TMI Tax Updates - e-Newsletter
November 23, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes]- except in cases where movement of such goods is for further supply of the same goods, such inter-state movement shall be treated ‘neither as a supply of goods or supply of service,’
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GST:
Issue related to classification and GST rate on Terracotta idols – will be eligible for Nil rate
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Income Tax:
Depreciation on the asset which were claimed as application u/s 11 at the time of purchase - ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the Act of 1961 after extending normal depreciation and deductions from its gross income. - HC
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Customs:
Clarification in respect of anti-dumping duty on imports of color coated aluminium foil from China PR - regarding. - Circular
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Indian Laws:
Constitution of Task Force for drafting a New Direct Tax Legislation - The Terms of Reference (ToR) of the Task Force is to draft an appropriate direct tax legislation within six months
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Service Tax:
Classification of services - activities of unitisation, strapping and packeting in the client’s premises - Prior to the amendment made by the Finance Act of 2005 with effect from 16.06.2005, no demand of service tax can sustain - AT
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Service Tax:
Business Auxiliary Services - Commission received from airlines - There are only two parties in the transaction, the seller of space and the buyer of space. Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS - AT
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Service Tax:
Business Auxiliary Services - C&F Agent - the Corporation was engaged in purchase and sale of liquor and could not be considered as clearing and forwarding agent for the State Government - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (11) TMI 1154
TDS u/s 194J - Non Deduction of tax at source on payments made to faculty members - CIT-A allowed claim - Held that:- Commissioner of Income Tax(A) has held that in view of the judgments of Hon’ble Delhi High Court in the case of Commissioner of Income Tax vs NIIT (2009 (9) TMI 42 - DELHI HIGH COURT) and CIT vs Career Launcher India Ltd. (2012 (4) TMI 440 - DELHI HIGH COURT), tax u/s 194J was not deductible at source. However, the fact remains that the assessee’s plea of profit sharing with the faculty members is not evident from the facts on record. The ld. Commissioner of Income Tax(A), while deciding the issue in favour of the assessee, has not made reference to any document or evidence which enabled him to reach the conclusion that the faculty members were franchisees of the assessee company and not its employees. Although the ld. Commissioner of Income Tax(A) has held that the faculties were associated with the assessee on a revenue sharing basis, no evidence has been forthcoming from the assessee to justify this claim
We are of the view that the ld. Commissioner of Income Tax(A) has not examined the issue in proper perspective and the relief has been granted to the assessee only on the basis of written submissions made before him. We are of the considered opinion that the issue needs reexamination. As no evidence has been filed before us, it would be in the fitness of things if the issue is restored to the file of the ld. Commissioner of Income Tax(A) to examine this issue de novo and adjudicate on the same after considering evidences which the assessee may like to produce before him in this regard. - Decided in favour of revenue for statistical purposes.
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2017 (11) TMI 1153
Penalty u/s 271(1)(c) - non-striking off of the irrelevant clause in the notice - whether assessee has 'concealed particulars of income' or has 'furnished inaccurate particulars' of income? - Held that:- As in the notice issued u/s 274 r.w.s. 271(1)(c) of even date, both the limbs of Sec. 271(1)(c) of the Act are reproduced in the proforma notice and the irrelevant clause has not been struck-off. Quite clearly, the observation of the Assessing Officer in the assessment order and non-striking off of the irrelevant clause in the notice clearly brings out the diffidence on the part of Assessing Officer and there is no clear and crystallised charge being conveyed to the assessee u/s 271(1)(c), which has to be met by him.
As noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff (2007 (5) TMI 198 - SUPREME Court), the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of non-striking off of the irrelevant clause in the notice shows that the charge being made against the assessee qua Sec. 271(1)(c) of the Act is not firm and, therefore, the proceedings suffer from non-compliance with principles of natural justice inasmuch as the Assessing Officer is himself unsure and assessee is not made aware as to which of the two limbs of Sec. 271(1)(c) of the Act he has to respond. - Decided against revenue.
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2017 (11) TMI 1152
Disallowance u/s. 14A r.w. Rule 8D - sufficiency of own funds - Held that:- Hon'ble Jurisdictional High Court in the case of HDFC v. CIT (2016 (3) TMI 755 - BOMBAY HIGH COURT ) has held that if assessee possessed sufficient own funds, the presumption was that the investment was made from own funds and not from borrowed funds. Further we also observe that the assessee itself disallowed 10% of the dividend income at ₹.4,013/- and ₹.1,15,144/- for the Assessment Years 2008-09 and 2009-10 respectively at its own being the expenditure attributable for earning the exempt income and the Assessing Officer had not given any reason for rejecting the stand taken by the assessee. In the circumstances we hold that there is no need to make any further disallowance more than what the assessee already disallowed suomoto. In the circumstances, we direct the Assessing Officer to delete the disallowance made u/s. 14A r.w. Rule 8D of the I.T. Rules for the Assessment Years 2008-09 and 2009-10.
Investments in domestic companies inclusion for computing disallowance u/s.14A - whether dividend from domestic companies is not exempt from tax in view of section 115-O? - Held that:- This issue is decided against the assessee by the Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd [2017 (5) TMI 403 - SUPREME COURT OF INDIA] wherein held Section 14A of the Act would apply to dividend income on which tax is payable under Section 115-O of the Act and the question formulated in the appeal has to be answered against the appellant-assessee.
Disallowance made u/s. 14A should be added while computing the total income as per the book profits u/s. 115JB - Held that:- We admit the additional grounds and we find that the Delhi Special Bench of the Tribunal in the case of ACIT v. Vireet Investments Private Limited (2017 (6) TMI 1124 - ITAT DELHI) held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s. 14A r.w. Rule 8D of the I.T Rules, 1962. Thus respectfully following the said decision, we restore the grounds raised by the assessee in respect of disallowance u/s. 14A while computing the book profits to the file of the Assessing Officer who shall decide in view of the decision of the Special Bench (supra). Ground No. 4 and the additional grounds are allowed for statistical purpose.
Addition made u/s. 145A - previous year’s closing stock has not been taken as forming part of current year’s opening stock and made addition by the Assessing Officer - assessee before us submitted that the method of valuation of stocks as forming part of Tax Audit Report and referring to Point No. 5 submits that during the year the company has complied with the requirements of the Guidance Note issued by the Institute of Chartered Accountants of India [ICAI] with respect to the provisions of section 145A - Held that:- On hearing both the parties and perusing the orders of the authorities below. we are of the considered view that this matter has to be restored to the file of the Assessing Officer for fresh adjudication and the contentions of the assessee are left open.
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2017 (11) TMI 1151
Received on-money in cash for sale of Vatva land - addition relying on recovery of alleged diary at the time of survey, and (b) admission of director in the statement recorded under section 133A of the Act at the time of survey - Held that:- The alleged disclosure was retracted by directors by virtue of the affidavits and disclosure was a simplicitor as information. In the affidavit the assessee has leveled serious allegations against survey team pointing out that no such entries were found at the time of survey. They were noted during the course of survey under pressure of the survey team. When such a complaint was made during the course of assessment proceedings, and more so when the Chief Commissioner was appraised of this fact, then it ought to have been investigated and truth ought to have been dug out.
We have gone through complete order available on the paper book and found that at the time of survey, litigation was pending before the Hon’ble Bombay high Court in Company Petition between vendors of the assessee vis-à-vis other financial institutions. Rights in the land have not been crytstallied in favour of the assessee before the Hon’ble Bombay High Court. Decision was pronounced on 21.10.2011 whereas survey was conducted on 23.11.2010. Similarly, the assessee has brought to the notice of the AO that Civil Court in Ahmedabad has also granted status quo with respect to the land on an application filed by the GIIC. It has brought to the notice of the AO order of the Civil Court dated 6.9.2011 whose copy is available on page nos.188 to 190 of the paper book. Thus, the assessee was not having absolute alienable rights in the land at the time of survey.
We also find that name of any purchaser was not mentioned in the diary. It is highly improbable that a sum of ₹ 14.85 crores would be given by an unknown person to the assessee in cash for purchase of a land without executing any documents. It is also improbable that only cash components would be given by the prospective buyer of the land. It is pertinent to observe that when explanation or a defence of an assessee based on number of facts supported by evidence and circumstances required consideration whether explanation is sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. If we make an analysis of all the facts in their setting as a whole, then it would reveal that Revenue failed to bring corroborative evidence on record for demonstrating the alleged receipt of on-money by the assessee. The assessee was not having absolute alienable right in the land at the time of survey. It was subject to various litigations, and no prudent businessman would put such substantial money at a stake on a piece of land whose title is in dispute.
We have perused discussion made by the ld.CIT(A), but it is pertinent to observe that the ld.CIT(A) has failed to appreciate evidentiary value of the alleged diary, more so when the assessee has leveled serious allegation against survey team itself. If we appreciate chain of circumstances about existence of diary, then such circumstances considered by the AO are not worthy of credence. Taking into consideration facts of the case on record, we are of the view that Revenue failed to collect sufficient evidence for holding that the assessee has received money for sale of alleged land. Therefore, we allow the appeal of the assessee and delete addition - Appeal of the assessee is allowed.
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2017 (11) TMI 1150
Long term capital gains arising out of sale of quoted equity shares assessed as unexplained cash credit u/s 68 - AR submitted that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue - Held that:- In the light of the documents stated i.e. (I to xiv) we find that there is absolutely no adverse material to implicate the assessee to have entered gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. We take note that the ld. DR could not controvert the facts supported with material evidences which are on record and could only rely on the orders of the AO/CIT(A). We note that in the absence of material/evidence the allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore also fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. These evidences were neither found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38) of the Act. - Decided in favour of assessee.
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2017 (11) TMI 1158
Depreciation on the asset which were claimed as application u/s 11 at the time of purchase - double deduction - Held that:- Now the issue is squarely covered as stated by counsel for the respondent in case of Commissioner of Income Tax-II vs. Krishi Upaj Mandi Samiti [2015 (3) TMI 11 - RAJASTHAN HIGH COURT] wherein held Section 32(1) of the Act of 1961 provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the Act of 1961 after extending normal depreciation and deductions from its gross income. In computing the income of a charitable institution/trust depreciation of assets owned by such institution is a necessary deduction on commercial principles, hence, the amount of depreciation has to be deducted to arrive at the income available - Decided in favour of the assessee
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2017 (11) TMI 1149
ALV of the house property computation - Held that:- ALV of the house property should be as per the rateable value fixed by Municipal Authority. No infirmity in the order of the CIT(A). The CIT(A) after considering the fact that in the immediately preceding year 2010-11, the ALV has been determined at ₹ 4,63,651/-, enhanced the same by 5% and worked out to ₹ 4,86,834/-. The detailed reasoning given by CIT(A) is as per material on record, therefore, do not require any interference on our part.
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2017 (11) TMI 1157
Revision Petition u/s 264 - ground raised was that the AO had wrongly denied and not applied Section 44BB and had incorrectly invoked and applied Section 44DA of the Act - Commissioner's reasoning and observation was that the petitioner, for some unexplained reasons, deliberately did not file an appeal against the assessment order for Assessment Year 2012-13, though it had filed appeals for other years and this was an attempt to invoke Section 264 of the Act as a backdoor entry to file an appeal
Held that:- We find that the impugned reasoning cannot be sustained for it is contrary to the legislative mandate of Section 264 of the Act and the revisionary power conferred on the Commissioner. Section 264 of the Act empowers the jurisdictional Commissioner to revise any order (other than an order to which Section 263 applies) passed by an authority subordinate to him, on his own motion or on an application by the Assessee for revision. The Commissioner is empowered to call for the record of any proceeding under the Act in which such an order has been passed and may make such inquiry or cause such inquiry to be made and pass such order thereon, not being an order prejudicial to the Assessee and subject to the provisions of this Act, as he thinks fit. Statutory power has been conferred on the Commissioner to examine and correct any order passed by a subordinate authority.
It is not the case of the respondents or the reason given by the Commissioner that time for preferring appeal had not expired. It is the admitted case that time for filing appeal against the assessment order for AY 2012-13 had expired. The assessee had waived his right to file appeal. Clause (a) is therefore not attracted. Clause (b) to Section 264(4) of the Act is also not attracted in the present case and it is not the case of the Revenue that the petitioner has filed an appeal for 2012-13 before Dy. Commissioner (Appeals). The petitioner has also not filed any appeal against the said order before the Commissioner (Appeals) or the Tribunal to attract the negative stipulation in clause (c) to Section 264 (4) of the Act. The present case therefore, does not fall under clauses (a) to (c) of Section 264 (4) of the Act.
The impugned order no doubt reflects and states that the contention of the petitioner was incorrect and merits rejection but it does not assign and give any reason for the said conclusion. The impugned order cannot be sustained as it does not examine the contention on merits while recording the decision. The Commissioner must give and assign reasons for taking a particular view, even if he accepts the findings and reasons recorded by the assessing officer and does not agree with the contention raised by the assessee. This court is, therefore, deprived and is unable to fathom the reasons and ground which were in the mind of the Commissioner. The order of the Commissioner should have contained reasons for the conclusions arrived at and ought to have dealt with the issue on merits as required under Section 264 of the Act.
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2017 (11) TMI 1148
Addition towards share capital u/s 68 - addition solely on the basis of communication received from Mauritius Revenue Authorities which suggest that the Mauritius company did not have funds to make investment in assessee company - difference in two communications received from Mauritius Revenue Authorities which has not been properly explained by the assessee with necessary evidences - Held that:- The second communication received from the Mauritius Revenue Authorities contains full details sought by the AO including the name, address and citizenship of directors, copy of share certificate issued by the assessee company, income-tax return filed by Mauritius company with Mauritius Revenue Authorities, bank statements of M/s Strand Developers Mauritius Ltd, the business customer information cum account opening form of HSBC Mauritius Ltd and financial statement of M/s Strand Developers Mauritius Ltd. The AO also not disputed the fact that the reasons for difference in two communications sent by the Mauritius Revenue Authorities has been clarified by the Director General of Mauritius Revenue Authorities in their communication dated 21-12-2011 which has been extracted by the CIT(A) in his order at para 3.4.1. The other documents sent by the Mauritius Revenue Authorities has also been listed by the CIT(A) in the same paragraph. By these documents, a clarification has been received from the Director General of Mauritius Revenue Authorities which was forwarded by the Under Secretary, FT & TR-II, CBDT directly to the AO. Therefore, we are of the view that there is no merit in the arguments of the Ld.DR that the CIT(A) has not considered the necessity of further enquiry with regard to the genuineness of transactions and creditworthiness of the parties. We further are of the opinion that once communication received from the designated authority through FT & TR which is the authorized agency for exchanging information between two countries u/s 90 of the Income-tax Act, 1961 and such information has been received through proper channel, then there is no scope for the AO as well as the CIT(A) to conduct further enquiries with regard to the creditworthiness of the parties.
All details like share certificate issued by the assessee company and bank statement of M/s Strand Developers Mauritius Ltd clearly establishes receipt of money by the assessee company. The assessee also furnished copies of FCGPR and other compliances with respect to RBI and Foreign Inward Remitance Certificate which clearly proves the identity, genuineness of transactions of investment received from M/s Strand Developers Mauritius Ltd. The subsequent communication received from Mauritius Revenue Authorities alongwith the income-tax return further prove the fact of creditworthiness of the share and capacity to invest in assessee company. Therefore, we are of the considered view that the AO was incorrect in holding that the assessee has failed to discharge the genuineness of transactions and creditworthiness of the parties. - Decided in favour of assessee
Disallowance of proportionate administrative and other sales and marketing expenses attributable to Income from house property - AO has disallowed expenses relatable to income under the head ‘ Income from house property’ on the ground that the assessee has claimed separate deductions as provided u/s 24(a) & 24(b) in the computation of income under the head 'Income from house property’ whereas failed to disallow corresponding expenditure debited in the P&L Account while computing income under the head ‘Income from business’ - assessment year 2008-09 - Held that:- We find force in the arguments of the Ld.Counsel for the assessee that the AO while calculating disallowance of expenditure relatable to income from house property has allowed deductions towards property maintenance expenses already disallowed by the assessee in its computation and failed to deduct rates and taxes, professional fees and donations without any reason. We further observe that the assessee has already disallowed on its own expenses directly relatable to the activity of income from house property. The other expenses debited in the P&L Account are purely in the nature of corporate / routine expenses allowable u/s 37. The AO has not given any reasons for not considering the expenses already disallowed by the assessee in its computation and also corporate and other routine expenses, which are allowable u/s 37. Therefore, we are of the considered view that the issue needs to be examined by the AO .
For 2009-10 admittedly, the assessee has filed revised return during the course of assessment proceedings to make a claim of deduction towards property maintenance expenses against business income which has not been taken cognizance on account of limitation. Therefore, we are of the considered view that considering the facts and circumstances of the case and also relying upon the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd [2006 (3) TMI 75 - SUPREME Court] and CIT vs Prithvi Brokers & Shareholders Pvt Ltd (2012 (7) TMI 158 - BOMBAY HIGH COURT), the claim of the assessee with regard to the deduction towards property maintenance expenses against business income needs to be considered in the lights of the facts without going into the technicality of the issue of limitation of filing revised return. Therefore, we set aside the issue to the file of the AO and direct him to consider the issue afresh after affording reasonable opportunity of hearing to the assessee.
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2017 (11) TMI 1147
Disallowance of “Provision for outstanding expenses" - Held that:- The difference between the provision and actual amount shall usually be adjusted in the subsequent years by debiting/credit the profit and loss account. The assessee submitted that the assessee is consistently following same methodology of estimation year after year. We find merit in the submissions of the assessee. We have also gone through the details of outstanding expenses given in page No. 66 of the paper book. We noticed that the same pertain to various expenses. It, inter alia, includes certain payments covered by the provisions of sec. 43B of the Act like leave encashment, excise duty etc. In respect of expenses attracted by the provisions of section 43B, the AO is required to examine them in terms of sec. 43B only. In this view of the matter, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. Accordingly we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the items covered by section 43B of the Act in accordance with the said section.
MAT computation - addition of outstanding expenses while computing book profit under the provisions of section 115JB treating the same as unascertained liability - Held that:- Since we have held that the liabilities are accrued liabilities, the same would fall under the category of ascertained liabilities. Hence the same is not required to be added u/s. 115JB of the Act. Accordingly, we set aside the order passed by the tax authorities on this issue.
Addition of modvat credit - Held that:- We notice that the assessee has given workings relating to modvat in page No. 30 of the paper book, wherein it has computed the modvat amount under inclusive method. The assessee has demonstrated that there is no impact on the profit if modvat is accounted under inclusive method. Further identical issue in assessee’s own case relating to A.Y. 2007-08 has deleted identical disallowance made in that year. Since the assessee has demonstrated that there is no impact on profit if inclusive method of accounting is followed, we do not find any substance in the addition made by the Assessing Officer.
Denial of set off of unabsorbed depreciation against long term capital gain - Held that:- Direct the Assessing Officer to allow set off of unabsorbed depreciation against long term capital gain. As decided in case of M/s. Amforge Industries Ltd. (2014 (10) TMI 957 - ITAT MUMBAI) wherein it was held that treatment given to current year depreciation would equally apply to brought forward depreciation and accordingly unabsorbed depreciation can be set off against capital gain.
Disallowance of depreciation on walls and fences - Held that:- The assessee has taken entire amount of sale consideration as pertaining to land. When we allocate a portion of the same towards wall & fences, the sale consideration pertaining to land should be reduced by that amount. Accordingly, we direct the Assessing Officer to reduce the sale consideration of land by ₹ 7,64,689/- and compute long term capital gains accordingly.
Rejection of claim of set off of unabsorbed depreciation against business income - Held that:- Provisions of section 32(2) as amended by the Finance Act, 2001 would allow the unabsorbed depreciation allowance available in A.Ys. 1997-98 to 2001-02 to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not be set off till A.Y. 2002-03 then it would be carried forward till time it is set off against the profits and gains of subsequent years
Charging of interest u/s 234A - A.R submitted that the due date for filing return of income was extended during the year under consideration upto 15th October, 2010 and the assessee has filed the return of income on 11th October, 2010. Accordingly she submitted that the interest u/s 234A is not chargeable - Held that:- We restore this issue to the file of the AO for examining the claim of the assessee. We direct him not to levy interest u/s 234A of the Act, if the assessee had filed return of income within extended time limit.
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2017 (11) TMI 1146
Validity of reopening of assessment - objections against re-opening was not disposed of by way of speaking order - Held that:- AO has not passed any speaking order, even in the Assessment Order there is no whisper about the objections raised by AO that assessment cannot be re-opened where the AO had invoked provision of Section 154 of the Act. Moreover, AO has discussed the reply of the Assessee raised during the course of re-assessment proceeding.
We hereby set aside the assessment order, and direct the AO to dispose of the objection by way of separate speaking order and in case, if the objections are rejected he would make assessment afresh as per law
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2017 (11) TMI 1145
Penalty u/s 271(1)(c) - Reimbursement of expenses paid to agent for collecting FDRs - Held that:- It cannot be held that assessee has furnished any inaccurate particulars of income because as a matter of past practice, assessee has been reimbursing the expenses incurred by the agents for collecting FDRs and the findings given in the quantum side goes to show that disallowance has been made purely on ad-hoc basis which definitely cannot warrant levy of penalty for concealment on the charge of furnishing of inaccurate particulars. There is no material referred in the assessment order that these are bogus or non-genuine payments. Therefore, the ld. CIT (A) has rightly deleted the penalty on this addition.
Disallowance out of advertisement and publicity expenses - expenses have been incurred but since they pertain to the earlier years, therefore, disallowance has been made in this year - Held that:- There is no finding that bills for incurring such expenditure too were received in earlier years or expenditure had not been crystallized in this year. Mere disallowance of expense in quantum proceedings does not ipsofacto lead to an inference of charging assessee for furnishing of inaccurate particulars of income and levy penalty thereon in absence of any material brought on record that assessee’s claim in this year lacks bonafide. In any case, such claim of expenditure which otherwise is related to business not claimed in the earlier year albeit in this year cannot fall in the category of furnishing of inaccurate particulars as held by the ld. CIT(A) and, therefore, we uphold the deletion of penalty on this score.
Disallowance of amount written off outstanding against M/s Southern Synthetic Limited - Held that:- the assessee has made advance to its subsidiary company, M/s Southern Synthetic Ltd. from time to time for urgent requirement of the said subsidiary company and also on account of its business needs, as the said company was manufacturing certain chemicals which were raw materials for the assessee-company’s product. The amounts were advanced to the subsidiary company with a view to help in production of raw material and manufacturing line of business of the company. In light of such business requirement and commercial expediency; advances were given to the subsidiary company from time to time. Since the subsidiary company got merged with another company and BIFR wrote a letter to this effect and in view of such an event Assessee Company took a business decision that the amount has become irrecoverable in the wake of BIFR order; and therefore, assessee has written off the said advance from its books. Since the advances given by the assessee-company were for the purpose of business and writing off of such advance has been claimed, then it cannot be held that the assessee has furnished inaccurate particulars - Appeal of the Revenue is dismissed.
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2017 (11) TMI 1156
Treatment of loss on sale of loan portfolio which was not accepted as falling in the capital stream but treated as income - Held that:- The assessee, a non-banking financial company, had relied upon Section 36(2)(i) which reads as follows:
“36.(2) In making any deduction for a bad debt or part thereof, the following provisions shall apply-
(i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or moneylending which is carried on by the assessee.”
The Court notices that the assessee relied upon an identical treatment of a similar amount for the previous year i.e. A.Y. 2004-05 and the order of the Tribunal. No substantial question of law
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2017 (11) TMI 1155
Denying the approval in respect of certain proposed amendments in the Trust Deed of the applicant - Whether the proposed amendments in the Trust Deed are Charitable and Religious in nature or not, the distinction between the two not being in water tight compartments, it is only appropriate that a holistic view of the matter is taken? - Held that:- This court considers it appropriate to remand the case back to the said Authority for reconsideration of the case of the petitioner Trust in this regard. At the same time, the petitioner-Trust may also consider incorporating the requisite amendments in the proposed amendments of the Trust Deed to fall in line with the letter and spirit of the Charitable activities of the Trust as per the concerned provisions of the Income Tax Act, 1961.
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2017 (11) TMI 1144
Reopening of assessment - reason to believe - wrong calculation of 80-O, 80HHC & 80IA deduction and interest payable at compound interest rate to APSEB - Held that:- These matters had come up for appeal in the year 1997-98 & 98-99 and dealt by him in detail in the orders of those years which were identical in present appeal. Reopening without any appropriate satisfaction/reason is not done as per the law by the Assessing Officer. Thus, the assessee’s case gets support from the Hon’ble Apex Court judgment in case of Kelvinator India (P) Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] wherein it is held that “post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess.
AO has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer.”
The appeal of the assessee is allowed on the ground that the CIT(A) erred in upholding the re-opening of the assessment u/s 147 of the Act - Decided in favour of assessee.
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2017 (11) TMI 1143
Addition of bogus purchases - profit estimation - assessee was not allowed cross examination of the parties on whose bases addition made - Held that:- The estimation of the profit element involved in making of the purchase under consideration had fairly been adopted by the CIT(A) @25% after considering certain important factors, viz. (i). the gross profit declared by the assessee as deliberated upon by the CIT(A) in the backdrop of the profit percentage involved in the trade line of the assessee did not inspire much of confidence; and (ii). the assessee had himself offered that addition within the range of 12.5% to 25% of the aggregate value of the purchase transactions under consideration may be made as regards the profit embedded in respect of the purchase transactions under consideration. We have given a thoughtful consideration to the estimation of the profit element as regards the bogus purchases under consideration at 25% by the CIT(A), and are persuaded to be in agreement with him. We are of the considered view that the CIT(A) after rejecting the books of account of the assessee, had therein deliberated on the gross profit of the assessee as against that reflected in the trade line being of the view that the same did not inspire much of confidence, had thus discarded the same by observing that the profit involved in the trade line of the assessee was found to be comparatively more. Thus, the aforesaid observations of the CIT(A) laid down the very foundation of his conviction that the purchases debited by the assessee in his books of account were inflated. We find that no attempt had been made by the ld. A.R before us to either dislodge the said observation of the CIT(A), or to prove that the same was perverse
We find that the A.O after making independent inquiries and conclusively proving that the assessee had failed to substantiate the genuineness and veracity of the purchase transactions and therein discharge the onus as stood cast upon him, had only thereafter concluded that the purchase transactions under consideration were found to be ingenuine. We are of the considered view that no infirmity as regards sustaining of the observations of the A.O and the addition emerging there from does arise from the order of the CIT(A), solely for the reason that the assessee was not allowed cross examination of the aforementioned parties- Decided against assessee.
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2017 (11) TMI 1142
Bogus purchases - genuineness of the purchase transactions could not be verified - Held that:- CIT-A restricting the disallowance/addition to 6.5% of the total non-genuine purchases, had also taken due cognizance of the fact that in the case of the assessee for the immediate succeeding years, viz. A.Y. 2010-11 and A.Y. 2011-12 the addition was restricted by the first appellate authority to 6%. We are of the considered view that the CIT(A) in the present case had on the basis of a very well reasoned order restricted the addition in the hands of the assessee to 6.5% of the total purchases aggregating to ₹ 3,61,50,427/- which were claimed by the assessee to have been made from the aforementioned 13 parties. We are persuaded to be in agreement with the view taken by the CIT(A), and finding no reason to dislodge the view taken by him, therefore, uphold his order. Appeal of the revenue is dismissed.
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2017 (11) TMI 1141
Bogus purchases - estimation of income - Held that:- We modify the order of the Ld. CIT(A) and sustain the addition of 12.5% of the total amount of bogus purchases determined by the AO. We therefore, partly allow the appeal of the revenue and direct the AO to compute the addition @ 12.5% of the total amount of bogus purchases.
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2017 (11) TMI 1140
Non deduction of tds - agreement with Vodafone for extending certain space facility for which the company agreed to pay rent and besides that deposit for security purpose - Held that:- The assessee entered into an agreement with Vodafone for extending certain space facility and the said company agreed to pay the rent of ₹ 60,000/- per month besides security deposit. According to the assessee out of ₹ 11,61,000/- received from Vodafone, ₹ 7,20,000/- was received towards rent which was offered to tax and the remaining amount was received towards security. The authorities below have treated the remaining amount as revenue receipt for the reason that the assessee had claimed TDS of ₹ 1,16,100/- in computation of income. As per the AO the authorized representative of the assessee failed to explain as to why the company Vodafone deducted the tax at source on the entire payment if the part of it was towards security. On the other hand the Ld. CIT(A) affirmed the action of AO holding that the assessee has failed to reconcile the balance with the liability shown in the balance sheet to substantiate its plea. So, in our considered view before making addition of the amount in question, AO should have verified the facts to establish that the entire amount was revenue receipt. Under these circumstances we are of the considered view that further verification of the facts by the AO in the light of the contention of the assessee is necessary. Hence, we set aside the findings of the Ld. CIT(A) and restore the issue back to the file of AO to decide the same afresh - Appeal filed by the assessee allowed for statistical purposes.
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2017 (11) TMI 1139
TDS u/s 194I - disallowance of support service charges in respect of rent payment sustained by the CIT(A) u/s 40(a)(i) for failure to deduct tax at source - Held that:- In this case, there is no dispute with regard to the fact that KPMG has taken premises on rent from landlords. There is no dispute with regard to the fact that KPMG has complied with TDS provisions on such rental payments. The assessee has made the payment on the basis of agreement with KPMG which clearly states that the common cost incurred by KPMG shall be shared by group companies on cost to cost basis. Therefore, considering the facts and relying upon the ratio in Result Services Pvt Ltd (2012 (7) TMI 217 - ITAT DELHI) we are of the view that there is no obligation on the part of the assessee to deduct TDS on reimbursement of support service charges to KPMG. Hence, we direct the AO to delete the disallowance made u/s 40(a)(i) towards rent payments. - Decided in favour of assessee.
Undisclosed income from professional services on the basis of AIR information - AO made addition on the basis of assessee’s letter dated 29-23-2008 which states that the entries did not relate to assessee and also not able to reconcile with its books of account - Held that:- AIR information appeared in assessee’s PAN in the database of the income-tax department contains certain payments made to the assessee. Once there is an entry in the AIR information, it is incumbent upon the assessee to reconcile the difference in AIR with its books of account. The assessee neither reconciled the difference nor filed any explanations as to how entries appear in the AIR does not belong to the assessee. Merely stating that the entries in the AIR information is not relating to the assessee would not absolve the assessee’s responsibility of explaining the entries appeared in AIR. At the same time, the AO made additions only on the basis of AIR information without conducting any further enquiry with regard to the receipts appeared in assessee’s AIR database. Though the AO has issued notices u/s 133(6) to the parties, completed the assessment without obtaining any information from such parties. Therefore, we are of the considered view that the issue needs to be reconsidered in the light of the explanations of the assessee. Hence, we set aside the issue to the file of the AO and direct him to cause necessary enquiry.
TDS u/s 195 - professional charges paid outside India without deduction of tax at source - According to the AO, the payment made to e-Gen Consultants Ltd, Bangladesh is in the nature of royalty within the meaning of section 9(1)(vi) and Article 13(2) of the India Bangladesh DTAA - Held that:- In the view of the matter and being consistent with the earlier decision taken by the co-ordinate bench in assessee’s own case for the earlier assessment year, we are of the view that there is no obligation on the part of the assessee to deduct tax at source on professional charges paid to e-Gen Consultants Ltd, Bangladesh as such payment neither falls under the definition of ‘royalty’ under Article 12 of Indo-Bangladesh DTAA or under Explanation to section 9(1)(vi) of the Income-tax Act, 1961. The CIT(A), after considering relevant facts, has rightly deleted addition made by the AO. We do not find any error in the order of the CIT(A). Hence, we are inclined to uphold the order of CIT(A) and reject ground raised by the revenue.
TDS u/s 194C - as per AO payment made by the assessee are in the nature of contractual payments coming under the definition of ‘contracts’ as defined u/s 194C - Held that:- No merit in the findings of the AO for the reason that there is no contract between the assessee and KPMG for carrying out any works. The assessee as part of the KPMG group of companies agreed to share common facilities like infrastructure cost and office supplies. Such costs are incurred by KPMG on payment and the same has been allocated to group of companies on cost to cost basis without any element of profit. The assessee being part of KPMG group has used common facilities provided by KPMG for which it has reimbursed expenditure incurred by KPMG on cost to cost basis. Therefore, we are of the view that the impugned payments are only in the nature of reimbursement of actual expenditure incurred by the assessee for which provisions of section 194C has no application. The assessee is not under obligation to deduct tax at source on amount reimbursed on actual cost basis. The CIT(A), after considering relevant submissions has rightly deleted additions made by the AO. We do not find any error in the order of the CIT(A) - Decided in favour of assessee.
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2017 (11) TMI 1138
Disallowance u/s 69C on account unexplained purchases - CIT-A restricting the disallowance to 15% against the peak credit made by AO detected during the course of survey u/s 133A of the Act - Held that:- Admittedly, there cannot be sale without purchases. Admittedly, in such type of cases, there is no option but to estimate the profit which depends upon the subjective/objective approach of an individual and the material facts available on record. In the appeal for Assessment Year 2007-08, the Ld. Assessing Officer disallowed ₹ 23,34,801/- on account of alleged bogus purchases by invoking the provisions of section 69C of the Act on the plea that the assessee could not substantiate the genuineness of the purchases and thus the income was assessed at ₹ 1,15,53,461/-. Likewise, for Assessment Year 2008-09, the income was assessed at ₹ 1,27,79,350/- and for Assessment Year 2009-10, it was assessed at ₹ 4,25,21,584/-. For Assessment Year 2010-11, the income was assessed at ₹ 6,31,87,980/-. The Ld. Assessing Officer took the year-wise peak credit as has been mentioned in the respective assessment order. It is noted that while adjudicating the issue, the Ld. Commissioner of Income Tax (Appeal) sought remand report from the Ld. Assessing Officer and the same was duly considered. Admittedly, the necessary documents just like purchase bills, sale invoices, process flow chart, contract agreements, inspection notes inward and outward register of the material and the disputed purchases were debited to sewage treatment plant and the authenticity of the documents was not disputed by the Ld. Assessing Officer. Thus, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), because, the assessee has proved consumption, consequently, this ground of the Revenue is without any merit, therefore, dismissed.
Allow deduction u/s 80IA of the Act in respect of addition made u/s 69C - Crux of arguments on behalf of the assessee is that any disallowance of purchases made in the assessment order would increase in profit and gains eligible business as a result of which the assessee would be entitle to claim the increased deduction u/s 80IA(4)- Held that:- We find that finally, the Assessing Officer was directed to re-compute the profit and gains of STP Unit. We may add here that considering the language of section 80IA, the Ld. Assessing Officer is directed to examine the factual matrix and also whether the assessee has satisfied/fulfilled the conditions enumerated in the section then decide in accordance with law. This ground of the Revenue is allowed for statistical purposes.
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2017 (11) TMI 1137
No hearing provided before referring the matter to the TPO under provisions of section 92CA(1)- violation of principles of natural justice - Held that:- Not providing an opportunity to the assessee before referring the matter to TPO is a jurisdictional issue and thus the violation of same leads to an order which is not sustainable in law and the same is invalid /void. Hence, the orders passed by AO are bad in law and therefore stands quashed. In this view of the matter, the additional grounds raised by the assessee are allowed.
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2017 (11) TMI 1136
Short-term capital gains on sale of shares as income under the head "Income from other source" - disallowance of purchase cost of shares by treating the same as an unexplained expenditure under section 69 of the Act and bringing to tax the same under the head "Income from other sources" - Held that:- The activities of share transactions in the case of listed shares is highly regulated activity which is controlled, monitored and regulated by the SEBI and stock exchanges. The assessee could not explain why the said intermediary Alliance Intermediaries and Network P. Ltd. did not demand the payment in the intervening period from May 15, 2007 till November 29, 2007 and why they did not resorted to the prescribed modes of auction, penalty etc., as stipulated by stock exchanges in case of defaulting clients such as auction, penalties etc. The assessee did not brought on record what happened to the delivery of shares which was purchased on May 15, 2007 and no evidence is brought on record that Alliance Intermediaries and Network P. Ltd. was holding the said shares physically/electronically from May 15, 2007 to December 5, 2007 in brokers client pool account on behalf of the assessee.
It is also claimed that the said Alliance Intermediaries and Network P. Ltd. charged interest of ₹ 9,155 from the assessee for delayed payment but the assessee did not made payment for the interest of ₹ 9,155 while payment for purchase consideration of ₹ 93,755.95 was made on December 3, 2007 as the statement of account issued by Alliance Intermediaries and Network P. Ltd. shows interest of ₹ 9,155 recoverable from assessee as on March 31, 2008 (page 6/pb). There is no evidence on record which proves that the assessee did make payment of the said interest to Alliance Intermediaries and Network P. Ltd. Thus, even if we eschew the statement of Mr. Mukesh Choksi, then also the primary onus as cast upon the assessee did not stood discharged by the assessee.
The Revenue rebutted the claims of the assessee but the assessee could not rebut the incriminating material brought on record by the Revenue which is obtained as a result of an enquiry, as detailed above. Since the assessee is asking the Tribunal to accept a course which is not a normal course of conduct prevailing on the stock exchanges for dealing in securities, the onus is heavy on the assessee to prove why he deviated from the normal course of conduct while dealing in securities which the assessee in the instant case failed to discharge. In any case now it is settled by the Tribunal in the cases of Mr. Mukesh Choksi that he and his group concerns had indulged in providing accommodation entries wherein some of the orders of the Tribunal are detailed in the preceding paragraphs. Thus, we have no hesitation in confirming the appellate orders of the learned Commissioner of Income-tax (Appeals) which we affirm/confirm. The assessee fails in this appeal and the appeal of the assessee stood dismissed. - Decided in favour of revenue
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2017 (11) TMI 1135
Bogus purchases - profit estimation - non maintenance of proper books of accounts - net profit of 5% of the turnover was added as income to the total income of the assessee - Held that:- Admittedly, in such type of cases, there is no option but to estimate the profit which depends upon the subjective/objective approach of an individual and the material facts available on record. Considering the material facts, available on record, we find that, to plug the revenue leakage, the Ld. Assessing Officer has taken a justifiable approach. Before this Tribunal, as mentioned earlier, on the appointed date, the assessee neither presented itself, nor moved any adjournment petition, to justify the conclusion drawn in the impugned order. We find that the factual finding recorded in the assessment order has not been controverted by the First Appellate Authority. Normally, in such type of case, the Tribunal and the Hon'ble jurisdictional High Court has adopted the profit at the rate of 12.5% of the bogus purchases. However, considering the material facts, the Ld. Assessing Officer has already taken a justified view, which deserves to be upheld. Therefore, we reverse the order of the First Appellate Authority and upheld the conclusion drawn in the assessment order on the issues in hand. The appeal of the Revenue, is therefore, allowed.
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2017 (11) TMI 1134
Addition on account of bogus purchases - estimation of profit - Held that:- The assessee could not produce the necessary details like delivery of challans, etc.. As per the Revenue, at the same time, the assessee did not produce the evidence of genuine purchase, therefore, considering the material facts, we have no option but to estimate the profit. It will meet the end of justice and to put an end to the litigation, if the disallowance is restricted to @ 20% (as agreed by the ld. counsel for the assessee) of the bogus purchases. It will the safeguard the interest of Revenue and will cover the leakage of revenue. Accordingly, the appeal of the assessee is partly allowed.
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2017 (11) TMI 1133
Reopening of assessment - assessee had taken cheques from the accommodation entry provider - reasons to believe - borrowed information - no independent application of mind by AO - Held that:- Going through the reasons to believe recorded by the Assessing Officer, reproduced hereunder, we concur with the contention of the ld. AR that it is vague as the reasons to belief has been formed solely on the basis of information received from the Investigating Wing of the Department.
No specific source of information has not been disclosed, on the basis of which it has been assumed that assessee had taken cheques from the accommodation entry provider, after paying them unaccounted cash. Obviously, no occasion to the assessee has been given to cross examine the alleged entry provider, on the basis of whose statements or intimation, the Investigation Wing of the Department had come to the finding of alleged accommodation entry and sent it to the Assessing Officer, who has based on his reasons to initiate reopening proceedings without examining the veracity of the said information. The alleged information of the Investigation Wing can alone at the best be a reason to suspect, however, in the absence of any other material, same cannot be a tangible material for the formation of belief. Undisputedly, in the present case, there was no material other than the purported information before the Assessing Officer to form his reasons to believe that there was an escapement of assessable income. - Decided in favour of assessee.
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2017 (11) TMI 1132
Disallowance on account of additional payment made for the purchase of land - as per assessee he has not claimed the expenses made categorized as Additional payment as a deduction either by debiting to Profit and Loss account or through computation and therefore Assessing Officer was not justified in disallowing the same - Held that:- The assessee has also either acted as a land holding company purchasing land and transferring the development rights in respect of land purchased to BPTOP Ltd. or accumulating development rights in respect of land purchased by other group companies and transferring these land development rights to BPTOP Ltd. To that extent, the facts of case of assessee company are similar and identical to the facts of other cases which are decided by various coordinate benches of Tribunal, New Delhi on which reliance is placed by the learned AR of the assessee.
There is nothing on record that Additional payment is not recorded in books of account and we are unable to find any mention by the Assessing Officer in assessment order or by the learned CIT (Appeals) in his order. Accordingly, the argument of the learned CIT [DR] that Additional payment is not recorded in books of accounts is not factually correct.
As facts of case of assessee are similar and identical to the various cases decided by coordinate benches of Tribunal, New Delhi where similar disallowance has been deleted by the Tribunal in other group cases cited by the assessee. Being bound by the decision of the Coordinate Bench, it is held that no disallowance of additional payment can be made. In the result, it is held that the learned CIT (Appeals) was not justified in upholding part of the disallowance of additional payment on the ground that neither the assessee has debited additional payment in its Profit & Loss account nor has claimed it. - Decided in favour of assessee.
Disallowance of cash payment made under section 40A(3) is deleted as assessee has not claimed any deduction in respect of cash payment made.
Assessment u/s 153A - Held that:- Validity of notice was not upheld on the ground that satisfaction note was silent about the assessment year in which incriminating information was discovered on search. See CIT vs Singhad Technical Education Society [2015 (4) TMI 190 - BOMBAY HIGH COURT]. As the Assessing Officer has failed to record the said documents in the satisfaction note and in our considered view, the Assessing Officer cannot go beyond the documents referred in the satisfaction note. Accordingly on this reason alone, this document could not be considered for assessment under section 153-C and the above document cannot be used in the assessment made u/s. 153-C, therefore, the addition of ₹ 9 lacs is not warranted and is hereby deleted. - Decided in favour of assessee.
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2017 (11) TMI 1131
TPA - comparable selection - Held that:- As apparent from the impugned order of the DRP that the DRP has adjudicated only selective points from the objections raised by the assessee instead of going into all aspects of functional comparability. The learned Authorised Representative of the assessee has relied upon various decisions on the issue of functional dissimilarity of these companies in both segments and therefore we find that the issue of comparability in respect of all these companies where the assessee raised objections of functional dissimilarity require a proper verification and examination. Accordingly, we set aside the entire TP issue in both segments i.e. software development services as well as ITES to the record of the DRP for adjudication of the same afresh by a speaking and reasoned order on all the aspects of functional comparability as raised by the assessee. Needless to say the assessee be afforded an opportunity of hearing and also to support its objections with precedent.
Deduction under section 10A computation - Held that:- We find that the issue of expenditure incurred towards travel expenses in foreign currency is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction under section 10A of the Act, is covered in favour of the assessee by the decision of the Hon’ble Karnataka High Court in the case of CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT].
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2017 (11) TMI 1130
Reopening of assessment - Deduction under section 10B disallowed - the assessee is not involved in the business of export and import of article or things but was merely doing a job work to the person for sending the gold to the assessee from Dubai which the assessee is exporting back after doing job work - Held that:- The hon'ble jurisdictional High Court in the case of Mahavir Spinning Mills Ltd. v. CIT [2004 (5) TMI 38 - PUNJAB AND HARYANA High Court] opined that no allegation that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Absence of this finding makes the action of the Assessing Officer wholly without jurisdiction. In the instant case there has been no change in the business activity of the assessee right from the inception of the company and the deduction under section 10B has been continuously claimed examined and allowed by the Department.
In the instant case after going through the reasons recorded by the Assessing Officer it cannot be said that there has been any no new material that necessitate neither reopening nor any new fact should have been brought to the notice. The Assessing Officer has arrived at his satisfaction from the material available on record namely the export of gold to Dubai and the job work done by the assessee to two concerned persons present at Dubai. - Decided in favour of assessee.
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2017 (11) TMI 1129
Claim of exemption u/s 54B - denial of claim primarily for the reason that the land in question was not used for agricultural purpose for two years immediately preceding the date on which the said agricultural land was sold by the assessee - assessee has cultivated only kharif crop in the immediately preceding two years from the date of sale of land - Held that:- The objections raised by the Commissioner of Income-tax (Appeals) in rejecting the claim of the assessee are of trivial nature and would not impact adjudication of care issue. In our opinion the same are not warranted when the entries made in the revenue records clearly show that there was cultivation on the land. In so far as determination of two years period is concerned, the period of two is to be determined from date of sale and not the immediately two preceding financial years. The date of sale of land is January 3, 2012. Thus, the period of two years have to be reckoned from January, 2010 onwards. As has been pointed earlier that the land of the assessee is Jirayat land. The assessee could cultivate Kharif crop only on the land during the period starting from April to September. The assessee has shown from the records that the land was under cultivation during the immediately two preceding years and the assessee had grown soyabean and jowar crops on the land. The assessee has satisfied the conditions that the land is being used in two immediately preceding years for the purpose of agriculture before the date of sale.
As decided in the case of Ramesh Narhari Jakhadi v. ITO (1992 (2) TMI 178 - ITAT PUNE ) that it is not necessary that the land should have used for agricultural purposes for full two years immediately preceding the date of transfer. Even if the land is used for some days in the year earlier to the preceding year it would be sufficient for compliance with the provisions of section 54B of the Act.
Thus, even if the assessee has cultivated only kharif crop in the immediately preceding two years from the date of sale of land, the condition set out in section 54B for claiming benefit of exemption is complied with.
Thus, in view of the facts and documents on record, we are of the considered view that the assessee has complied with all the conditions for claiming the exemption under section 54B of the Act in the assessment year under appeal. Accordingly, the impugned order is set aside and the appeal of the assessee is allowed. - Decided in favour of assessee.
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2017 (11) TMI 1128
Grant of registration under section 12AA(1)(b)(ii) rejected - diversion of general funds towards corpus - income derived by trust is being misused or that there is some apprehension that the same would not be used in proper manner - assessee-trust has not got its account audited and that it has not filed its return of income for the preceding years - Held that:- We find no action has been taken by the Revenue despite knowing the fact, if any, that the assessee-trust had surplus income before allowing the exemption under sections 11 and 12 of the Income-tax Act. We find the hon'ble Punjab and Haryana High Court in the case of Shri Sai Darbar Charitable Trust (Dharamshala)(2017 (4) TMI 123 - PUNJAB AND HARYANA HIGH COURT) has held that non-filing of returns by a trust in earlier years cannot be a ground for denying registration and the activities of the assessee-trust cannot be said to be non genuine.
Since the activities of the assessee-trust are admittedly for imparting education, therefore, it cannot be said that non-filing of returns for the preceding years on not getting the accounts audited disentitles the assessee from being granted registration.
Assessee trust is running like a private limited entity - all the trustees are family members - Held that:- We find the Ahmedabad Bench of the Tribunal in the case of Jupiter Medical Research Centre Trust (2009 (8) TMI 1150 - ITAT AHMEDABAD) following the decision of case of Deoki Nandan v. Murlidhar [1956 (10) TMI 35 - SUPREME COURT OF INDIA] has held that merely because all trustees are family members, it does not mean that the trust is not a public trust and therefore registration granted under section 12AA cannot be withdrawn. The objection of the learned Commissioner of Income-tax that the society is a private limited concern and therefore there can be misuse of power by the president and the society is susceptible to use for purpose other than charitable ones has no basis.
Activities of the societies are profit motive and non-charitable in nature - Held that:- we find it is an admitted fact that the society is imparting education. While imparting education, the assessee-trust is charging fees from the students. The issue has already been decided by the hon'ble Supreme Court in the case of Queen's Educational Society (2015 (3) TMI 619 - SUPREME COURT). It has been held therein that where a surplus was made by educational institution which was ploughed back for educational purposes, the said institution was held to be existed solely for educational purpose and not for purpose of profit.
So far as the objection of the learned Commissioner of Income- tax that the confirmations filed for corpus donations cannot be said to be directions from the donors as envisaged under section 11(1)(d) is concerned, the same in our opinion can be taken care of by the Assessing Officer at the time of assessment and this cannot be a ground for denying the registration under section 12AA of the Income-tax Act. The various other objections by the learned Commissioner of Income-tax for denying grant of registration under section 12AA in our opinion are not justified at this stage - Decided in favour of assessee.
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2017 (11) TMI 1127
Claim of exemption under section 80-IB(10) - disallowance of income earned from Emerald Park Annex Project, on the ground that each unit exceeded the area of 1,500 square feet - Held that:- The assessee fairly admitted that the issue is squarely covered by the orders passed by the ITAT in the assessee's own case for the earlier assessment years 2008-09 to 2010-11. Under these circumstances, we do not find any reason to interfere with the order passed by the learned Commissioner of Income-tax (Appeals) and accordingly reject the grounds urged by the assessee.
Applicability of the provisions of section 14A - Held that:- We are of the view that the learned Commissioner of Income-tax (Appeals) erred in applying the provisions of section 14A in the instant case despite the fact that there is no exempt income earned by the assessee. - Decided in favour of assessee.
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2017 (11) TMI 1126
Revision u/s 263 - Validity of taking up of matters by the successor CIT - as per CIT-A deduction claimed under section 54F was not as per law and directed the Assessing Officer to recompute the income by denying the said deduction - Held that:- Clearly and undisputedly this issue was examined by the Commissioner of Income-tax in proceeding initiated under section 263 of the Act vide his notice dated December 14, 2007 and due reply filed by the assessee, after considering which and after being satisfied by which the proceedings were dropped. The present proceeding having been initiated on the identical issue are clearly unsustainable in law since it simply tantamounts to review of the order of the Commissioner of Income-tax and not of the Assessing Officer. The co-ordinate Bench of the Income-tax Appellate Tribunal in the case of Satya Prakash Gupta (2014 (3) TMI 932 - ITAT DELHI) has in identical circumstances held that the successor Commissioner of Income-tax becomes functus officio in this regard after the exercise conducted by the predecessor Commissioner of Income-tax. Therefore, we have no hesitation in holding that the order passed under section 263 is not sustainable on this ground alone.
The explanation given by the assessee in this regard vide its reply submitted to the Commissioner of Income-tax in the earlier proceeding and even in the present proceeding, we find is plausible and reasonable. A bare reading of sections 54 and 54F of the Act nowhere states that the surplus remaining after claiming deduction under section 54/54F on account of construction of house property undertaken in a year, would not be allowed set off against long-term capital gain earned in the succeeding year. There is no such specific bar provided in the section. The learned Departmental representative also agreed to this. Therefore, as long as the conditions specified under section 54F are fulfilled, the interpretation and understanding of section as taken by the assessee and also by the earlier Commissioner of Income-tax cannot be said to be perverse and grossly against law. Therefore, the argument of the learned Departmental representative that an error would be allowed to be perpetuated by setting aside the present order of the learned Commissioner of Income-tax on technical grounds, we find has no merit. - Decided in favour of assessee.
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Customs
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2017 (11) TMI 1125
Maintainability of petition - appealable order - Section 110A of the Customs Act, 1962 - Held that: - Normally, writ petitions are not entertained, where there is an equally efficacious alternative remedy - the petitioner should invoke the appellate statutory remedy by way of appeal under Section 128 of the Act. The same would be efficacious and proper forum for redressal of the grievance. If any such an appeal is filed within a period of two weeks from today, the same would not be dismissed on the ground of limitation - petition disposed off.
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2017 (11) TMI 1124
Rejection of application made to Settlement Commission - Section 123(1) of the Act - Held that: - A reading of Sub-Section (1) of Section 123 of the ACt shows that the place, time and manner of seizure of the goods under the provisions of the Act is immaterial as the section only contemplates that "Where any goods to which this section applies are seized". Therefore, no distinction can be made between seizure during the course of examination of cargo or seizure of the goods after they left the customs barrier, etc. This is precisely what the petitioner wants the Court to do which is impermissible under the Statute - the impugned order passed by the Settlement Commission is just and proper and calls for no interference - petition dismissed - decided against petitioner.
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2017 (11) TMI 1123
Refund claim - bank guarantee furnished - time limitation - EPCG Scheme - Held that: - The Commissioner (Appeals) allowed the appeal filed by the petitioner and set aside the order passed by the respondent dated 25.4.2011. Further, the Commissioner (Appeals) directed that status quo to be maintained till the petitioner produces EODC and once it is produced and if it is found to be in order, the amount recovered by encashing the bank guarantee should be refunded - Therefore, now calling upon the petitioner to approach the Assistant Commissioner (Refunds) is presumably with an intention to reject the said application as being time barred, as the Assistant Commissioner (Refunds) is likely to take a stand that the application should have been filed for refund within one year from the date of payment of duty.
Bond furnished by appellant shall stand cancelled - Bank guarantee less administrative charges to be refunded - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 1122
Validity of SCN - The main ground on which the show cause notice is questioned is by contending that the respondent has come to a foregone conclusion that the petitioner is involved in smuggling, whereas the petitioner had no earlier opportunity to put forth their case, apart from the fact, the petitioner did not have opportunity to object to the Authority extending the period by six months under Section 110(2) of the Act - Held that: - the averments set out in paragraph no.8 of the affidavit of undertaking filed by the adjudicating authority would be sufficient to safeguard the interest of the petitioner - the affidavit of undertaking dated 08.11.2017 filed by the adjudicating authority, is placed on record and the writ petition is disposed of with a direction to the adjudicating authority to adjudicate the show cause notice without being influenced by the findings rendered in the order-in-original dated 31.03.2017 and proceed based on the available material and the statement recorded under the provisions of the Customs Act, 1962 - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 1120
Applicability of Section 28AAA - export of chilled meat - DEPB credit - The allegations made in the SCN by customs Department are that such scripts where procured by undertaking export of chilled meat in contravention of the relevant provisions of the Foreign Trade Policy (FTP) - case of appellant is that Section 28AAA came into effect w.e.f. 28.05.2012 so the same is not applicable in the instant case - Held that: - In the present case, the appellant has exported chilled meat and procured DEPB/VKGUY scrips issued by DGFT - the relevant period involved in the present case is 01.04.2006 to 31.10.2010 and the show cause notice has been issued on 30.05.2011 to the person to whom such scrips were issued.
The investigation has revealed that certain blank certificates duly signed by the doctors were found in the appellant’s factory at the time of their search along with the relevant seals. The allegation is that the veterinary doctors never supervised such slaughter and hence, all such certificates were not valid but only an empty formality.
Cross-examination - the appellant has sought cross-examination of the veterinary doctors whose certificates where recovered during such proceedings - Held that: - cross-examination has not been allowed by the adjudicating authority before passing the impugned order. We note that it is a well settled legal principle that the cross examination of witnesses whose statements are admitted as evidence has to be considered in terms of Section 138B of the Customs Act. The said provisions are identical to the provisions of Section 9D of the Central Excise Act, 1944 - cross-examination of the above witnesses will be particularly necessary since the case of revenue is based on the certificates said to have been issued by these doctors.
The matter is required to be remanded to the adjudicating authority to pass fresh orders after allowing the cross-examination of the witnesses - appeal allowed by way of remand.
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2017 (11) TMI 1119
SEZ unit - penalties - jurisdiction of customs authorities - Held that: - Customs Authorities had the jurisdiction to adjudicate cases originating within a SEZ even for the period prior to the amendment in the SEZ Rules. To this extent the impugned order cannot be held to be passed without jurisdiction.
Whether penalty can be imposed on Sh. Jatin Arora, partner in as much as penalty has already been imposed on the a SEZ unit? - Held that: - The investigation further established that Sh. Jatin Arora, partner, was the main person who was instrumental in planning and carrying out the systematic diversion of duty-free imported good - the impugned order has clearly brought out the fact that Sh. Jatin Arora, partner, has indulged in acts of commission leading to evasion of customs duty by M/s Global Partners (India) - for the acts of omission and commission on the part of Sh. Jatin Arora leading to the evasion of customs duty by M/s Global Partners (India), he will be liable for penalty both under section 114 A as well as section 114AA - penalty upheld.
Appeal dismissed - decided against appellant.
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2017 (11) TMI 1118
Misdeclaration of imported goods - appellant had mis-declared the quantity of the blank video cassettes of Panasonic brand, had not declared a large quantity of blank video cassettes of Sony brand and also 30 pieces of high definition video cameras of Panasonic brand - valuation of imported goods - Held that: - when the goods were examined by the Customs Authorities, it was found that the imported goods did not match with the declaration made by the appellant in the bill of entry - Mis-declaration was found in terms of the actual quantum of the video cassettes as well as in the description of the imported video cassettes. In addition to the declared goods, 30 pieces of Panasonic brand video cameras were also found. Since, there is no dispute on the fact of mis-declaration, we have no hesitation in upholding the confiscation of the imported goods under section 111 of the Customs Act 1962.
Valuation of imported goods - evidence of contemporaneous import - Held that: - the Apex Court in the case of Varsha Plastics Pvt. Ltd. [2009 (2) TMI 40 - SUPREME COURT] has held that once the nature of goods is mis-declared, the value declared becomes unacceptable - in view of the mis-declaration by the importer, the declared values become un-acceptable. In the peculiar facts and circumstances of the present case, we also do not find any serious irregularity in the method adopted by the lower authorities.
Appeal dismissed - decided against appellant.
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2017 (11) TMI 1117
Misdeclaration of imported goods - confiscation - redemption fine - penalty - Held that: - on examination of the goods, the Chartered Engineer gave a categorically report that these are old and used pipes which were rusted internally as well as externally. If pipes are rusted internally and externally and have been removed from some project then it is only a waste, nothing else. His opinion that 80% of the goods can be re-used but the same is without any market survey or supporting documents. In that circumstances - the charge of mis-declaration on the appellant is disproved, therefore, the goods are held not liable for confiscation - redemption fine and penalty also not sustainable - appeal allowed in part.
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2017 (11) TMI 1121
Jurisdiction - Whether the Appellate Tribunal could travel beyond the scope of the allegations levelled in the show cause notice and decide the appeal, rejecting the refund claim of the appellant, on the basis of issues/allegations not raised in the show cause notice? - refund claim - Held that: - The contention raised by the appellant is based on the show cause notice dated 20th May, 2002 and even the first authority and second authority have considered the bill of entry and the attachment which was liable for the Jacquard - the show cause notice which was issued for refund is required to be set aside. The appellant is entitled for the refund.
Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1159
Revocation of CHA License - Whether the Tribunal is legally correct in setting aside the revocation of CHA Licence of the appellant No.3 in the circumstances when there is gross violation of CHA Licensing Regulations, under which the said licence was granted, on the part of the CHA himself? - Held that: - the decision in the case of Commissioner of Customs Versus M/s K.M. Ganatra & Co. [2016 (2) TMI 478 - SUPREME COURT] referred, where it was held that To ensure appropriate discharge of such trust, the relevant Regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations.
The view taken by the Tribunal is required to be reversed in view of the licence which was granted by the competent authority to particular person with a particular purpose to be utilized by the same in sub-delegation to any person is required to be deprecated.
Revocation is upheld - appeal allowed - decided in favor of Revenue.
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Insolvency & Bankruptcy
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2017 (11) TMI 1116
Corporate Insolvency Resolution Process - Held that:- The statement of accounts as filed by the 'Operational Creditor' is not complete in order to ascertain what are the amounts which were actually remitted by the 'Corporate Debtor' over a period time even though it is admitted that some payments were received shown by the Banker's Certificate as received from the 'Corporate Debtor' and the same does not match as no payment is shown to have been received in the statement of accounts. In this, the Tribunal being the Adjudicating Authority cannot lose track of the avowed objects for which IBC, 2016 has been brought into force and more pertinently in relation to CIRP.
Taking the above facts and circumstances of the case and as well as the precedents laid down by the Hon'ble NCLAT in relation to the issue of demand notice and furnishing of certificate from the banker, this Tribunal is not inclined to admit this Petition and in the circumstances the Petition is dismissed but without costs.
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2017 (11) TMI 1115
Corporate insolvency process - Held that:- Managing Director of the Company has referred to certain proceedings held by this Tribunal to press upon the contention that in the circumstances of the case, this Tribunal has taken cognizance of the offence, therefore, a direction should be given for lodging the complaint and for investigation. This contention deserves to be out rightly rejected, as holding of the proceedings for disposal of the application under consideration, cannot by any stretch of imagination amount to taking cognizance of the alleged fraud.
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Service Tax
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2017 (11) TMI 1111
Renting of Immovable Property Service - Department, after audit of the accounts of the appellant, was of the view that the amount received by the appellant towards lease rent will be liable to the payment of service tax under the category of Renting of Immovable Property Service - Held that: - the issue is decided in favour of revenue by the Tribunal in the case of M/s. Greater Noida Industrial Development Authority Versus CCE & ST, Noida [2014 (9) TMI 306 - CESTAT NEW DELHI], where it was held that renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1-7-2010, and not so, earlier to this date - demand upheld.
Extended period of limitation - Held that: - the demand of service tax is to be upheld only for the normal time limitation period - Only for the limited purposes of quantification of the demand falling within the normal time limit, the case is remanded to the adjudicating authority.
Appeal allowed - decided partly in favor of appellant.
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2017 (11) TMI 1110
Convention services - whether or not the appellant provided convention services liable to service tax? - Held that: - Admittedly, any person of a specialized group is also a part of general public for other purpose. In a general way, all persons, in given situation, are part of “general public”. However, when a person takes part in a activity with reference to his expertise, skill, etc. he is no more a part of general public and becomes a part of a select group or recognized group of public with certain common basis - we are not in agreement with the plea of the appellant that the conferences, seminars and workshops organized by the appellant are meant for or open to general public. The analysis and reasoning in the impugned order is more close to the statutory definition for the tax entry - demand upheld.
Time limitation - Held that: - the impugned order itself while examining the liability of the appellant for penalty under Section 78, held that there is no mens rea behind the non-payment of service tax on the part of the appellant. That being so, we find that the ingredients for invoking extended period for demand is absent in the present case - extended period and penalty cannot be imposed.
Appeal allowed in part.
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2017 (11) TMI 1109
Business Auxiliary Services - Commission received from airlines - Held that: - the tax liability on similar activities under the category of ‘Business Auxiliary Service’ has already come up for consideration before the Tribunal in the case of DHL Logistics (P) Ltd. Vs CCE, Mumbai-II [2017 (8) TMI 600 - CESTAT MUMBAI], where it was held that This activities can be no stretch of imagination by considered as BAS as for any service to statute the BAS at least three parties should be involved in the transaction namely the service provider, service recipient and the client. There are only two parties in the transaction, the seller of space and the buyer of space. Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS - appeal dismissed - decided against Revenue.
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2017 (11) TMI 1108
Erection, commissioning and installation service - Revenue held a view that the respondent did not discharge service tax on various services rendered to their clients under the said category - Held that: - The fact that the respondent availed certain services from job workers to install and make it functional, the delivered equipment in the premises of the customers by itself will not vary the nature of contract and the fact that they have paid the sales tax on the full value - If the goods were sold and VAT is paid as per the State Govt. law for full value, no tax liability will arise under the Finance Act, 1994.
The SCN proceedings against the respondent is to recover service tax under “erection, commissioning and installation service”. We note that the contracts which were proposed to be made liable for service tax are composite in nature involving supply of goods and certain element of service as claimed by the Revenue. If that be so, the tax liability of such service will arise only with effect from 1.6.2007 - On this ground also the proceedings could not have been concluded under works contract as the proposal is under entirely different service.
Appeal dismissed - decided against Revenue.
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2017 (11) TMI 1107
Classification of services - activities of unitisation, strapping and packeting undertaken in terms of contract with M/s BSP, Bhilai, in the client’s premises - whether classified under Cargo Handling Services or otherwise? - Held that: - the very same issue in the assessee-Appellants‟ own case was subject matter of the decision before the Apex Court Signode India Limited Versus Commr. of Cen. Excise & Customs-II [2017 (3) TMI 934 - SUPREME COURT OF INDIA], where it was held that All activity undertaken by the appellant, though related to packing activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation. Prior to the amendment made by the Finance Act of 2005 with effect from 16.06.2005, the appellant would not be liable to pay service tax on the service rendered by it in terms of Section 65(23) read with Section 105(zr) of the Act.
The demand of Service Tax on the assessee-Appellants for the relevant period will not arise - appeal allowed - decided in favor of appellant-assessee.
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2017 (11) TMI 1106
GTA service - non-payment of service tax - reverse charge mechanism - Held that: - The liability to pay Service Tax is very much linked with the status of the truck owners, as claimed by the assessee-Appellants - However, it is clear that the assessee-Appellants have to establish the status of such truck owners as not belonging to transport agency which is liable to Service Tax. Since this aspect could not be examined by the original authority, matters needs reexamination - appeal allowed by way of remand.
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2017 (11) TMI 1112
Business Auxiliary Services - C&F service - regulate supply of liquor through conferring the exclusive privilege of purchase and sale in the wholesale thereof - sale of liquor only through the canalising agency - Held that: - the issue is decided in the case of Union of India vs. M/s. Chattisgarh Estate Beverages Corporation [2015 (3) TMI 744 - CHHATTISGARH HIGH COURT], where it was held that The Tribunal has recorded a finding of fact that the Corporation was engaged in purchase and sale of liquor and could not be considered as clearing and forwarding agent for the State Government. It is finding of fact. No illegality in the finding has been pointed out.
Appeal allowed - decided in favor of appellant-assessee.
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2017 (11) TMI 1105
Refund of unutilized CENVAT credit - input services - Air Travel Agents service - Real Estate Agents services - Supply of Tangible Goods services - Business Consultant’s Service - Club or Association service - Technical & Scientific Consultancy Services - Held that: - Since all these services in view of the various case-laws have been held to be an ‘input service’, therefore these services are ‘input services’ and it has a nexus with the output services exported - I remand the case back to the adjudicating authority to examine the claim of the appellant afresh after considering the fact that the impugned services are ‘input services’ in terms of Rule 2(l) of the CCR, 2004 - appeal allowed by way of remand.
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Central Excise
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2017 (11) TMI 1104
CENVAT/MODVAT credit - defective units - Rule 57-D of erstwhile Central Excise Rules, 1944 - Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the CENVAT/MODVAT Credit is admissible in respect of the inputs which were defective, unfit for use in the manufacturing of final goods & hence destroyed by the Respondent, without considering that the Respondent itself was unable to specify and identify the stage of such defect/wastage which clearly had to conclude that the inputs supplied to the Respondent were ad-initio defective inputs unfit for use in the manufacture of the final product?
Held that: - On perusal of the above extracted Sub-rule (4) of Rule 57A of the erst while Central Excise Rules, 1944 it can be inferred that the MODVAT credit was available on inputs used in the manufacture of the final products. Further, MODVAT credit was also available on the inputs used in or in relation to the manufacture of final product whether directly or indirectly. Therefore, it is amply clear that it was not required that the said inputs should contain in the final products.
The testing is an integral part of manufacturing process and MODVAT is available as per Rule 57A.
The order passed by the Tribunal is fully justified as the Tribunal has categorically recorded the finding of fact, after perusal of the report of defect work that the MODVAT credit has been availed by the assessee company on the inputs/ parts, of the watches at the time of the receipt of the same, before putting to use and that the assessee company has conducted certain test to find out as to whether the inputs to be usable or not. In respect of the inputs which were not found fit to be used, the assessee company has reversed credit thereon and rest of the inputs were issued by the respondent for process or assembling of watches, and during the course of manufacture of watches, certain inputs were found defective during further test and certain inputs were lost while manufacturing the goods.
The MODVAT credit cannot be denied applying the provisions of Rules 57-D when duty has indeed been paid - In the instant case of the appellant during the period in dispute scrap valued at ₹ 78,53,771/- was cleared from the factory on this scrap a duty of ₹ 12,20,722/- was paid, therefore, without prejudice and in any case the benefit of MODVAT credit has to be given to the assessee company on the basis of relevant fact that the duty has been paid on scrap.
Appeal dismissed - decided against appellant.
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2017 (11) TMI 1099
CENVAT credit - shortage of inputs - The contention of the learned AR is that as it is physically verified stock and shortage has been detected, therefore, they are not entitled to CENVAT Credit - Held that: - it is admitted fact that the shortage in quantity is only 0.35% of the total purchases - respondent is a manufacturing unit and such shortages are of meager in nature - the learned Commissioner (Appeals) has made observations and held that the demand is merely based on the shortages detected during physical tallying, the entire quantity of inputs on which CENVAT credit was availed were received in the the factory is also not disputed and clandestine removal is not alleged by the department - appeal dismissed - decided against Revenue.
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2017 (11) TMI 1098
Refund of tax paid under dispute - denial on the ground of unjust enrichment - doctrine of merger - Held that: - the grant of refund has been finalized by this Tribunal along with interest. Further, in Civil Misc. Writ Petition No. 479 of 1996 the Hon'ble Allahabad High Court in the Petition of the assessee has been pleased to direct that the assessee is entitled to refund with 12% interest, being order dated 6th July, 2000. Against the said order Revenue had preferred Civil Appeal No. 1042 of 2001, which was dismissed by the Hon'ble Supreme Court by its order dated 29/04/2003. Under such facts and circumstances, I hold that the subsequent show cause notice issued by the Department being SCN No. V/15/ADJ/Noida/BTCL/77/09/13926 dated 14/09/2009 is ab initio void and accordingly quashed.
The impugned Order-in-Appeal is set aside, as the same is apparently hit by the principles of doctrine of merger and hierarchy of Courts.
Appeal allowed - decided in favor of assessee.
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2017 (11) TMI 1097
Refund of unutilized CENVAT credit - Rule 5 of CCR, 2004 - Held that: - there are no force in the contention that the show cause notice only seeks to reject the refund claim on the ground that Rule 5 of the Cenvat Credit Rules does not attracted which has been settled by the Hon’ble High Court of Karnataka in the case of Union of India Vs. Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT], wherein it was held that if the unit is closed and the Cenvat credit is lying in balance, the same should be refunded in cash - refund allowed - appeal dismissed - decided against Revenue.
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2017 (11) TMI 1096
Clandestine removal - M.S. ingots - Held that: - both the lower authorities have not adduced any evidence to show that M/s J.S. Forge Pvt. Ltd. in fact, had received the 205 MTs of sponge iron purportedly cleared by M/s Shilphy Steel Pvt. Ltd., clandestinely, nor there is any evidence to show that the said sponge iron cleared by M/s Shilphy Steel Pvt. Ltd. was converted to MS ingots by the appellant in any form - In absence of any evidence to show that, there was conversion of sponge iron purportedly cleared clandestinely by M/s Shilphy Steel Pvt. Ltd., demand of duty from the appellant M/s J.S. Forge Pvt. Ltd. for clandestine clearance of finished goods, may not arise - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1095
Valuation - discounts termed as Standard Discounts and Special Discounts as also Cash Discounts and Sales Linked Discounts - provisional assessment - Held that: - even though the Ld. Commissioner (Appeals) has upheld the order of the original authority however, in respect of the submission by the applicant that during the relevant period the duty actually paid by them was ₹ 15,76,79,154/- and not ₹ 13,87,96,831/-, he has not come to any conclusion but referred the matter to the original authority to determine the same - despite the direction of Ld. Commissioner (Appeals), the Department has not entertained the request of the appellants to look into the computational error and simply responded by asking for recovery of adjudged amount.
The order of the Commissioner (Appeals) “upholding the impugned order in original and rejecting the appeal” in toto appears to be erroneous - matter needs to be remanded to the adjudicating authority for fresh adjudication - appeal allowed by way of remand.
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2017 (11) TMI 1094
Excesses of raw material/finished goods - defect in the stocktaking - clandestine removal or not - Held that: - the manner of stocktaking is defective on the date of inspection. It cannot even be called a good eye estimation. Further. the stocktaking being part of the panchnama cannot be relied upon in view of the apparent defect in the panchnama for violation of the provisions of the criminal procedure code, as made applicable to the provisions of Central Excise Act, as regards search and seizure - Inspite of records oi inputs received and clearance of finished goods vide invoices. the same were ignored and not taken into account for no reason - also, there is no specific instance found inspite of all the exercise, of clandestine removal or attempted clandestine removal on the part of the appellants - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1103
Clandestine removal - Whether the Hon’ble CESTAT is correct in holding that confirmation of demand of duty on impugned goods was not sustainable merely on the basis of presence of machines and certain statements of laboureres and accountants whereas there were evidences in form of verification and still photography of machines and confessional statement of Shri Rajesh Goyal, Director? - maintainability of appeal - section 35-G of CEA.
Held that: - this appeal is under 35-G where it will be difficult for us to reverse the finding of fact arrived at by the Tribunal that witnesses in the panchnama were not examined by the Commissioner of Excise - The fact which has been recorded by the Tribunal is a finding of fact and being last fact finding authority, it could not be disturbed.
Cross-examination of witnesses - Held that: - In view of the finding given by the Tribunal and not cross-examination of witnesses and panch witnesses and the other witnesses who are the employee of the company, we are in complete agreement with the view taken by the Tribunal. No substantial question of law arises.
Appeal dismissed - decided against appellant.
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2017 (11) TMI 1102
Clandestine removal - conversion of hot rolled Aluminium Strips/Coils into cold rolled aluminium coils - manufacture or not? - Held that: - the Tribunal has to consider afresh on facts first and then on the law which has been cited by both the sides. In that view of the matter, in view of judgments cited by both the sides, we remit back the matters to the Tribunal - Endeavour is made by the counsel for the assessee that no point or substantial question was raised in the appeal. In our considered opinion, Tribunal is to consider the points raised in these appeals.
In these matters of taxation we should not go into technalities where Tribunal has not followed the law - matter is remanded to the Tribunal for decision abroad - appeal allowed by way of remand.
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2017 (11) TMI 1101
Liability of interest - Whether Tribunal was right in law in allowing the appeal of revenue with regard to imposition of interest u/s 11AB of the Act, especially when it is an admitted fact that the liability to pay the disputed duty arose on 18.12.2000 i.e. prior to the day when provisions of Section 11AB were not in force in terms of Section 11AB (2) of the CEA, 1944? - Held that: - the observations made by the Tribunal is contrary to record and the matter is required to be remitted back to the Tribunal. It is made clear that the matter is remanded only on the ground that finding arrived at by the Tribunal is contrary to the record and the judgment which is relied upon by the appellant will be considered while deciding the matter afresh by the Tribunal - appeal allowed by way of remand.
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2017 (11) TMI 1100
CENVAT credit - duty paying documents - Whether the Tribunal is justified in allowing the CENVAT credit of ₹ 27,33,393/- on unverified/re-constructed bills of entry without giving a chance to Revenue to verify them when the same were not proper/legal documents as per CCR? - Held that: - credit on duty paid on air conditioners installed in office of the factory is admissible - In Board’s Circular NO. 943/4/2011-CX dated 29.04.2011, it is mentioned that “goods such as furniture and stationary used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed - credit allowed - appeal dismissed - decided against Revenue.
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2017 (11) TMI 1093
CENVAT credit - input - Grinding Media Balls - Held that: - The definition of ‘input’ contained in the cenvat credit Rules is broad enough to consider all goods, excepting certain excluded goods, within its scope and ambit for consideration as input - In the present case, the fact is not under dispute that the disputed goods are not falling under the exclusion clause provided in the definition of input. Since grinding media is used in or in relation to manufacture of the final product within the factory and in absence of use of the said goods, the ball mill cannot function, the said goods should be considered as input for the purpose of taking of cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1092
Penalty u/r 25 of the CER 2002 - contravention of Rule 8 (3A) of the CER 2002 - Held that: - in the present case there was a delay in payment of duty but the same was paid later on along with interest voluntarily before the issue of show-cause notice. In such a situation, the appellant's case is squarely covered by the decision of the Hon'ble Karnataka High Court in the case of CC Vs. Powerica Ltd. [2011 (9) TMI 665 - Karnataka High Court], where it was held that uty and penalty is paid even before the issue of Show Cause Notice and the said fact is informed to the proper officer thus he shall not initiate any proceedings to recover the duty and interest, much leas for imposition of penalty - Rule 8(3A) has been held to be ultra vires by various High Courts - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (11) TMI 1088
Validity of assessment order and notices - it was alleged that the petitioner has not fulfilled the conditions so stipulated in Notification dated 20.8.2010 as well as the conditions so provided under Section 13(1)(f) of the U.P. VAT Act - input tax credit - Section 29 of the VAT Act - Held that: - no fresh information, material or fact or reason has been recorded by the assessing authority to establish the satisfaction of any of the required pre-conditions of the applicability of the provisions of Section 29 of the VAT Act.
Section 29 of the VAT Act provides for reassessment of tax on turnover escaping from assessment. It lays down that if the assessing authority has reason to believe that the whole or any part of a turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act.
In the present set of facts, particularly when admittedly the transaction has properly been examined and verified and where there is no fresh material available with the assessing authority, re-assessment proceedings are nothing but are roving and fishing inquiry of the matter, which is not permissible under the law nor it is permissible under Section 29 of the VAT Act.
In the assessment orders the assessing authority has properly examined the entire material and thereafter has allowed input tax credit on the sale price by accepting the credit notes, which are issued by the seller and once this aspect has been considered and examined, there was no occasion to the assessing authority to seek permission for re-assessment for re-opening the matter and in view of the aforesaid reasons the writ petitions stand allowed - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 1091
Classification of goods - Parachute Coconut Oil - Medikar - Held that: - Entry 43 of Schedule II Part A of the U.P. VAT Act, 2008 mentions edible oil and oil cake therefore if Parachute pure coconut oil which is marked as "edible" on its packaging cannot be lebeled as hair oil and therefore an unclassified item liable to tax at 12.5% it must necessarily be classified as edible oil under Entry no. 43 of Schedule II Part A - Parachute oil would be liable to tax at 4% and not as an unclassified item taxable at 12.5%.
Medikar - Held that: - Mediker which is used for anti-lice treatment is a drug because of its medicinal affect - Once it is a drug, it cannot be a shampoo. As a natural corollary, it will not invite the liability of levy of entry tax.
Revision dismissed - decided against Revenue.
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2017 (11) TMI 1090
Arrears of sales tax - whether the petitioner can be proceeded against for the tax arrears payable to M/s.Karpaga Electronics (P) Ltd? - Held that: - there is no charge on the property and there is no doubt about the bonafide of the purchase made by the petitioner, because it is TIIC who brought the property for sale - reliance placed in the case of Rukmani Versus The Deputy Commercial Tax Officer I [2013 (3) TMI 205 - MADRAS HIGH COURT], where it was held that there is no material placed before them to prove that steps have been taken under the provisions of the Revenue Recovery Act against the delinquent or the subsequent first purchaser, and therefore the petitioner therein cannot be penalized - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 1089
Validity of assessment order - time limitation - case of petitioner is that assessing authority could not have passed the order of assessment in October 2008 for the period for the assessment year 1993-94 - Even the order of assessment was never served to the petitioner - Held that: - The case of the petitioner is that he had discontinued the business and left the premises and therefore was neither aware of the pending assessment proceedings nor passing of the final order of assessment, irreparable loss would be caused to the petitioner if the order of assessment is not allowed to be challenged merely on the ground of delay. Further, the petitioner’s ground of the assessments being time barred would require a closer examination.
The petitioner’s appeals before the first appellate authority shall stand revived subject to the petitioner filing applications for and persuading the first appellate authority to condone the delay - petition allowed by way of remand.
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Indian Laws
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2017 (11) TMI 1113
Attempt to probablize the suggestive case - dishonor of cheque - guilty under Section 138 of Negotiable Instrument Act - Held that:- Even during the cross examination of P.W.1, though, an attempt has been made by the Revision petitioner/accused to touch upon the financial capacity of the P.W.1. However, such an attempt as become fertile in view of the positive evidence by the P.W.1 in the cross examination that from the saving of his earning he has made the amount. Both the courts below have concurrently and rightly held that the complainant has proved the necessary ingredients to raise the presumption in his favour and however, the respondent/accused has fasted to probablise the suggestive case that the complainant is lend no financial capactancy and he is man of no means, as claimed by him. Either by direct evidence and to eliciate any circumstance to that effect by preponderance of probability.
Revision Petitioner has miserably failed to probablize the suggestive case and except this point,no other point urged were and both the courts below have a concurrently held that the complainant is entitled for the presumption under the Negotiable Instrument Act and the respondent/accused has failed to probablize the suggestive case is well merited and well considered and the same does not warrant any interference by this Court and this Criminal Revision Petition is devoid of merits and accordingly, this Criminal Revision Petition is dismissed.
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