance in the name of Smt. Mahalakshmi Kunjithapatham cannot be clubbed together with funds outstanding from another trustee and each one is a person in terms of section 2(31) of the Act. That being so, the assessee-trust having transferred the income or the property to the benefit of Shri S. Kunjithapatham is construed to be in violation of section 13(1)(c)(ii) of the Act. Accordingly, we uphold the order of the Assessing Officer. - Decided against assessee.
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2015 (11) TMI 981
Eligibility for deduction under section 10B - AO excluded freight charges and handling/clearing and forwarding charges attributable to delivery of article or a thing outside India from the export turnover, however the same was not excluded from the total turnover resulting in the additions - Held that:- What should be excluded from the purpose of export turnover, the same should be excluded from the total turnover also. See Income-Tax Officer. Versus Sak Soft Limited. [2009 (3) TMI 243 - ITAT MADRAS-D] and CIT v. Gem Plus Jewellery India Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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Customs
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2015 (11) TMI 950
Validity of SCN u/s section 28 read with section 124 - final assessment not done - Held that:- Respondents states that the show cause notice clearly indicates that final assessment has already been made but since a factual dispute is raised as to whether the final assessment has been made or not this Court feels that the matter should be decided upon exchange of affidavits. In view of the exposition of law laid down in the two reports this Court feels that the petitioner is entitled to an interim protection as he has made out a prima facie case. The respondent authorities are restrained from taking any steps or further steps on the basis of the impugned show cause notice for a period of eight weeks from date or a further order whichever is earlier - Stay granted.
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2015 (11) TMI 949
Maintainability of appeal - Alternate remedy - Held that:- appeal would lie under Section 35 (2) against the impugned order. Since the petitioner has alternate remedy, the petition would not be tenable. - However, in order to enable the petitioner to take recourse of alternate remedy available in law, interim order granted stands extended for the period of two weeks. - Decided partly in favour of assessee.
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2015 (11) TMI 948
Valuation - import of rerollable steel scrap - Enhancement in value - Imposition of redemption fine & Penalty - Held that:- Invocation of Rule 5 of the Valuation Rules is not justified in the present case because, in order to prove that the goods are similar, it is required to ascertain that the country of origin is same in case of comparable goods with the goods relevant for assessment. In the case in hand, the country of origin was "Sharjah- UAE", whereas in the bill of entry dated 7.2.2013 referred to in the adjudication order, the originating country was different. Thus, the goods cannot be considered as similar. Further payment of duty by the appellant at the enhanced rate without contesting the enhanced duty liability, was due to avoidance of demurrage and detention charges of the vessel. Such payment cannot prove under-valuation of goods for the purpose of imposition of redemption fine and penalty, especially in view of the fact that the onus vest with the customs department has not been satisfactorily discharged. - import documents available in the file prove bonafides of the appellant, the genuineness of which have not been disputed by the Department, I am of the view that imposition of redemption fine and personal penalty on the appellant is not justified. Thus the impugned order imposing redemption fine and personal penalty is set aside - Decided in favour of assessee.
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2015 (11) TMI 947
Suspension of CHA license - illegal baggage clearances at Chennai Seaport - CHA failed to discharge their duties and responsibilities as a CHA as per CHALR - Held that:- suspension of licence is almost three years now and the authority has not completed the proceedings till date. The Department's plea that delay is due to request of appellant to keep the matter pending as subjudice is not justified and acceptable. - The present procedure prescribed for completion of regular suspension proceedings takes a long time since it involves inquiry proceedings, and there is no time limit prescribed for completion of such proceedings. Hence, it has been decided by the Board to prescribe an overall time limit of nine months from the date of receipt of offence report, by prescribing time limits at various stages of issue of Show Cause Notice, submission of inquiry report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs recording his findings on the issue of suspension of CHA license, and for passing of an order by the Commissioner of Customs. Suitable changes have been made in the present time limit of forty-five days for reply by CHA to the notice of suspension, sixty days time for representation against the report of AC/DC on the grounds not accepted by CHA, by reducing the time to thirty days in both the cases under the Regulations. Investigating authority shall furnish its report to the Commissioner of Customs who had issued the CHA license (Licensing Authority), within thirty days of the detection of an offence. The Licensing Authority shall take necessary immediate suspension action within fifteen days of the receipt of the report of the investigating authority. A post-decisional hearing shall be granted to the party within fifteen days from the date of his suspension. - High Court of Madras order is squarely applicable to the present case. In spite of definite time limit of 9 months prescribed by Board circular dt. 8.4.2010 for completion of the proceedings, in the present case, we find that even after 2 = years the proceedings are not completed. - Decided in favour of appellant.
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2015 (11) TMI 946
Benefit of concessional rate of Customs duty under Notification No.21/2002-Cus - Benefit of CVD - whether the show-cause notice dated 16.3.2011 issued by the authorities for demanding the differential CVD along with interest and also for imposition of penalties to all appellants is hit by limitation or otherwise - Held that:- There is no answer as when the benefit of Notification 21/2002-Cus for the imported consignments was extended based upon the certificate issued by the Ministry of Environment and Forest, Govt. of India how the assessing officer failed to note that the goods are covered under MRP/RSP. We fail to understand how the assessing officer was not aware that the goods imported are covered by Notification No. 49/2008. It would be correct to say that the assessing officer of the Customs department should be aware of the duty liability of the goods imported and should have assessed the goods correctly by invoking the provisions of Notification 49/2008. It cannot be said that the appellant has suppressed any material fact from the Customs department, atleast in the case in hand. Demand in question in the case in hand and consequent penalty imposed is incorrect as provisions of Section 28(1) of the Customs Act, 1962 and the proviso thereof, may not be applicable on the facts as recorded by us herein above. It has to be hold that the there was no suppression of material fact by the appellant; and Customs authorities have also erred in not noting that the imported goods are covered for discharge of CVD based upon value determined by MRP/RSP. - Since the demands which have been raised is beyond the period of six months as per the Customs Act, 1962 and there is no evidence to show willful suppression of facts with intent to evade duty, we hold that the impugned order is unsustainable and liable to be set aside. - Decided in favour of assessee.
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2015 (11) TMI 945
Demand of differential duty - Misdeclaration of goods - Confiscation of goods - Imposition of penalty - Held that:- when the goods were duly cleared by customs after proper examination and after finding them to be not mis-declared, the respondent cannot be held liable to the differential duty on the ground that the goods were defective/secondary tin plate sheets/ coils merely on the basis of the statement of a third party when that party did not object at the time of receipt of goods from the suppliers that the goods were not prime material l. Also there is no unbroken link between the goods seized and the goods imported under the said three Bills of Entry dated 18.10.2005 in-as-much-as the goods were first sold by the respondent to M/s. Mayank Containers who also used to obtain goods from other suppliers and M/s. Mayank Containers in turn supplied the goods to M/s. Saksham Containers Pvt. Ltd. Not even an iota of evidence exists to show that the goods seized were necessarily out of the goods imported vide the said three Bills of Entry under which the total quantity imported was 169.92 MT., while the purchase as per M/s. Mayank Containers Pvt. Ltd. from the supplier respondent was to the tune of more than 200 MT. - adjudicating authority came to the correct conclusion that the investigation has failed to establish the relationship of the seized goods with the goods imported vide three Bills of Entry dated 18.10.2005 and has therefore rightly dropped the proceedings - Decided against Revenue.
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2015 (11) TMI 944
Confiscation of goods - Penalty u/s 114 - CHA did not take care to verify the genuineness of export/exporters and therefore they have aided in smuggling of red sanders - Held that:- It is already concluded in favour of the appellants that they have not indulged themselves malafidely in filing of the shipping bill in question, leading to attempted export of prohibited goods. The Act of negligence and lack of vigilance on the part of the appellants have already been taken care of under the provisions of CHALR and the security deposit stands forfeited by the order of the Commissioner of Customs (General) as noted above. I further find that there is no finding to the effect that the appellant have indulged into any Act leading to an order of confiscation under the provisions of section 113. Further I find that order of confiscation is the condition precedent for imposition of penalty under Section 114(i). - condition precedent for imposition of penalty under Section 114(i) is absent in the facts of the present case - Decided in favour of appellant.
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2015 (11) TMI 943
Classification of Glucose meters - Classification under Customs Tariff Heading 90.18 or under Heading 90.27 - exemption from basic customs duty was claimed under notification number 24/05-Cus dated 1.3.2005 - Held that:- essential character of the goods in both cases is to draw the blood and test it for glucose content. With changes in technology, the glucose meter can be expected to become more sophisticated and compact without change in the essential function. The essential function of a Glucose meter is to draw the blood as well as test the blood. The testing of blood and then its analysis for indicating blood sugar content as revealed by the Glucometer is undisputedly the outcome of a chemical analysis. That is, the Glucometer is an instrument for chemical analysis. Having noted the essential characteristic of both- a Glucose meter system with strips and lancets and the Glucose meter without strips, it would be illogical to say that the Glucose meter with strips will be classifiable under heading 90.18 whereas the Glucose meter without strips will get classified under heading 90.27. - product in question is not an instrument which is generally used in laboratories. Therefore by virtue of the Explanatory Note under Heading 90.18, the impugned goods, that is Glucose meters are classifiable under heading 90.27. - impugned goods namely Glucose meters are classifiable under heading 90.27 and are eligible for exemption under notification No. 24/05-CUS dated 01.03.2005. - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 942
Imposition of penalty on bank branch manager - Issue of bank guarantee without following proper procedure of law - violation under banking regulations - import of "Mulberry Raw Silk" in the guise of "Duppion Silk" and also misuse of DEEC scheme by the importers. - Held that:- Departmetn have enforced the bank guarantee and the bank has issued two Demand Drafts - The same was deposited in the Customs with challans. Therefore, it is not the case of forgery of bank guarantee or any fraudulent issue of Bank Guarantee - there is no evidence brought out by the department for abetment or collusion or commission or omission in relation to import of goods to establish contravention of provisions of Customs Act. Section 112(b) relates to dealing of contraband goods and the appellant is only a branch manager issued bank guarantee. If at all any violation under banking regulations it is for the bank to initiation action and the Bank suspended him and subsequently removed from service in the year 1997. - Decided in favour of Appellant.
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2015 (11) TMI 941
Smuggled of goods into India - Proceedings were initiated against the Masters of the vessels and several others including the crew members of the vessels and the boatmen. - Confiscation - Imposition of redemption fine - Imposition of penalty - Held that:- vessel MV Salvanguard sailed from Singapore on 17-1-2009 and arrived at Kakinada Port on 23-1-2009 and on the same day, the vessel was got converted from Foreign run to Coastal run. Thereafter, the officers found a fibre boat carrying the packages received from vessel MV Salvanguard and being carried to vessel MV Salvigilant. The boat was found in Indian territory. Therefore, it can be definitely said that once vessel reached India and was converted into Coastal run, the importation of foreign spares was complete. The Master of the vessel failed to declare these items in the manifest filed by them. This has been admitted. The reason given is ignorance of law. Even if a Master of the vessel is in his first voyage, he would have known all the relevant provisions of law. - The Master of the vessel who received the engine/ship spares has also admitted that he unloaded the said items from the vessel into fibre boat and allowed them to deliver to another vessel, without intimating the Customs authority. The boatman did not take the minimum precaution of checking up whether Customs formalities have been fulfilled before undertaking the transfer of the goods. The above discussion would show that there was all round failure to follow the procedures under Customs Act, 1962, in this case. Therefore, I do not find any reason to interfere with the impugned order - Decided in favour of Revenue.
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Service Tax
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2015 (11) TMI 979
Business Auxiliary service - profit margin earned by the appellant during the course of trading of sim cards and recharge coupon of Bharat Sanchar Nigam Ltd - Penalty u/s 77 & 78 - Held that:- In this case, BSNL had already paid service tax on the sim cards and recharge coupons sold to the franchisee and again demanding service tax from the franchisee would amount to double taxation which is not permissible in law. Secondly, we find that the appellant is only engaged in purchase and sale of sim cards and recharge coupons and his relationship with BSNL is of principal-to-principal basis. The appellant cannot be termed as an agent of BSNL. In view of this, the finding of the learned Commissioner that the appellant is promoting the business of sale or service of BSNL is misconceived. The impugned order is therefore not consistent with law and the catena of judgments delivered by the Tribunal and High Court. The judgment cited above by the learned counsel for the appellant squarely cover the case of the appellant to the fact that the appellant is only engaged in trading activity and does not render any taxable service in the category of 'business auxiliary service'. - Decided in favour of assessee.
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2015 (11) TMI 978
Demand of service tax - Manpower Recruitment Service or Supply Agency Service - deputation of employees to other company - Held that:- There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of the company. There was no relation of agency and client. It was pointed out that the employee deputed did not exclusively work under the direction of supervision or control of subsidiary company. All throughout he would be under the continuous control and direction of the company. - Decision in the case of Krohne Marshall Pvt. Ltd. [2015 (10) TMI 2459 - CESTAT MUMBAI] followed. Impugned orders before us are unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (11) TMI 977
Demand of service tax - Insurance Auxiliary Service - Business Auxiliary Service - Held that:- during the period prior to 01/05/2006, service provided to a policy holder, insurer including reinsurer was only liable to service tax and the amount received by the appellant is for the service provided to the hospitals. Therefore during the relevant appellant was not liable to pay tax at all. We find this submission to be valid since the service provided to insurer or policy holder was only liable to tax prior to 01/05/2006. - Decided in favor of assessee. Whether amounts received as healthcare receipts/self-funded schemes are liable to tax as BAS - Held that:- This is a self-funded scheme and implementation lies with Special Purpose Trust named 'Yeshasvini Trust' of which the appellant is also a part. This is a contributory scheme wherein the beneficiaries contribute a small amount of money every year and beneficiaries were offered cashless treatment in over 135 hospitals in Karnataka. - The service provided by the appellants to corporate clients as submitted is a service limited to the healthcare of the employees of corporate clients. It cannot be said that this service is provided on behalf of a corporate client to the employees. Therefore we agree with the submission that this service is not covered by BAS. - Decided in favor of assessee. Levy of penalty - As regards insurance auxiliary service, the appellants have paid the entire amount with interest and an excess amount of more than ₹ 4.5 lakhs has also been paid before the issuance of show-cause notice. Since they have registered and have been paying the tax and have paid the entire amount before the issue of show-cause notice, according to provisions of Section 73 of Finance Act, 1994, penalty under Section 76 is not imposable. As regards the other two demands amounting to ₹ 16,29,562/-, we have already held that on merits, the demand is not sustainable. Under the circumstances, penalties under Sections 76 or 78 of Finance Act, 1994 is not imposable on the appellant. - Decided in favour of assessee.
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2015 (11) TMI 976
Claim of refund of penalty deposited earlier - Benefit of Section 73(3) for non levy of penalty - Failure to file ST-3 returns - Held that:- Section provides that where true and complete details are available in the specified records which are admitted in the fact herein. Further, as required the assessee has deposited the amount of Service Tax in full as accepted by him, which is the same amount as determined vide the Order-in-Original and further admittedly the appellant have paid the interest under Section 75 as well as penalty equal to 1% of tax for each month for the period during the default was there and have also deposited penalty/late fee for delay in filing the returns. Further, it is found that no further tax is found to be recoverable from the respondent assessee. Accordingly, I find that the appellant is entitled to the benefit both under Section 73(3) as held by the learned Commissioner (Appeals) as well as also benefit under Section 73(4A) available in the provisions of the Finance Act, 1994 - respondent assessee will be entitled to refund of the penalty already deposited with interest as per rules - Decided in favour of assessee.
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2015 (11) TMI 975
Denial of refund claim - export of software services or export of goods - refund claim denied on the ground that appellant has exported the goods and not the services - period of limitation - eligible input services - Held that:- With respect to denial of refund claim on embroidery software service, I find that it is evident from the agreement produced before me that the said activity is in the nature of service. Further, actual export of underlying service and receipt of foreign exchange is not in dispute. Also for the past period the assessee has been carrying out the same activity and was accepted by the Department as service. In view of the above, merely because the assessee has inadvertently indicated the said turnover in the return against the column for final product instead of output service, that will not dis-entitle them for the refund. With regard to denial of refund on account of challenge to eligibility of certain input services, I find that these input services are essential and are in fact used for provision of output services by the Appellant. I also find that when the assessee claimed cenvat credit on these input services, the same was not challenged. It is settled principle, that there cannot be different yardsticks in allowing the credit and granting the refund. In view of this, I hold that the Appellant has rightly claimed refund of cenvat credit availed on these input services - Decided in favour of assessee.
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2015 (11) TMI 974
Claim of Interest on refund - applicable date up to which the interest is to be paid - initially refund was credited to consumer welfare fund on the ground of unjust enrichment - revenue contended that refund was sanctioned on 03.6.2008 and department has credited the same to the Consumer Welfare Fund as per law. Hence, department was liable to pay interest only from 24.04.2005 to 02.6.2008. - appellant claims that interest may also be paid to them from 24.04.2005 to 10.03.2010, on which date the refund was made to them in pursuance to the said order of the Tribunal. Held that:- As the Revenue had sanctioned refund claim on 03.6.2008 and transferred the amount to Consumer Welfare Fund as per the provisions of law, Revenue cannot be held to be liable to grant interest subsequent to the period from 03.6.2008. The appellant instead of Welfare Fund became eligible for the refund amount in the light of the order of the Tribunal. Hence, whatever was due to Welfare Fund was liable to be transferred to the Appellant. The appellant is therefore rightfully entitled for the refund amount along with interest for the period from 24.4.2005 to 02.6.2008, as held by the Commissioner (Appeals) in the impugned order - Decisions in the case of Salem Cylinders Pvt. Limited vs. CCE, Salem (2013 (6) TMI 579 - CESTAT CHENNAI) distinguished - Decided against Assessee.
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2015 (11) TMI 973
Denial of CENVAT Credit - Demand of interest - Penalty u/s 78 - Held that:- appellant discharged the service tax liability by way of cenvat credit, which otherwise would have been utilised for payment of dues, and hence the interest liability should be restricted to from the date the liability arose to the date of payment made through cenvat credit - Tribunal in the case of CCE, Mumbai vs. CEAT Limited [2010 (3) TMI 621 - CESTAT, MUMBAI], in Para 9 of the order, held that credit is to be restored. This decision of the Tribunal was upheld by the Hon’ble High Court of Bombay, reported as [2013 (7) TMI 568 - BOMBAY HIGH COURT]. - appellant discharged the service tax liability by way of cenvat credit, which otherwise would have been utilised for payment of dues, and hence the interest liability should be restricted to from the date the liability arose to the date of payment made through cenvat credit. - appellant is liable to pay interest from the date of liability of tax to the date of payment of same through cenvat credit. The same may be quantified by the adjudicating authority. - appellants were not aware of the amended provisions and there was no intention to evade tax. Hence, imposition of equivalent penalty under Section 78 of the Finance Act, 1994 is not warranted and the same is set-aside. - Decided partly in favour of assessee.
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2015 (11) TMI 972
Denial of refund claim - refund denied of an amount of service tax paid for the services rendered by the service providers at the place of destination - whether the appellant is eligible for refund of service tax paid on various services which were availed by them in respect of the terminal handling charges, inland haulage service and other documentation charges incurred for the goods on reaching the port of destination - Held that:- It can be seen from the above reproduced portion of the clauses of Notification, that it talks about granting of rebate on specified goods which is defined as services which have been used beyond the place of export of such goods. It is undisputed that in the case in hand, appellant exported the excisable goods and utilized the services for such export and the place of removal in the case in hand is factory gate. It is also undisputed that in some of their clients case, appellant had accepted the terms of delivery of the goods till the door steps of the clients. It would mean that the appellant was responsible for the delivery of the goods in the hands of the appellants clients. Hence services received by the appellant for such activity is eligible for refund under Notification 41/2012-ST - impugned orders to the extent contested before the Tribunal are unsustainable and liable to be set aside. - Decided in favour of assessee.
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2015 (11) TMI 971
CENVAT Credit - whether Cenvat credit on the telephone Services, availed at the residences of the senior officers of the appellant, is admissible when such bills are paid by the appellant - Held that:- Bill landlines, installed at the residences of the Senior Officers of the appellant, are paid by the appellant. The case law of Monnet Ispat & Energy Ltd vs CCE Raipur (2009 (12) TMI 328 - CESTAT, NEW DELHI), relied upon by the Learned AR, will not help the case of the Revenue as none of the case laws relied upon by the appellant & CBEC clarification were brought to the notice of CESTAT Delhi - appeal is thus required to he decided in favour of the appellant. Secondly as favouble decisions were existing during the relevant period therefore, appellant can not be considered have taken credit with intention to evade. The demand issued to the appellant in these proceedings is thus clearly time barred - Decided in favour of assessee.
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2015 (11) TMI 970
Classification of services - Cargo Handling Services or manpower recruitment services - Held that:- Respondent were registered with the department and were paying service tax for the same service under Manpower Supply Agency w.e.f. 16.06.2005. The Revenues case is prior to that date, they should be charged service tax under Cargo Handling Services. - Activities are done automatically by machinery and conveyor owned by the cement manufacturer. The manpower supplied by the respondent is for mainly supervising and supplementing the mechanised packing and loading - Revenue has not given any reason as to why the impugned services were classifiable under Cargo Handling Services before 16.06.2005 and as manpower recruitment from 16.06.2005 - The admitted fact is that the services remain same and there is no reason for different service tax treatment for different period. Considering the detailed discussions and findings in the impugned order we find no reason to interfere with the same - Decided against Revenue.
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2015 (11) TMI 969
Denial of CENVAT Credit - whether the appellant is eligible to avail CENVAT credit of the service tax paid on insurance premium to the Insurance Company for Group Insurance and medi-claim policies taken for existing employees as well as for the retired employees; also on the service tax paid on the insurance premium for the policy taken for stocks lying in the foreign warehouses - Held that:- In respect of the service tax paid on the premium of the life insurance/medi-claim taken for the existing employees as well as the retired employees or the employees who had taken voluntary retirement is now eligible to avail CENVAT credit as this Bench in the appellant's own case in Appeal No. E/1283/2012-Mum as reported at [2015 (7) TMI 231 - CESTAT MUMBAI] has held that such credit is available relying on the judgement of the Hon'ble High Court of Karnataka in the case of Millipore India Ltd. - [2011 (4) TMI 1122 - KARNATAKA HIGH COURT ]. On an identical issue for the earlier period, this Bench having taken a view that the appellant is eligible to avail CENVAT credit, following the same, we hold that the appellant is eligible to avail CENVAT credit of the service tax paid on the premium of the insurance cover extended to their employees who are retired. - CENVAT credit sought to be denied by both the lower authorities is not in consonance with the law. Accordingly, we set aside the impugned order - Decided in favour of assessee.
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2015 (11) TMI 952
Denial of CENVAT Credit - Banking and other Financial Services - services partially exempted vide Notification No. 29/2005-Service Tax dated 22.2.2004 - Held that:- Issue is full covered by Jost’s Engineering (2013 (8) TMI 463 - CESTAT MUMBAI) and in the case of Nagar Urban Co-operative Bank Ltd. (2014 (7) TMI 117 - CESTAT MUMBAI), I find that the appellant’s case is squarely covered. - reversal of credit by the assessee on the entire common input service credit taken along with interest, amounts to non-availment of credit. Further, the aforementioned ruling was not available before the adjudicating authority at the time of passing of the impugned order and rulings were pronounced subsequently. In this view of matter and after recording the finding that the appellant’s case are covered by these two rulings, I remand the matter back to the adjudicating authority with a direction to verify the amount of CENVAT Credit reversed. If the same is found to be short then the appellant may be allowed an opportunity to reverse the amount alongwith interest. It is also held that the Banking and other Financial Service, which are the output service of the appellant are not fully exempted and accordingly, do not fall under the category of exempt service as defined under Rule 2(e) of the Cenvat Credit Rules, 2004. - Matter remanded back - Decided in favour of assessee.
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Central Excise
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2015 (11) TMI 968
Classification of goods - Appellants claim that the good produce by him as ‘veterinary Medicaments’ falling under Chapter No. 3003.10 but department classify under Chapter No. 3307.90 - Supreme Court after hearing the partial dsmissed the appeal filed by Revenue by holding that on the facts of this case, the Tribunal has rightly classified the goods as 'Veterinary Medicaments'. The appeal was filed against the decision of Tribunal [2007 (4) TMI 33 - CESTAT,BANGALORE], wherein tribunal held that appellant product fall under Chapter No. 3003.10.
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2015 (11) TMI 967
Rate of Duty - Classification of goods - classification of Cellulosic Spun Yarn - Classification under under Tariff Heading No. 18 III (i) or under heading 18 III (ii) - Held that:- CESTAT has rejected the contention of the Revenue that the yarn in question was manufactured out of fibres. The Department had relied upon certain test reports which have been rejected by the CESTAT holding that those test reports are not relevant as sample for it was drawn on April, 1985 and after that, there is no evidence on record to show that the goods formed part of the manufacture lot during the relevant period. - These are pure finding of facts arrived at by the CESTAT on the appreciation of material/ evidence on record. We do not see any question of law which arises for consideration - Decided against Revenue.
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2015 (11) TMI 966
Validity of the show cause notice - Jurisdiction of Civil Court - Section 9 of the Code of Civil Procedure inasmuch as the Central Excise Act provides for complete machinery for adjudication of such disputes - suit filed against the show cause notice was premature and there was no cause of action to file such a suit when the said show cause notice was yet to be adjudicated upon - Held that:- The appellant had simply issued the show cause notice to respondent no. 1. This notice has been issued under the provisions of Central Excise Act. The validity of such a show cause notice could not be gone into in a suit filed by the noticee. As rightly pointed out by Mr. Radhakrishnan, various provisions of the Central Excise Act provide for complete machinery for adjudication of such show cause notice. Opportunity was given to respondent no.1 to reply to the said show cause notice. After grant of hearing, the Adjudicating Authority was supposed to pass the order on the show cause notice. There is a provision in challenging such an order by filing appeal. In this scenario, we are of the opinion that the jurisdiction of the Civil Court is clearly barred under Section 9 of the Code of Civil Procedure on the principles laid down by this Court in Dhulabhai vs. State of M.P.[1968 (4) TMI 64 - SUPREME COURT OF INDIA] - Even otherwise, when the matter was still at the show cause notice stage and no adverse order has been passed against respondent no. 1, there was no cause of action to file such a suit. We, thus, set aside the impugned order of the High Court - Decided in favour of Revenue.
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2015 (11) TMI 965
Valuation of goods - whether the amount collected by the respondent assessee @ 1% on the invoice value, as incentive, is includible in the value of goods on payment of central excise duty - Held that:- scheme is that of the dealers/agents; dealers are seeking help from staff of the respondent to manage and service the scheme. The findings of the original authority also confirmed that the scheme was meant for buying the gifts for dealers and distributors. If the money received from the dealers and distributors is spent on their behalf, the same cannot be treated as additional consideration flowing back to the manufacturer. Therefore, we do not find any reason to interfere with the findings of the Commissioner(Appeals) - Decided against Revenue.
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2015 (11) TMI 964
Demand of differential duty - Undervaluation of goods - Held that:- Revenue contended that the CESTAT has not discussed the facts of the present case appropriately and has accepted the version of the respondent-assessee blindly without even going into the documents, more particularly, the so called forward contract entered into between M/s. L&T and the assessee which was not even produced by the assessee. He submitted that the finding that the transaction was not at arm's length which was arrived at on the basis of material on record after detailed discussion has not even been commented upon and is side-tracked. On these facts, his submission was that the judgment of this court in H.B.L. Aircraft Batteries Ltd. could not have been mechanically applied. - Matter remanded back - Decided in favour of Revenue.
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2015 (11) TMI 963
Classification of goods - jute products or products of plastic - Whether the floor covering with plastic laminated on both side manufactured and cleared by M/s. SPL Siddhartha Limited [for the period from 31.05.2000 to 17.01.2005] should be classified under sub heading 3918.90 of the Central Excise Tariff Act, 1985 and accordingly, charged to the Central Excise duty @ 16% ad valorem along with appropriate interest or not - Held that:- It is clear that the products are dominantly jute products and they cannot be treated as products of plastic. Therefore, there is no question of their coverage under Chapter Heading 39. On the other hand, we find that the Entry which is more proximate to get the aforesaid product covered appears to be 59.04 which, inter alia, covers the product that is floor coverings consisting of a coating or covering applied on a textile backing. Product which is floor covering is made of jute and plastic coating is applied thereupon. - in the amendment made to the sub-Headings in Entry 59.04 in the year 2005, the product in question is described with more clarity inasmuch as Entry 5904.90.10 is described as 'Floor coverings with jute base”. There is no dispute that in the instant case, the product is a floor covering with jute as its base. - order of the CESTAT does not call for any interference - Decided against Revenue.
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2015 (11) TMI 962
Classification of goods - three wheeled tractor which are known as “Auto Track and semi-trailer” - Classification under Chapter Heading 8701 or under Chapter Heading 8704 - Classification of three wheeled tractor or auto trailor - Held that:- Tribunal found that the Commissioner while relying upon the earlier decision of the Tribunal ignored the fact that on the first occasion, when the matter was remanded, the Tribunal itself had observed that the new tariff did find the meaning of the tractor and also that positive evidence would be necessary to make them depart from its earlier view. It further found that the Revenue had not disputed that it is immaterial whether vehicle in question comprising of hauling unit and semi trailer is cleared together or separately which is clear from Chapter Note 2. - classification under Chapter Heading 87.01 and not under heading 84.04 upheld - Decided against Revenue.
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2015 (11) TMI 961
Valuation of goods - part of sugar was to be sold at controlled rates to be fixed by the Government - Section 4 of the Central Excises and Salt Act, 1944 - Held that:- As per clause (a) of sub-Section (1) of Section 4, the duty which is payable is on a normal price of the goods i.e. price at which the goods are ordinarily sold by the assessee to a buyer. As pointed out above, the High Court had passed interim orders permitting the assessee to charge higher price and thereafter at that price the goods were normally sold by the assesse to the FCI as well as other buyers. - it is clear that the only price that was spoken about even by the interim orders was the price “fixed under any law for the time being in force” and thus an interim order fixing the higher price would also be an order which fixes a price “under any law for the time being in force”. - Order of Tribunal is set aside - Decided in favour of Revenue.
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2015 (11) TMI 960
Waiver of pre deposit - whether the CESTAT was correct in coming to the prima facie conclusion that the Appellant "failed to make a case for full waiver of duty and penalties." - Held that:- A foundational fact that would have to be shown to exist by the Department for attracting the deeming fiction under Rule 18 (2) of the Rules is that the goods were found to have been "manufactured in or cleared from" the premises searched. The CESTAT, when it hears the appeals on merits, will have to address itself to the central issue of whether the evidence on record demonstrates that the Appellant as Noticee No.1 could be said to have been party to the clandestine manufacture and removal of chewing tobacco using the machines found at the premises. This would also have to be examined in the context of the fact that a separate SCN has been issued to Mr. Kunal Indoria arising from the same search. The effect of the retraction of the statement made by Mr. Kunal Indoria and the requirement that there must be sufficient other evidence to corroborate the said retracted statement would also have to be examined in detailed by the CESTAT. Court would not like to express any opinion on the merits of the above contentions given the limited scope of the present appeal, and particularly since the CESTAT will have to deal with the appeal before it on merits. Having examined the order of the Commissioner in light of the submissions of learned counsel for the parties, as noted hereinbefore, the Court is satisfied that the Appellant has made out a prima facie case for waiver of the deposit of the duty, penalty and interest. The CESTAT has not given any reasons for coming to the conclusion to the contrary in the impugned order. None of the above contentions of the Appellant have merited consideration by the CESTAT even for the limited purpose of deciding whether a case for waiver of pre-deposit was made out. - Appeal disposed of.
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2015 (11) TMI 959
Waiver of pre deposit - Amendment to Section 35F of the Central Excise Act, 1944 vide Finance Act, 2014 - Mandatory pre deposit - pre-deposit of 7.5% for first appeal and 10% for second appeal of the total tax demanded as illegal and violative of articles 14, 19(1)(g) and 265 of the Constitution of India - Retrospective or prospective effect - Held that:- It is held that in the instant case, the right to file an appeal, which is a substantive right granted under Sections 35 and 35B of the Act has not been amended and remains intact. That Section 35F of the Act as amended, consists of a mandatory requirement of pre-deposit for entertaining an appeal before the Appellate Authority i.e., before the Commissioner (Appeals) or the Appellate Tribunal as the case may be, is a piece of procedural legislation and does not fall within the realm of substantive law. Thus, Sections 35 and 35B do not confer an absolute right to file an appeal, but are subscribed or controlled by Section 35F of the Act. Hence, in the instant case, the right to file an appeal under Section 35 or 35B as the case may be is not an absolute right, but a conditional one. Right to file an appeal under Sections 35 and 35B of the Act is in no way affected by the amendment made to Section 35F of the Act requiring pre-deposit to be made at the time of preferring the appeal. Such a condition regarding pre-deposit is made with a view to regulate the exercise of the right of appeal so as to enforce the order appealed against in case the appeal is ultimately dismissed. - Section 35F of the Act has retrospective operation and is not restricted to only prospective cases. It applies to all lis which have commenced prior to or after the enforcement of the amendment, except to cases covered under the second proviso thereof. In view of the insertion of second proviso to amended Section 35F of the Act, it is held that the same is in the nature of a saving clause, keeping intact the earlier provision of Section 35F to be made applicable to circumstances noted under the second proviso. That in all other cases not covered under the second proviso, the amended Section 35F is applicable as it has a retrospective operation. Such a legislation by amendment having a retrospective operation is a valid piece of legislation - second proviso in amended Section 35F is significant, which was absent in the provisions considered in Hoosien Kasam Dada [1953 (2) TMI 35 - SUPREME COURT OF INDIA] and Garikapati Veerayya [1957 (2) TMI 54 - SUPREME COURT]. The provisions of law considered by the Hon'ble Supreme Court in the aforesaid cases being not in pari materia to Section 35F of the Act under consideration and in view of the later judgments of the Hon'ble Supreme Court it is held that the ratio of those decisions are not applicable to the present case. As the amended Section 35F has a retrospective operation and none of the petitioners herein has filed an appeal prior to 6/8/2014 before the appellate authority or if the appeal has been preferred subsequently has not deposited the requisite predeposit before the appellate authority, as the case may be, they are required to comply with the conditions of the amended Section 35F. - Decided against assessee.
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2015 (11) TMI 958
CENVAT Credit - Clearance of goods to sister Unit - Non Clearance of CVD - Penalty u/s 11AC - Held that:- Goods were cleared by the assessee to its sister unit and whatever credit was reversed by the assessee, the same was made available to its sister unit. Section 11AC of the Act provides payment of penalty where there is any intention to evade payment of penalty. In the instant case, we do not find that the assessee has committed fraud, collusion or wilful misstatement or suppression of fact with an intention to evade payment of duty. We do not find any substantial question of arising for consideration. - Decided against Revenue.
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2015 (11) TMI 957
Restoration of appeal - Appeal dismissed for non compliance of pre deposit - Held that:- It is seen that the appeal was dismissed for non-compliance on 12.09.2014 and an application for restoration of appeal was filed on 13.11.2014. This application was listed for disposal on 19.12.2014, 30.01.2015 and 27.02.2015 and all these days same request was made by the applicant for adjourning the matter. This Bench accommodated the request made by the applicant. Since this application is filed in November 2014 and the applicant is seeking adjournments on some pretext or other, I find that the applicant is not serious in prosecuting the ROA application. - Restoration denied.
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2015 (11) TMI 956
Infraction of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rule 2008 - Intimation for closure of factory not given - Held that:- From the perusal of the record that intimation of closure of the factory was given by the assessee on 10.1.2013 intimating the Department that the production would be closed w.e.f. 15.1.2013. According to the appellant 11.1.2013 and 12.1.2013 were holidays and, therefore, only two working days were provided, namely, 13.1.2013 and 14.1.2013, consequently, there was a clear cut violation of Rule 10. - pursuant to the intimation the Department reached the premises and sealed the factory on 14.1.2013. Consequently, substantial compliance of Rule 10 had been made. The idea for giving prior intimation of three days is to give the department sufficient time to reach the premises and seal the unit so that clandestine manufacturing and removal of goods does not happen. In the instant case we find that the department after due intimation had reached the premises and had sealed the unit on 14.1.2013 - No substantial question of law arises - Decided against Revenue.
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2015 (11) TMI 955
Validity of ex-parte order passed by the tribunal - Violation of principle of natural justice - Held that:- Show-cause notice was issued by the Respondent Department in the month of August, 2014 and reply to that show-cause was given on 13th October, 2014, in which it was specifically stated that the petitioners have received the notice for hearing dated 20th October, 2014 and it was requested that the matter be adjourned to some other date after 14th November, 2014. Thereafter, vide notice dated 21st October, 2014 respondent fixed hearing of the adjudication on 11th November, 2014. On the said date, counsel for the petitioner presented himself in the office of the respondent, but, the Commissioner of Central Excise, Jamshedpur was not available and therefore, this petitioner gave application praying therein that since the Commissioner is not available, the next date of hearing may be fixed in the month of December, 2014. Surprisingly, instead of the next date of hearing being fixed, the petitioner was served with an ex-parte order dated 9th February, 2015 passed without giving any adequate opportunity of being heard to the petitioner - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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2015 (11) TMI 954
Modvat/Cenvat credit - use of Capital goods outside the factory premises - Whether the amended Notification No.25/96-CE (NT) dated 31.08.1996 is clarificatory and therefore restorative in nature or not? - Held that:- Court, in the earlier batch of appeals, pertaining to the very same assessee, found that the Tribunal has not gone into the issue whether the capital goods were utilised in the own factory of the assessee or in an integrated mine of the assessee or in other mines. Therefore the matter was remanded to the Original Authority for reconsideration of the claim of the assessee in the light of the decision in Vikram Cement case (2006 (2) TMI 1 - Supreme court). - there is no finding as to whether the capital goods were utilised in the own factory of the assessee or in an integrated mine of the assessee or in other mines, this Court, without going into the other questions of law as raised by the appellant, is inclined to set aside the impugned orders and remand the matter back to the Original Authority for reconsideration. - Decided in favour of assessee.
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2015 (11) TMI 953
Adjustment of excess paid duty with the short paid duty during the Financial Year 2006-07 - Finalization of provisional assessment - Difference of opinion - Majority order - Held that:- Adjudicating Authority has held that for the part of the period in hand the appellant has short paid the duty of ₹ 3,52,78,170/- and in respect of other part of the period the appellant has paid ₹ 3,53,74,279/- duty in excess. Therefore, the duty excess paid by the appellant is more than the duty short paid by the appellant. Therefore, appellant is not required to pay any duty. Consequently, interest is not payable - The appellant is entitled for adjustment of excess paid duty with the short paid duty during the financial year 2006-07 - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (11) TMI 940
Classification - whether raw aluminum castings manufactured and sold by the Respondent herein, are covered by the residual Entry C-II-102 of the BST Act and exigible to tax @ 10% or whether they fall under Entry C-I-29 exigible to tax @ 4%. - Held that:- what is manufactured by the Respondent herein is very much in the raw, unfinished and primary form and are not finished goods. These findings of fact have been arrived at by the MSTT after taking into consideration all the material placed before it and we do not think that these findings are in any way perverse and/or contrary to the record. Further it is not even the case of the Applicant – Revenue that these Certificates are unreliable and therefore the MSTT was in error in placing reliance thereon. To be fair to Mr. Sonpal, he did not even urge such an argument - reliance placed by Mr Joshi on the decision of the Supreme Court in Vasantham Foundry's case [1995 (8) TMI 190 - SUPREME COURT OF INDIA] is well founded. We find that the aluminum castings manufactured and sold by the Respondent herein to the automobile industry, are in its raw, unfinished and primary form which require further processes such as milling, drilling, tapping etc. by the purchaser before they are used in the manufacture of their motor vehicles / chassis. This being the case, we find that the ratio of the Supreme Court in the case of Vasantham Foundry would apply with full force and accordingly, the raw aluminum castings manufactured by the Respondent herein would fall within Entry C-I-29 of the Bombay Sales Tax Act, 1959 and not within the residual Entry C-II-102. We are unable to agree with the argument of Mr Sonpal that merely because the word ‘castings’ is not found in Entry C-I- 29, the raw aluminum castings manufactured by the Respondent cannot fall within the aforesaid Entry - In any event, we do not think that the findings rendered by the MSTT on this aspect can by any stretch of the imagination be termed as perverse or suffering from any patent illegality giving rise to any substantial question of law that would persuade us to take a different view. - Decided in favour of assessee.
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2015 (11) TMI 939
Detension of truck and seizure of goods - transporter was not carrying any transit pass issued by the entry check-post - the officer at the check-post informed the carrier that since there was no exit check-post in Diu, it would not be possible for him to issue transit pass even on the basis of the manual application - Thus, though the transporter had given application for transit pass in Form 404, no transit pass was issued to the transporter, and the truck with the goods, was allowed to enter into the State of Gujarat - Levy of tax, interest and penalty u/s 68 - Held that:- A perusal of the seizure memo as well as the show cause notice issued by the second respondent reveals that the seizure memo has been issued in exercise of powers under section 68(4) of the VAT Act and the show cause notice has been issued in exercise of powers under section 68(5) thereof - on a plain reading of the above provision, it is evident that it is the officer in-charge of a check-post who is empowered to take action under sub-sections (4) and (5) of section 68 of the VAT Act. Sub-section (1) of section 68 of the VAT Act provides that if the State Government considers that with a view to preventing evasion of tax in any place or places in the State, it is necessary to do so; it may by notification in the Official Gazette, direct that such number of check-posts shall be set up or such number of barriers shall be erected at such places as may be specified in the notification. Therefore, the check-post or barrier as envisaged under sub-section (4) of section 68 of the Act must be notified by the State Government in exercise of powers under sub-section (1) of section 68 of the VAT Act. It is, therefore, manifest that the powers under subsection (1) of section 68 of the VAT Act clearly cannot be exercised by the Additional Commissioner Enforcement, Gujarat State by virtue of a letter, as has been submitted on behalf of the respondents. Even if such letter had granted such permission, the same would be without jurisdiction, inasmuch as, the jurisdiction under section 68(1) of the VAT Act has to be exercised in the manner provided therein by the State Government by issuing a notification specifying the places where such check-post is to be set up or barrier is to be erected. Under the circumstances, the second respondent had no jurisdiction to take any action in exercise of powers under section 68(4) or (5) of the VAT Act. The impugned seizure memo and show cause notice are, therefore, without any authority in law and therefore, the same cannot be sustained. - Under the circumstances, action of the second respondent in resorting to taking action under section 68(4) of the VAT Act, when he had no power to do so cannot be justified with reference to the merits of the case. Even otherwise, this court is of the view that also on merits, the petitioner has made out a good case. - Decided in favour of assessee.
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2015 (11) TMI 938
Review Petition - Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessment orders were not barred by jurisdiction having been issued by authority not authorised thereto and were not barred by limitation having been passed beyond the statutory time-limit prescribed thereunder - Held that:- The essential challenge is of the concerned authority having extended the same not having the power in wake of absence of proviso to sub-section (2) of section 42 of the Act for a limited period from April 1, 1994 to August 1, 1998. On March 22, 1994, the order of delegation gave the powers under sub-section (1) to section 42 of the Act to the Assistant Commissioner of Sales Tax. It is explained by the respondent that no notification delegating the power under section 42 of the Act was passed after the reintroduction of the proviso to section 42 of the Act with effect from August 1, 1998 and the earlier notification dated March 22, 1994 continued to be in operation in respect of delegation of power. Such powers were delegated to the Assistant Commissioner of Sales Tax by a subsequent notification dated May 26, 2004 where designation of Assistant Commissioner was substituted by Deputy Commissioner and those powers which were enjoyed by Assistant Commissioner were given to the Deputy Commissioner. - in wake of the substantive power authorizing the State Government or the Commissioner to extend the period of limitation for carrying out the assessment as prescribed under the proviso to section 42(2) of the Act coupled with the specific consent having been expressed in writing and communicated to the concerned authority by the petitioner, the subsequent challenge seeking to review the order needs to fail. - Decided against Revenue.
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2015 (11) TMI 937
Forfeiture of taxes collected by Petitioner - Collection and remittance of tax illegally - Penalty u/s 65 under Assam General Sales Tax Act, 1993. - Held that:- Transaction between the petitioner on the one part and the Oil India and Gas Authority on the other, does not constitute a transaction of sale and purchase between the two oil companies for the periods, in question, because the Oil India and Gas Authority are declared to be oil companies only with effect from October 21, 2002. Prior to that, the Oil India and Gas Authority were not specified oil companies. The purchases made by the petitioners from the said two entities, cannot be treated as purchase from the oil companies; therefore, the question of exemption of tax did not arise. Accordingly, the petitioner paid the tax as per Schedule II of the Act. When the petitioner effected sale to its sellers, the petitioner collected the sales tax by way of reimbursement and some excess amount was collected. The excess amount, so collected, has been remitted to the Government and no part of the excess amount has been retained. When the goods are exempted from payment of tax, no person irrespective of a dealer, registered dealer or unregistered dealer shall collect tax in respect of goods, which are exempted from tax. The object is to prevent the consumer cheating, by dealers. If such contravention takes place and consumer cheating occurs then the penal provision, of forfeiture and penalty gets attracted. Here, in this case, the petitioner is a registered dealer. The petitioner has paid tax. The goods, in question, are taxable goods. The petitioner has paid tax to its seller, which was not a specified oil company at that time. The petitioner, therefore; has collected tax from its purchasers. The above facts clearly disclose that the petitioner has not committed any contravention of section 65A(1) since the goods, in question, are not exempted goods. Any person cannot collect tax on sale of goods, which is exempted from tax. In view of the clear distinction with regard to the proposition of law that is discernible from the provisions of section 65A(1), it cannot be said that the petitioner has contravened the provisions of section 65A(1). Therefore, the order of forfeiture and penalty is bad in law. The same is set aside. If any excess tax is collected by the petitioner, retained by him and not remitted, the assessing authority can verify and see that the excess tax collected and retained be collected by the Department. - Decided in favour of assessee.
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Wealth tax
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2015 (11) TMI 980
Addition in the value of wealth - whether the CWT(A), right in holding the impugned lands are urban lands and the BIAPPA is municipality or notified area as defined in section 2(14)(iii) of the Act - Held that:- respectfully following the co-ordinate bench decisions in assessee own case in [2015 (11) TMI 951 - ITAT BANGLORE]and also coordinate bench decision, we hold that the impugned lands are not urban lands within the meaning of section 2(ea) of the Wealth tax Act, 1957 and not exigible to wealth-tax. Accordingly, we set aside the CWT(A) order and delete the additions made by the assessing Officer. - charging of interest is mandatory and consequential, wherever there is a incidence of tax - Decided partly in favour of assessee.
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2015 (11) TMI 951
Lands pertaining to the assessee - whether are capital assets u/s 2(14) of the Income Tax Act? - whether the lands were capital assets in terms of the distance from the municipality and also the nature of the land and the activities carried on by the assessee on the said land? - Held that:- Since the Tribunal, in the assessee’s own case in income-tax proceedings with regard to the same subject matter, has taken the stand and held the land to be agricultural land and the definition of ‘capital asset’ in the Income-tax Act is similar to the definition of ‘urban land’ under the Wealth-tax Act, we respectfully follow the order of the co-ordinate bench of the Tribunal and hold the said land to be not urban land exigible to capital gains tax. Since we have held the land to be not ‘urban land’ and not exigible to wealth-tax, the issue of valuation of capital asset becomes academic and therefore is not adjudicated at this stage.
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Indian Laws
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2015 (11) TMI 1005
Applicability of Limitation Act - Whether the Limitation Act, 1963, particularly Section 3 and the Schedule will apply to any action instituted before the Commission under Section 86(1)(f) of the Electricity Act, 2003? - Whether the impugned order passed by APTEL permitting application of principles emerging from Section 14 of the Limitation Act, is against Law so as to warrant interference? - Held that:- A claim coming before the Commission cannot be entertained or allowed if it is barred by limitation prescribed for an ordinary suit before the civil court. But in appropriate case, a specified period may be excluded on account of principle underlying salutary provisions like Section 5 or 14 of the Limitation Act. We must hasten to add here that such limitation upon the Commission on account of this decision would be only in respect of its judicial power under clause (f) of sub-section (1) of Section 86 of the Electricity Act, 2003 and not in respect of its other powers or functions which may be administrative or regulatory. In the light of above there can be no difficulty in appreciating that M/s. LANCO rightly appreciated the hurdle of limitation in its way when such an objection was taken by the appellant and it rightly chose to seek exclusion of the period it was pursuing arbitration proceeding before the High Court, on the basis of principles underlying Section 14 of the Limitation Act. Having considered submissions of the parties we find no merit in the contention advanced on behalf of appellant that the commission was justified in not excluding this period of about one year on the ground that it was not bona fide and in such facts APTEL should not have taken a contrary view. The view which we are going to take has been indicated by this Court in several judgments including M.P. Steel Corporation (2015 (4) TMI 849 - SUPREME COURT). But the point requires no debate in view of clear stipulation in explanation (a) to sub-section (3) of Section 14 of the Limitation Act which reads as follows: "Explanation - For the purposes of this section, - (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted." The same conclusion is inevitable even on other relevant facts. The appellant had notice of the arbitral proceeding and after judgment in Gujarat Urja (2008 (3) TMI 654 - Supreme Court of India), the appellant also took no steps to get the application under Section 11 listed and disposed of earlier to 18.3.2009. The averments and the materials are not sufficient to establish the claim of the appellant that the proceeding ceased to be bona fide after 13.3.2008. As a consequence of aforesaid discussion, the challenge to impugned order in respect of views taken on the issue of limitation in the light of principles of Section 14 of the Limitation Act fails. Claim for reimbursement of MAT - Held that:- The claim of the appellant that liability of MAT is on account of change in Law and therefore required M/s. LANCO to adopt the procedure for making claims under Article 11.4 of the PPA does not appeal to us. The entire stipulation in Article 11.4 of the PPA is in respect of additional or reduced expenditures or costs which have not been catered for and arise later due to change in Law. The burden on account of income tax as per Article 3.9 of the PPA cannot be treated as additional or reduced burden because the entire actual advance income tax payable for the project is required to be reimbursed by the Board. It is immaterial whether the income tax payable is high or low in any particular year. When there is already a special provision in respect of entire payable taxes on income under Article 3.8 of the PPA, that should have precedence over the general provisions in Article 11.4 of the PPA. We have also considered other relevant provisions of the Income Tax such as definition of income, total income, tax and find that they do not help the case of the appellant in any manner. Section 2(43) defines 'Tax' to mean income tax chargeable under the provisions of Income Tax Act and 'Total Income' has been defined with reference to Section 5 which enlarges the scope of total income not only to income received or accrued but also deemed to be received or deemed to be accrued in India (for a resident). Simply because the exemption earlier granted to power generating companies has been withdrawn so as to subject them to income tax liability under a special provision, cannot lead to any inference as suggested on behalf of the appellant that it is not an income tax but some other tax which is levied under Section 115JB of the Income Tax Act. Hence we hold the claim for MAT covered by Article 3.8 of the PPA and payable as such when requisite conditions stand satisfied.
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