TMI Tax Updates - e-Newsletter
December 22, 2017
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Central Goods and Services Tax (Thirteenth Amendment) Rules, 2017 - Notification
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Income Tax:
Income –tax (25th Amendment) Rules, 2017 - Amends Rule 127
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Income Tax:
Depreciation of assets acquired by assessee trust - the capital expenditure is treated as application of income for charitable purposes - amendment in Section 11(6) is prospective in nature w.e.f. AY 2015-16 - SC
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Income Tax:
If the petitioner is entitled for waiver of interest u/s 234A for the reasons set out above, the question of payment of advance tax nor a portion thereof will not arise and therefore, the petitioner is entitled for waiver of interest u/s 234B and 234C - HC
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Income Tax:
The mere supervision by the assessee without the carrying of the basic operations would leave no manner of doubt that no agricultural income arose in the hands of the assessee. The argument of the assessee that the company is an artificial person and could not have conducted the agricultural operations by itself and, therefore, required such kind of an arrangement with the farmers for earning agricultural income does not have any merit. - AT
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Income Tax:
Deemed dividend - section 2(22)(e)(ii) specifically excludes from the scope of deemed dividend, the amount transferred by a company to a shareholder in the ordinary course of its business and where the lending of money is a substantial part of the business of the company. - AT
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Income Tax:
Speculation loss or not - the loss suffered in cash segment, being an integrated part of the total arbitrage activities has to be allowed / set off against income from derivative segment. - Loss earned by assessee on account of purchase and sale of securities allowed against income earned in derivative transactions. - AT
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Income Tax:
The assessee is liable to levy of penalty u/s 271(1)(c) on the expenditure incurred on Foreign Tour of the trustees, scholarship given to the relatives of the trustees and also on the interest on loan given to relatives of the trustees - AT
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Income Tax:
Levy of surcharge and education over 10% tax as per the DTAA between India and France on royalty - revenue cannot levy surcharge and education cess, which is also in the nature of surcharge, over and above the cap of 10% prescribed in article 13 as the tax rate for Royalty income. - AT
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Income Tax:
Deduction allowable u/s 36 (1)(iii) - assessee has not commenced any business activity and no deduction is allowable u/s 36 (1) (iii) in respect of interest expenditure because it is not in respect of any business activity, the fund raising charges also cannot be allowed for the same reason. - AT
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Income Tax:
Addition u/s 69C - certain items jotted in pencil on two sheets of paper - unexplained expenditure - the assessee had denied to have incurred this expenditure and the assessee had been maintaining that such expenditure was never incurred by the assessee and these were not reimbursed to the employees - no additions - AT
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Corporate Law:
Striking of name of company from registrar of companies - there is no plausible explanation as to why it has not filed its annual returns and balance sheets before the ROC. There is thus a serious lapse on the part of the appellant company. - Now, since the appellant company fulfils the requirement of Section 252(1) read with Section 252(3) of the Companies Act, the name restored - Tri
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Service Tax:
Demand of service tax - Validity of SCN - POST GST scenario - this Court is of the prima facie opinion that the impugned notice dated 23.10.2017 is without jurisdiction - further proceeding under the impugned notice is hereby stayed until the returnable date. - HC
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Service Tax:
Refund claim - service tax paid on reverse charge mistakenly - unjust enrichment - No presumption can be made that excess duty paid by mistake is passed on to the buyer - In the present case, there is not even a tax liability on the date of conclusion of contract with DMRC. - AT
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Service Tax:
Refund claim - input services consumed within SEZ - non-inclusion of the services in the list of services approved by the Development Commissioner for authorised operations is just a procedural lapse which cannot be considered as a ground for rejection of refund claim - refund allowed - AT
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Central Excise:
CENVAT credit - tyres used in RBO (material handling equipment) for mining operations - these vehicles are not meant to be used for movement of materials in the mines. Such goods cannot be covered under capital goods since they are in the nature of motor vehicle other than dumper and dipper - tyres of such vehicle can also not be allowed for availing cenvat credit. - AT
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Central Excise:
Classification of goods - synthetic web equipment - goods are used by military and paramilitary personnel - The goods shall fall under Tariff Heading 6307.9090 - AT
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VAT:
Rate of Tax - Yarn - this being an exemption clause, strict interpretation has to be given to such exemption clause, and there is no room for any liberal interpretation with regard to such exemption - Under the said statutory notification, the term 'Yarn' has been defined only as cotton yarn. To interpret that Entry 44 to mean to include all types of yarn packed in hank form is incorrect way of interpreting the exemption provision. - HC
Articles
Notifications
Companies Law-
F. No. 1/40/2013-CL-V - dated
20-12-2017
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Co. Law
Companies (cost records and audit) Second Amendment Rules, 2017
Customs-
118/2017 - dated
21-12-2017
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Cus (NT)
Exchange Rates Notification No.118/2017-Custom(NT) dated 21.12.2017
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F. No. D 22011/68/2017 - dated
19-12-2017
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Safeguard
Initiation of a Safeguard investigation concerning imports of “Solar Cells whether or not assembled in modules or panels” into India - reg.
GST-
70/2017 - dated
21-12-2017
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CGST
Central Goods and Services Tax (Thirteenth Amendment) Rules, 2017
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69/2017 - dated
21-12-2017
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CGST
Seeks to extend the time limit for filing FORM GSTR-5A
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68/2017 - dated
21-12-2017
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CGST
Seeks to extend the time limit for filing FORM GSTR-5
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67/2017 - dated
21-12-2017
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CGST
Seeks to extend the time limit for filing FORM GST ITC-01
GST - States-
S.O. 279- 47/2017-State Tax (Rate) - dated
14-11-2017
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Bihar SGST
Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017
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S.O. 275- 45/2017-State Tax (Rate) - dated
14-11-2017
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Bihar SGST
Notification regarding prescribing 2.5% concessional BGST rates on certain goods supplied to a specific public funded research institutes and subject to specified condition
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S.O. 265 - dated
13-11-2017
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Bihar SGST
Delars Pay an amount ₹ 2500 in respect of the first quarter of the financial year commencing on the first day of April, 2017
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S.O. 263 - dated
8-11-2017
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Bihar SGST
Last date for furnishing of return in FORM GSTR-3B
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S.O. 257 - dated
30-10-2017
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Bihar SGST
Bihar Goods and Services Tax (Ninth Amendment) Rules, 2017
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(GHN-136) GST-2017-S.11(1) (23)TH - dated
12-12-2017
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Gujarat SGST
Corrigendum- Notification No. 8/2017-State Tax (Rate), 30-06-2017
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66/2017-State Tax - dated
15-11-2017
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Gujarat SGST
Exempt all taxpayers from payment of tax on advances received
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65/2017-State Tax - dated
15-11-2017
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Gujarat SGST
Exempt suppliers of services through an e-commerce platform from obtaining compulsory registration if turnover does not exceed 20 lakh rupees
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64/2017-State Tax - dated
15-11-2017
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Gujarat SGST
Maximum late fee payable for delayed filing of return in FORM GSTR-3B from October, 2017 onwards to 25 rupees per day
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59/2017-State Tax - dated
15-11-2017
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Gujarat SGST
Extend the time limit for FORM GSTR-4 till 24.12.2017
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57/2017-State Tax - dated
15-11-2017
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Gujarat SGST
FORM GSTR-1 aggregate turnover of less than ₹ 1.5 crore
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55/2017-State Tax - dated
15-11-2017
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Gujarat SGST
Gujarat Goods and Services Tax (Twelfth Amendment) Rules, 2017.
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47/2017-State Tax (Rate) - dated
15-11-2017
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Gujarat SGST
Exemption to admission to protected monument
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43/2017-State Tax (Rate) - dated
15-11-2017
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Gujarat SGST
To include cotton under revere charge under section 9(3)
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51/2017 – State Tax - dated
28-11-2017
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Sikkim SGST
Sikkim Goods and Services Tax (Twelfth Amendment) Rules, 2017
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55/2017 – State Tax - dated
15-11-2017
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Sikkim SGST
Sikkim Goods and Services Tax (Thirteenth Amendment) Rules, 2017
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47/2017 – State Tax - dated
18-10-2017
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Sikkim SGST
Sikkim Goods and Services Tax (Eleventh Amendment) Rules, 2017
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45/2017 – State Tax - dated
13-10-2017
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Sikkim SGST
Sikkim Goods and Services Tax (Tenth Amendment) Rules, 2017
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36/2017-State Tax - dated
3-10-2017
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Sikkim SGST
Sikkim Goods and Services Tax (Ninth Amendment) Rules, 2017
Income Tax-
98/2017 - dated
20-12-2017
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IT
Income –tax (25th Amendment) Rules, 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2017 (12) TMI 1069
The matter requires to be heard in greater detail - In case any duty amounts are paid, that will be subject to final outcome of the proceedings - it is open to the petitioners to proceed and claim credit or pay duty, as the case may be.
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Income Tax
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2017 (12) TMI 1071
Addition of bogus purchases - CIT-A restricting addition to the extent of 15% - Held that:- The conclusion reached at by the Ld. CIT(A) is a reasonable and fair one in view of the fact that the purchases made by assessee were related to his construction work, the books were audited and the assessee was in possession of requisite purchase documents and all payments were made through banking channels. The Tribunal, invariably, in all such cases, have taken a stand that even if presuming that all purchases were bogus, entire addition thereof was not warranted for particularly when the sales were not in dispute and the addition, if any, which has to be made in all such cases is to account for profit element embedded in such purchase transactions. The case law relied upon by Ld. CIT(A) could not be applied to the instant case as the said case law dealt with a search case where certain incriminating material was found which led to the additions in question. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and see no reason to interfere with the same. Hence, by confirming the same, we dismiss revenue’s appeal.
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2017 (12) TMI 1068
Condonation of delay - Held that:- There is a delay of 353 days in preferring this special leave petition which has not been satisfactorily explained. Even the tax effect is approximately ₹ 8 lakhs. For these reasons the special leave petition is dismissed. HC ref case [2016 (9) TMI 1399 - ALLAHABAD HIGH COURT]
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2017 (12) TMI 1067
Depreciation of assets acquired by assessee trust - the capital expenditure is treated as application of income for charitable purposes - Held that:- As in Commissioner of Income Tax v. Institute of Banking Personnel Selection (IBPS) [2003 (7) TMI 52 - BOMBAY High Court] correctly states the principles of law and there is no need to interfere with the same. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Lissie Medical Institutions v. Commissioner of Income Tax' [2012 (4) TMI 115 - KERALA HIGH COURT]. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature. It also follows that once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well.
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2017 (12) TMI 1066
Applicability of provisions of section 195A - Petitioners as employees deputed by the Consultant, returned their income received in India and showed the tax component paid by the KSEB as “income from other sources” - Held that:- In the present case the assesses were in India for employment in a project, as deputed by the Consultant. The assesses were, hence, in the employment of the KSEB and as per the consultancy agreement the salary was payable by the Consultant and the income-tax by the KSEB. Obviously, the salary of the employees deputed by the Consultant was included in the consultancy charges and the salary and income-tax were both from the KSEB, in whose project the assesses were employed. C.W. Steel (1971 (8) TMI 68 - KERALA High Court) is more on point, in interpreting the definition of 'salary' in the Act, then, which inter alia included perquisites; which, by an Explanation, included any payment made by the employer in satisfaction of an obligation of the employee; which, but for the payment, would have been payable by the employee. Section 195A brings in the same effect, the absence of which prompted the Hon'ble Supreme Court in Emil Webber [1993 (2) TMI 1 - SUPREME Court ]to direct treatment of the tax payment as “income from other sources”. Question of law raised to be answered in favour of the revenue and against the assessee on a different reasoning than that given by the Tribunal. We are told that in many of the assessment orders the computation has not been properly made. The Assessing Officer would, hence, employ Section 195A and compute the amounts properly within a period of two months from the date of receipt of the certified copy of this judgment. The assessees are said to have paid up the amounts already. Only if there is a balance due, the same would have to be satisfied by the assessee or its agent.
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2017 (12) TMI 1065
Addition made under Section 40(a)(ia) - Held that:- Tribunal noted that the Assessing Officer relied only on the facts based on Form 56F wherein it has been mentioned that the production commenced on 21.01.1999 relating to assessment year 1999-2000 as first year. The Tribunal held that the revenue could not substantiate with any evidence before it that the production was commenced in the assessment year 1999-2000 but relied only on Form 56F filed by the assessee. Thus the Tribunal held that considering the apparent facts, material record and the paper book filed the matter has to be re-examined by the Assessing Officer as these facts were not mentioned in the order of the DRP and it is not clear as to whether the assessee had filed these details before the DRP or before the Assessing Officer to substantiate its claim. Therefore, the Tribunal remanded the issue to the file of the Assessing Officer to verify the genuineness after providing an opportunity of hearing to the assessee. With regard to the issue pertaining to the claim that communication charges are paid to Indian Companies in respect of the lease lines, the Tribunal opined that the matter has to be verified by the Assessing Officer and accordingly set aside the order of the Assessing Officer on the said issue for the limited purpose to examine the nature of charges and verify whether this income has been offered in the hands of the recipients and the assessee to be afforded an opportunity before passing an order. Advance to subsidiary companies without charging any interest - Held that:- when there is a specific direction by the Tribunal to re-examine the matter in a particular manner, the Assessing Officer is bound to scrupulously follow the directions of the Tribunal. The direction of the Tribunal is binding on the Assessing Officer. Therefore, to conclude that no further evidence was produced by the petitioner may not be the correct approach to be adopted. On the given set of documents, the Assessing Officer was bound to cause verification of the details and ascertain the genuineness and then take a decision. However, while passing the impugned order this has not been done. The Assessing Officer has made a verification that with regard to the date of commencement of production except for the letter the petitioner has not produced any document. However, the petitioner's case is that the paper book which was filed by them before the Tribunal and also placed before the Assessing Officer contained the copy of the order of approval granted by the STPI which the respondent has not considered. In this regard, the learned counsel for the petitioner has drawn the attention of this court to the orders of approval of the STPI dated 18.03.2000. Thus, find that the impugned order has been passed without adhering to the directions issued by the Tribunal and the chronology of dates and events would show that the petitioner did not have adequate opportunity to put forth their submissions. Therefore, it is a fit case where the matter should be remanded for re-consideration by the Assessing Officer.
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2017 (12) TMI 1064
Waiver of interest payable under Sections 234A, 234B and 234C - petitioner's case was that he had no taxable income - consistent case of the assessee is that the property continues to remain undivided and no income arose from the property to the petitioner and as there was no taxable income, returns were not filed - Held that:- The petitioner established his bonafides by referring to the suit for partition, which was pending trial, in which the petitioner/assessee is arrayed as 6th defendant. Thus, when the property continues to remain undivided, the assessee cannot anticipate the accrual/receipt of such income. The circular issued by the Board empowering the Chief Commissioner to consider the waiver petition for waiver of interest under Section 234A as well as 234B would show that even in cases covered by Section 234B and even though these provisions are compensatory in nature, special orders for grant of relaxation could be passed. Thus, this Court is convinced that the dispute with regard to the division of property was a bonafide dispute which directly relates to the assessbility of the petitioner to tax. Therefore, if the petitioner is entitled for waiver of interest under Section 234A of the Act for the reasons set out above, the question of payment of advance tax nor a portion thereof will not arise and therefore, the petitioner is entitled for waiver of interest under Sections 234B and 234C.
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2017 (12) TMI 1063
Validity of notice u/s 143(2) - period of limitation - Held that:- In the present case, we do not see any such proceedings in which the assessee was informed of the inadmissibility of the returns or the grounds on which the returns were sought to be rejected. A notice was issued under Section 158BC on 23.05.2000 and the assessee filed its return in Form 2B on 24.07.2000. It was after the returns were filed, the necessity of a notice under Section 143(2) of the Act arises; if the return is not accepted. Assessing Officer was obliged to issue such a notice within the 12 month period as provided under Section 143(2) of the Act. Herein, though a contention is raised that the notice was dated prior to the limitation period, it was served only after the period of limitation, as admitted by the department before the Tribunal. Whether it is three days, three months or three years, if the notice is served after the limitation period, there could be no further proceedings taken. We are inclined to agree with the order of the Income Tax Appellate Tribunal and answer the question in favour of the assessee and against the Department.
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2017 (12) TMI 1062
Eligible deduction u/s 80IA - Held that:- There is no dispute to the fact that the issue has been decided in favour of the assessee by this Court as per the decision reported in (2002 (4) TMI 35 - KERALA High Court). The provision dealt with in the said case was under 'Section 80-I'; whereas in the present appeal, it is 'Section 80-IA', which undisputedly is the successor provision of 80-I. There is no difference, but for the different points of time and the question of law remains to be same in both the circumstances. It is brought to the notice of this Court that the challenge raised by the Revenue against the said verdict came to be repelled, pursuant to the dismissal of SLP. This being the position, the law declared by this Court has become final; which obviously stands in favour of the assessee.
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2017 (12) TMI 1061
Addition u/s 14A r.w.r. 8D - Held that:- We have observed that Hon’ble Delhi High Court in the case of Cheminvest Limited (2015 (9) TMI 238 - DELHI HIGH COURT) had held that no disallowance can be made u/s. 14A . If no exempt income is received or receivable during the year. The decision of the Hon’ble Delhi High Court is approved by Hon’ble Bombay High Court in the case of Principal CIT v. Ballarpur Industries Ltd. reported in {2016 (10) TMI 1039 Bombay High Court}. Thus deletion of the addition as made by the A.O u/s. 14A by applying Rule 8D as the assessee has not received any exempt income during the previous year relevant to the impugned assessment yea. - Decided against revenue
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2017 (12) TMI 1060
Partial rejection of claim for deduction u/s 54 - assessee held 1/3rd share in Flat - requirement that the sale proceeds realised on sale of old residential house alone should be utilised - Held that:- For the purpose of sec. 54 of the Act, we have to see whether the assessee has completed the construction within three years from the date of transfer of old asset. In the instant case, there is no dispute that the assessee took possession of the new flat within three years from the date of sale of old residential flat. Accordingly, we are of the view that the assessee has complied with the time limit prescribed u/s 54 of the Act. Since the amount invested in the new flat prior to the due date for furnishing return of income was more than the amount of capital gain, the requirements of depositing any money under capital gains account scheme does not arise in the instant case. Further, the Hon’ble High Court has held in the case of K.C.Gopalan [1999 (9) TMI 955 - KERALA HIGH COURT ]that there is no requirement that the sale proceeds realised on sale of old residential house alone should be utilised. Thus we are of the opinion that the assessee is entitled for deduction of full amount of capital gains u/s 54 of the Act, as he has complied with the conditions prescribed in that section. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to allow the deduction u/s 54 of the Act as claimed by the assessee.
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2017 (12) TMI 1059
Assessments u/s.153A - addition on unexplained gifts - no incriminating document was found and seized during the course of search - Held that:- The addition has been made u/s.153A for two gifts received during the year, however, since, it is an unabated AY and no incriminating document was found and seized during the course of search for that AY, therefore following the ratio of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ), we are inclined to hold that the issue of these two gifts was outside the scope of examination in the impugned proceedings u/s.153A. Now reverting to the contention of Ld. DR that no assessment prior to search for A.Y.2003-04 was completed u/s.143 (3), therefore the issue of these gifts can be examined in proceedings u/s.153A is without any substance. Hon’ble Delhi High Court in the case of WORLD WINDOW IMPEX INDIA (P) LTD. (2016 (3) TMI 1275 - DELHI HIGH COURT) has clearly held that the ratio as laid down in this regard in the case of Kabul Chawla (Supra) also covers the situation where, prior to search, no assessment u/s.143 (3) was passed for the year under consideration. - Decided in favour of assessee.
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2017 (12) TMI 1058
Entitled for exemption u/s 10(1) - agriculture income - proof of carrying agricultural operations - supervision activity - Held that:- The factual matrix of the present case reveals that the farmer had entered into lease agreement with the assessee company and the farmer is the lawful owner of the land. The said farmers had leased the farm land to the assessee company which has handed it back to the farmer to carry out cultivation of seeds on behalf of the assessee company. The parent seeds are provided free of cost to the farmer by the assessee company. The farmer is paid, amount for procurement of seeds by the assessee at fixed rate, which is bifurcated under the heads, land lease rent, fertilizers & chemicals and labour & services charges. We find from the arrangement between the farmer and the assessee that the assessee is not carrying any agricultural operations required in terms of tests laid in the judgment of the Hon’ble Supreme Court in the case of CIT Vs Raja Benoy Kumar Sahas Roy (1957 (5) TMI 6 - SUPREME Court). The actual cultivation on the land is done by the farmer like tilling, sowing, etc. The mere supervision by the assessee without the carrying of the basic operations would leave no manner of doubt that no agricultural income arose in the hands of the assessee. The argument of the assessee that the company is an artificial person and could not have conducted the agricultural operations by itself and, therefore, required such kind of an arrangement with the farmers for earning agricultural income does not have any merit. The farmers are not the employees of the assessee company. Had it been the case where the actual agricultural operations were carried out by the employees of the assessee company, it would have been a different case altogether. - Decided against assessee.
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2017 (12) TMI 1057
Assessment of income of HUF - proof of existence of HUF - Held that:- Section 171 of the Income-tax Act refers to the assessment in the status of HUF after partition wherein it is stated that a HUF, hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a HUF unless there is a finding of partition is recorded . Similarly, with regard to partial/total partition, any claim made by the assessee requires to be verified by the AO upon giving due notice to the members of the family. Moreover, with regard to fresh claim of existence of HUF, without there being any assessment in the earlier years or proof of holding assets by a major HUF, the burden is heavy upon assessees to satisfy the AO that assets were held by the major HUF. In the instant case, there was no such evidence on record. It was only subsequent to the survey operations, assessees came out with a plea that they were maintaining sheeps and goats in the status of main HUF, which were passed on to the separated HUFs. In our considered opinion, assessees miserably failed to bring on record any proof of existence of HUF and it’s ancestral nucleus. Under the above circumstances, we are of the view that finding of the AO as well as ld. CIT(A) with regard to non-existence of HUF deserves acceptance. Accordingly, we hold that the income declared by the HUFs are assessable in the hands of individuals. Since AO had assessed the income of HUFs in the hands of the individuals, which in turn, were accepted by ld. CIT(A), we uphold the orders of AO on this count. However, the income of the HUF is clubbed and assessed in the individual hands, the assessment of HUF and the HUF income was assessed to tax protectively. Accordingly, the assessment made in the hands of HUF is quashed and the tax collected in the hands of HUF may be adjusted against the tax demands of individuals. In the result, both the appeals in the individual capacity as well as in the capacity of HUF are dismissed. Unexplained cash deposits - collective income of family - Held that:- It is noted from the records that the assessee has no independent sources of income. The deposits in the bank are the income of the family. We find that there is only two cash deposits and all other entries are transfers from the other accounts or credits for closure of deposits accounts. Since the transfers and credits are internal transfers, these deposits cannot be questioned as these are verifiable and established sources. AO could have verified from the bank itself, but chose not to do. With regard to cash deposits of ₹ 3,25,000/-, the husband of assessee has submitted that these are out of family fund. Since, we have adjudicated the income of the HUF belongs to the individual, there is sufficient funds available with the family to make such deposits. It is pertinent to note that assessee does not have any independent source of income, source is only from the family income. As there is enough funds available in the family to make such deposits, we accept the contention of the assessee and delete the addition made.
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2017 (12) TMI 1056
Revision u/s 263 - Unexplained cash credit by invoking the provisions of sec. 68 - Held that:- We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court (three judges bench) in the case of Tin Box, (2001 (2) TMI 13 - SUPREME Court) has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and CIT(A)’s orders and remanded the matter back to AO for fresh assessment
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2017 (12) TMI 1055
Addition u/s 68 - reopening of assessment - AIR information that the assessee had deposited cash in the Savings Bank account with Bank of India during the year - Held that:- It has been held by various courts of law that cash credited in the bank book is not a book maintained by the assessee and the same cannot be treated as income u/s 68 of the Act. Assessing Officer does not get jurisdiction to assess the said deposit of the amount in the bank as income of the assessee u/s 68 of the Act. In that view of the matter, the addition so made by the Assessing Officer and confirmed by the ld. CIT(A) is directed to be deleted. Accordingly, the legal grounds raised by the assessee are allowed.
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2017 (12) TMI 1054
Adjustment of deemed speculation loss against non-speculative business income by invoking the explanation to section 73 - Held that:- We are of the view that both trading of shares are not coming under the preview of section 43(5) of the Act, which provides the definition of speculative transaction for the purpose of section 28 to section 41 of the Act. The fact that both delivery based transaction in shares and derivative transactions are non-speculative as per section 43(5) of the Act is concerned, it goes to confirm that both will have same treatment as regards to application of the explanation to section 73 of the Act is concerned which creates a deeming fiction. As in the present case, the assessee had undertaken cash/future arbitrage activity as one single business activity i.e. the position in a cash segment in a particular scrip is taken on a particular date and at the same time the reverse position is taken in the same scrip in F&O segment. The transactions in cash segment and F&O segment are inextricably linked with each other and are so interwoven that it is not possible to divorce these transactions and decide the nature of the income/loss. And hence, the loss suffered in cash segment, being an integrated part of the total arbitrage activities has to be allowed / set off against income from derivative segment. Accordingly, we confirm the order of CIT(A) allowing loss earned by assessee on account of purchase and sale of securities against income earned in derivative transactions. The issue of Revenue’s appeal is accordingly dismissed. Deemed dividend under section 2(22) - Held that:- On similar line, in assessee’s business, the learned Counsel explain that lending of money to the clients by settling their dues with exchanges. Parallel can also be drawn from the credit card business of banks, wherein advances to the customers are considered as lending activities. He explained that ABL has also earned interest income (delayed payment charges) from trade receivables amounting to ₹ 12.31 crores and ₹ 33.38 crores respectively during F.Y. 2008-09 and F.Y. 2009-10 which further increased to 57.92 crores during FY 2010-11. He stated that even if assessee exclude trade receivables from total capital employed, then also it will satisfy the Criteria that substantial part of the business of ASL was lending i.e. more than 20% of business. Accordingly, section 2(22)(e)(ii) specifically excludes from the scope of deemed dividend, the amount transferred by a company to a shareholder in the ordinary course of its business and where the lending of money is a substantial part of the business of the company. In view of the above, the learned counsel for the assessee fairly stated that the issue is squarely covered in favour of assessee and against Revenue in assessee’s own case or in group cases exactly on identical facts. When this was confronted to the learned CIT DR, he fairly agreed that in earlier years in assessee’s own and group cases the issue has been decided in favour of assessee.
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2017 (12) TMI 1053
Disallowance of commission paid - Held that:- The allegation that the amount received through cheque was returned back in cash to the assessee is completely baseless and based on surmises. No such evidence brought on record. Further, the assessee has started new business with National Highway Authority of India during the year. The turnover has increased substantially. The books were duly audited and no discrepancy was pointed out by the Assessing Officer. The other allegation that this amount might have been towards the illegal payment for getting the advertisement is also without any basis. No evidence is on record to support such observation. The ld. CIT(A) observation to sustain the addition that the payment was illegal gratification or bribe paid to the public servant is completely baseless and it is only surmises and conjectures. There is no evidence on record, which substantiates this observation of the ld. CIT(A). This expenditure incurred by the assessee was wholly and exclusively for the purpose of business and such expenditures are allowable expenditures U/s 37 of the Act - Decided in favour of assessee Disallowing the TDS credit - Held that:- It is noted from the written submissions of the A.R. of the assessee wherein he has prayed that TDS was deducted by the client at the time of payment made to the assessee and TDS certificate was issued during the year of payment. The ld A.R. further submitted that the assessee has correctly claimed TDS of ₹ 6799/-. In this view of the matter, it will be in the interest of justice and equity to restore the ground of appeal to the file of the Assessing Officer to decide it de novo after taking into consideration various facts of the issue including issue of the TDS certificate. Accordingly, ground No. 2 of the appeal is allowed for statistical purposes.
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2017 (12) TMI 1052
Adjustment on account of arm’s length on interest on receivables - TPA - Held that:- When the taxpayer has not been making any distinction between AE and non-AE in charging any interest on outstanding receivables, the adjustment made by the TPO/DRP/AO on account of arm’s length interest is not sustainable. Moreover the interest can be charged only on loaning or borrowing of money and not in case of sale. Particularly when there is no penal clause in the agreement entered into between the taxpayer and its AE/non-AE to charge the interest on delayed receivables. Even otherwise, a transaction cannot be recharacterized merely on ground of delay in payment of receivables. Identical issue has also been examined by coordinate Bench of the Tribunal in Kadimi Tool Manufacturing Co. Pvt. Ltd. vs. DCIT [2017 (9) TMI 1578 - ITAT DELHI] and has been decided in favour of the taxpayer by relying upon Kusum Healthcare Pvt. Ltd. vs. ACIT [2015 (4) TMI 180 - ITAT DELHI] and Bechtel India Pvt. Ltd. (2016 (9) TMI 196 - DELHI HIGH COURT ) wherein SLP filed in the Hon’ble Supreme Court has been dismissed. TPO/DRP/AO have erred in making adjustment on account of arm’s length interest which is not sustainable in the eyes of law, hence no adjustment on account of interest on receivables can be made Not allowing credit of advance tax, TDS, foreign tax and tax paid under MAT provision while computing the tax liability on assessed income - Held that:- While calculating the tax paid under MAT provision, it is required to be deducted from gross tax payable. Similarly, while calculating the tax credit of advance tax, TDS and foreign tax is also required to be set off first in computing the overall tax liability by the taxpayer. Particularly when tax liability of the taxpayer is higher as per peak profit computed under MAT provision of the Act, so AO is directed to recomptue the tax liability by considering the credit of advance tax, the TDS, the foreign tax and tax paid on MAT provision in the light of the decision rendered by Hon’ble Allahabad High Court in the case of CIT vs. Vacment India (2014 (10) TMI 787 - ALLAHABAD HIGH COURT ) - Decided in favour of assessee.
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2017 (12) TMI 1051
Penalty u/s 271(1)(c) - exemption under section 10(23C)(vi) denied - Held that:- We find that the Assessing Officer while completing the assessment has not recorded proper satisfaction as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee and consequently no proper show cause notice was given to the assessee before initiating the penalty proceedings under section 271(1)(c) of the Act. Even otherwise, the said satisfaction was recorded in respect of the non denial of exemption under section 10(23C)(vi) of the Act and not in respect of other additions made by the Assessing Officer. Further, the Assessing Officer while levying the penalty under section 271(1)(c) of the Act, in the order imposing the penalty for concealment has held the assessee to have concealed its income or furnished inaccurate particulars of income. In the absence of the details being given by the trust on account of each and every expenditure booked, 50% of such expenditure was disallowed being his personal expenditure. Vis-a-vis the said disallowance, we hold that same has been upheld in the hands of the assessee for want of proof and not for violation of any of the provisions of the Act. In view thereof, we find no merit in the levy of penalty under section 271(1)(c) of the Act on such partial disallowance of expenditure on maintenance of car and credit card expenses of Mr. B.E. Avhad. In assessment year 2006-07, disallowance on depreciation of car and Honorarium paid, i.e. facilities to Mr. B.E. Avhad have been upheld to the extent of 50%. We hold that the assessee is not liable to levy of penalty on partial disallowance of facilities provided to Mr. B.E. Avhad. The assessee is liable to levy of penalty under section 271(1)(c) of the Act on the expenditure incurred on Foreign Tour of the trustees, scholarship given to the relatives of the trustees and also on the interest on loan given to relatives of the trustees, disallowance of which under section 13(1)(c) of the Act has been upheld in the hands of the assessee. Hence, grounds of appeal raised by the assessee are partly allowed.
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2017 (12) TMI 1050
Deletion of foreign travel expenses - CIT-A restricted addition to 10% of the total expenses - Held that:- CIT(A) categorically observed that these expenses have been incurred in accordance with international travel policy of Nokia group, which regulates and facilitates the movement of personnel of the assessee across international locations, and there is no expenses which could be termed as not incurred for purposes of assessee company. From the submissions made by assessee before the authorities below, it appears that assessee has filed all the relevant details in respect of travelers and their status of employment with Nokia. We therefore do not find any reason to interfere with the consistent approach followed by Ld.CIT(A) which is supported by various orders of this Tribunal for various assessment years and which have been affirmed by Hon’ble jurisdictional High Court in appeal filed for Assessment Year 2000-2001 and 2001-02. - Decided against revenue. TPA - comparables deleted by Ld.CIT (A) in respect of NET R&D segment and NIC R&D segment - Held that:- We agree with the contentions of Ld. CIT DR and remit this issue back to the file of Ld.TPO for proper verification of the comparables and applying filters as per law.
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2017 (12) TMI 1049
Exemption u/s 80P(2)(a)(i) - whether or not the activities of the assessee are confined to its members so as to fall within the provisions of Sec. 80P(2)(a)(i) - Held that:- Pertinently, Sec. 80P(2)(a)(i) of the Act, so far as is relevant for the present case, deals with exemption with regard to the income earned by co-operative society from providing credit facilities to its members. The aforesaid was put to the learned representative for the assessee who submitted that the assessee had no objection if the matter is restored back to the file of the Assessing Officer for proper verification on this aspect. We, therefore, in view of the aforesaid discussion, set-aside the order of the CIT(A) and direct the Assessing Officer to examine and consider as to whether or not the assessee’s activities are in compliance with the Maharashtra State Co-operative Act, 1960 as also the Maharashtra State Co-operative Regulations, 1961. If it is so found, then, in the absence of any licence from the Reserve Bank of India, the assessee cannot be treated as an entity falling within the restrictions imposed in Sec. 80P(4). So however, if the findings of the Assessing Officer are to the contrary, he shall be free to take appropriate action as per law.
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2017 (12) TMI 1048
Addition u/s 69C - Held that:- We find that similar issue arose in the case of the assessee for the immediate previous assessment year 2010-11 [2017 (12) TMI 1071 - ITAT MUMBAI]. The Tribunal upheld the disallowance @ 15% of the bogus purchases made by the Ld. CIT(A). Facts being similar, we direct the AO to estimate the profit @ 15% on the bogus purchases of ₹ 1,88,40,628/- in place of 28.4% made by the Ld. CIT(A) and make the addition accordingly. Addition u/s 40(b) - Held that:- Indisputably, as per the partnership deed dated 22.05.2003, remuneration to the working partners has been authorized to be paid in accordance with the computation provided in section 40(b). We find that the AO has not taken into account the amended provision of section 40(b) for the impugned assessment year. CIT(A) has rightly taken into account the said amended provision and then restricted the disallowance to ₹ 1,20,000/-. Accordingly, we uphold the order of the Ld. CIT(A) on the above ground of appeal. Addition u/s 41 - Held that:- Addition u/s 41(1) cannot be made unless and until it is found that there was remission and/or cessation of liability, that too during the relevant assessment year. SEE Matru Prasad case [2015 (4) TMI 830 - GUJARAT HIGH COURT] Disallowance of claim of pollution control equipment expenses - Held that:- We find that the AO failed to give a single opportunity to the assessee to explain its case on the above issue. A proper hearing must always include a fair opportunity to those who are parties in the controversy for correcting or contradicting anything prejudicial to their view.In view of the above, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to decide the issue afresh Unauthorized occupation penalty - allowance u/s 37 - Held that:- We find from the ledger account that cheque no. 163966 has been paid towards MCGM unauthorized occupation penalty. As this is purely penal in nature, we uphold the order of the Ld. CIT(A) and dismiss the 3rd cross objection raised by the assessee.
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2017 (12) TMI 1047
Additions on account of service tax - treated to the income of the assessee company - Held that:- ITAT has already decided these grounds in favour of assessee in [2016 (8) TMI 1311 - ITAT MUMBAI] by holding that the additions on account of service tax cannot be treated to the income of the assessee company. Therefore, respectfully following the decision of the coordinate bench of Hon’ble ITAT in assessee’s own case for AY 2008-09 and 2009-10 and in order to maintain judicial discipline and consistency which are applicable mutatis mutandis in the case of the assessee. We accordingly gave similar directions to the AO as were given by Hon’ble ITAT for verify the claim of the assessee company, and on finding the same in order deleat the addition made in the hands of the assessee company. It is further directed that the AO in the course of verifying the aforesaid claim of the assessee company shall in all fairness afford an opportunity of being heard to the assessee company Levying Surcharge @ 2.5 percent, Education Cess @2% and Secondary and Higher Education Cess @ 1 percent - assessee has offered its income to tax under Article 13 of Double Taxation Avoidance Agreement (DTAA) between India and France at 10 percent - Held that:- We find that the Hon’ble ITAT in [2016 (7) TMI 712 - ITAT MUMBAI] has already decided this grounds in favour of assessee by holding that revenue cannot levy surcharge and education cess, which is also in the nature of surcharge, over and above the cap of 10% prescribed in article 13 as the tax rate for Royalty income. In any case the provision of article 13 of the India-France DTAA r.w.r 2 thereof would prevail over the provision of the domestic Income Tax law and thus the tax liability on royalty income shall be capped at 10%. Therefore, respectfully following the decision of the coordinate bench of Hon’ble ITAT and in order to maintain judicial discipline and consistency which are applicable mutatis mutandis in the case of the assessee. We accordingly gave similar directions to the AO as were given by Hon’ble ITAT to recompute the tax liability on royalty income accordingly. Thus this ground so raised by the assessee company is allowed
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2017 (12) TMI 1046
Not allowing deduction of brought-forward losses/depreciation while computing book profit u/s. 115JB - Held that:- In the case of Surat Textile Mills Ltd. vs. DCIT (2016 (6) TMI 525 - ITAT AHMEDABAD) the all credit balances were accumulated and transferred to “Rehabilitation Scheme Account” and the profit and loss account was adjusted against the same as per Scheme approved by BIFR for re-habilitation of the assessee under Sick Industries Act. Such adjustments were not made as per the requirements of Companies Act. That fact weighed in favour of the assessee. In the instant case the assessee itself has filed petition before the Hon'ble High Court of Bombay for reduction of share capital by adjusting accumulated losses as per the provisions of Companies Act. After receipt of approval from the Hon'ble Bombay High Court, the assessee has wiped off the accumulated losses by transferring it to Equity Share capital, thereby reducing the Share capital account. As submitted by the ld. DR all these transactions have happened way back in 2003. All these adjustments have been carried out as per the provisions of Companies Act and after such adjustment; there would not be any accumulated loss as contended by the assessee. We are concerned with determination of book profit for assessment year 2010-11. Admittedly the financial statement prepared for the year under consideration does not contain any entry towards “accumulated losses”. As stated earlier, there does not exist any accumulated loss in the eyes of law after giving effect to the order passed by Hon’ble Bombay High Court for capital reduction. For these reasons, we are of the view that the ld. CIT(A) was justified in upholding the order of AO in rejecting the claim of the assessee
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2017 (12) TMI 1045
Deduction allowable u/s 36 (1)(iii) - non-commencement of business - Held that:- As per P&L account available the assessee is showing income on account of interest on FDs and the activity in respect of purchase of shares of various companies is not shown as purchase and closing stock in trade. Specific query was raised by the Bench and in reply it was submitted by the ld AR of the assessee that there is no stock in trade and in my considered opinion, in the facts of the present case, it cannot be said that the assessee is doing any business activity and any income is to be taxed under the head ‘income from business’. Therefore, no deduction is allowable u/s 36(1)(iii) in respect of interest paid by the assessee and claimed as allowable expenditure because as per the sec. 36(1)(iii), interest is allowable if it is incurred in respect of capital borrowed for the purpose of business. Since there is no business activity, no deduction is allowable u/s 36 (1)(iii). Disallowance of fund raising charges - contentions of the assessee were same that the same is allowable as interest expenditure u/s 36(1)(iii) because as per the provisions of sec. 2(28A) interest includes services fee or other charges in respect of money borrowed or debt incurred or in respect of any credit facility which has not been utilized - Held that:- On this issues also, the assessee is bound to fail because when it is seen and held that assessee has not commenced any business activity and no deduction is allowable u/s 36 (1) (iii) in respect of interest expenditure because it is not in respect of any business activity, the fund raising charges also cannot be allowed for the same reason. Disallowance of business expenditure - Objection of the AO that no sales and Revenue has been generated - Held that:- Business of the assessee has not been started because it was not shown that any business activity was undertaken by the assessee.
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2017 (12) TMI 1044
Assessment of leasing charges of machinery - under the head income from other sources OR income from business - Held that:- The facts on record suggest that the assessee’s mining business is almost permanently closed. In view of these factual matrix, we hold that the income from leasing out of the machinery to the sister concerns shall be assessed as income from other source. In view of this, we uphold the order of the ld. CIT(A) on this issue. However, the assessee had made an alternate submissions that the loss incurred by the assessee company under the various heads of expenses should be allowed from the income assessed under other heads of income. From the records we observe that the genuineness of these expenses debited in P&L account have not been verified by the authorities below. Prior to considering the allowability of these expenses. The genuineness and business requirement of the assessee needs verification. Therefore, for the verification of the genuineness of the expenses and also the justification of the expenses for business requirement of the assessee, the issue is restored back to the file of the Assessing Officer. Disallowance of various expenses under the head dead rent,Environment expenses and salary and wages paid - Held that :- With regard to the claim of these expenses, we have already decided that the issue that these requires verification at the level of the Assessing Officer with regard to the genuineness and justification of the expenses for business of assessee, therefore, this ground of appeal is also restored back to the file of the Assessing Officer
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2017 (12) TMI 1043
Reopening of assessment - valuation adopted by the A.O. - working of capital gain - reference of matter to DVO - Held that:- Assessing Officer adopted the value at ₹ 1,56,95,100/- as adopted by the DIG (Stamps). The assessee has only challenged the valuation adopted by the A.O. at ₹ 1,56,95,100/- before the ld. CIT(A). The ld CIT(A) has granted the relief sought for by the assessee in his appeal. Now what is claimed in the appeal of the assessee is not a justified claimed. He himself has adopted the value for working out the capital gain at ₹ 52,40,700/-. Only enhancement was challenged before the ld. CIT(A). At the stage of CIT(A), the matter was referred the matter to the District Valuation Officer, who has valued it around ₹ 29,83,500/-. Now the assessee’s AR claims that this value should be substituted for the value declared by him in his return of income. On this issue, we are of the view that once the assessee has himself has offered the value adopted by the Registering Officer at ₹ 52,40,700/- and filed the return of income and paid the taxes. Then there is no scope for reduction. He has also not agitated this valuation before the ld. CIT(A) in any of his grounds of appeal. Only plea was to adopt the value at ₹ 52,40,700/- in place of ₹ 1,56,95,100/-, therefore, we find no merit in this plea of the ld AR of the assessee. After considering all the aspects of the matter, we sustain the order of the ld. CIT(A).
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2017 (12) TMI 1042
Adjustment on international transactions on account of difference in arm’s length price - Held that:- CIT(A) has not given detailed findings as to how no adjustment is warranted on international transactions on account of difference in arm’s length price. The order of CIT(A) in our opinion is not elaborate and is very cryptic. The issue of Transfer Pricing Adjustment whether at Arm’s Length price or not, has to be thoroughly verified which in the instant case has not been done. Remand back this issue to the file of the TPO/A.O. While computing the adjustment the TPO and the CIT(A) did not allow the benefit of +/-5% in terms of proviso to section 92C(2) of the Act. Since the price charged/paid by the assessee fall within the +/-5% range of the arm’s length price, no adjustment is warranted in terms of the proviso to section 92C(2). Since, there is a calculation error and thereby impacting the Transfer Pricing Adjustment, it will be appropriate to remand back this issue to the file of the TPO/A.O. Needless to say, all the contentions be kept open and the assessee be given proper opportunity of hearing as per due process of law. Sham transactions of lease rentals disallowed - Held that:- As in the assessee’s own case for Assessment Year 2002-03 [2017 (2) TMI 1290 - ITAT DELHI] A.O did not take into account the accounting of the sale proceeds in the year ended 31/3/2000 and also the interest factor for the the existence of assets itself is in doubt or when an asset subject matter of transfer actually from a physical part of another larger asset or such sham transaction takes place that the revenue can rightly object to the arrangements, in the present case, there was no doubt about existence of the assets, the sale proceeds and consequent short term capital gains were duly assessed in Assessment Year, 2000-01, and the transaction entitled the assessee to the use of the sale proceeds at a cost lower than borrowing through debentures. The CIT(A) has rightly deleted the same. This ground is dismissed. Penalty on addition u/s 43(A) and on disallowance on previous year expenses - Held that:- It is well settled principle that ignorance of law is not excused and cannot be a ground to avoid tax liability. The Assessee in the instant case is renowned Limited Company and accounts of the company are duly audited by the qualified auditors. Before filing the returns of income, the same are verified by the Directors of the Company. Therefore, it cannot be considered as mere clerical error on part of the Assessee Company. In fact, the CIT(A) rightly observed that had the assessee’s case not been selected for scrutiny, the assessee would have got away with the excess claim of depreciation. As relates to expenses pertaining to earlier years, the assessee has not filed any documentary evidence and was unable to given the proper explanation. Here also if the assessee’s case was not selected for scrutiny, the assessee would have been allowed to claim the excess expenditure to the extent of ₹ 16,40,786/-. In view of the above and the findings given by the CIT(A), we do not find any infirmity in the same. Accordingly, the penalty in this respect is upheld and grounds raised by the Assessee in Cross objection on this issue is dismissed.
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2017 (12) TMI 1041
Calculation of disallowance of u/s 36(1)(iii) - Held that:- In the present case also we are of the opinion that Assessing Officer should examine the disallowance keeping in view the case laws relied on by assessee wherein it has been held that on opening balances of advances no disallowance u/s 36(1)(iii) was warranted and similarly in cases it has been held that if the interest free funds of the assessee are more than the interest free advances, no disallowance u/s 36(1)(iii) can be made. Addition u/s 41(1) - Held that:- AR clearly establish that addition u/s 41(1) is not warranted unless the assessee writes off the credit balances of such creditors. Tax was not deductible as the amounts were paid as reimbursement to shipping agents - Held that:- emit this issue to Assessing Officer who should examine the nature of expenses and if the payments made are covered by the provisions of section 172(8) and CBDT Circular No. 723, then Assessing Officer should allow relief thereof. In view of the above ground no. 8 is allowed for statistical purposes. Addition was made u/s 69C on account of certain items jotted in pencil on two sheets of paper which were recovered during the course search and seizure operation. The assessee submitted that the said can not be treated as unexplained expenditure and under these circumstances, the Hon'ble Delhi High Court in the case of Lubtech India Ltd. [2007 (7) TMI 281 - DELHI HIGH COURT] has held that section 69(c) postulates that first of all, the assessee must have incurred the expenditure and thereafter if the - explanation offered by the assessee was not found satisfactory only then the addition can be made u/s 69C of the Act. In the present case also the assessee had denied to have incurred this expenditure and the assessee had been maintaining that such expenditure was never incurred by the assessee and these were not reimbursed to the employees and therefore we are in agreement with the arguments of assessee that addition under these circumstances can not be made u/s 69C of the Act. Disallowance of 1/10th out of vehicle expenses - Held that:- Assessing Officer is directed to delete disallowance on account of depreciation which the Ld. CIT(A) had sustained due to personal use. However as regards other expenses the disallowance sustained by Ld. CIT(A) is upheld. Addition of credit balance - Held that:- We find that assessee at its own had transferred this amount to rebate and discount in the succeeding year and therefore addition during the year under consideration will tantamount to double addition. Deemed dividend u/s 2(22)(e) - Held that:- We find that in the present case also the registered and beneficial shareholders are different than the assessee company
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Customs
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2017 (12) TMI 1040
Principles of Natural Justice - Breach of Regulations 11 and 17 of the said CBLR, 2013 - Held that: - this order appears to have been passed without giving any prior notice and opportunity of hearing to the petitioner, but a perusal of different Regulations particularly, Regulation Nos.18, 19, 20, 22 and 23 indicates that various kinds of penalties and actions are envisaged under these Regulations to be taken against the erring Customs Broker - petitioner not only has an opportunity to show-cause and establish its innocence and compliance with the Regulations before the concerned authority itself even now, but has equal, adequate and efficacious remedy by way of appeal against the impugned order even before the CESTAT under Regulation 21. A lenient and conveniently held out tool of ground of natural justice cannot be used to protect those who have indulged in gross violation of Regulations and Rules and which has resulted in evasion of tax and duties and has caused revenue loss. On the face of it, this ground invoked in the writ jurisdiction, may appear to be attractive to exercise the discretion under Article 226 of the Constitution of India but the malaise in such cases is indeed deep-rooted, where the Courts in its extraordinary jurisdiction, on the basis of the Affidavits only cannot even easily reach into. This Court would not like to comment upon the facts of the present case, as the matter appears to be still pending under investigation and the appellate order, the petitioner may have his own opportunity to lead his evidence in the matter at this stage, but prima- facie reading of the order, shocks the conscience of this Court - the alleged ground of breach of principles of natural justice need not prompt this Court to immediately interfere in such cases at such premature stage of the matter. Petition dismissed.
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2017 (12) TMI 1039
Alternative remedy of appeal - Section 129A of the CA, 1962 - Revocation of CHA License - Held that: - Section 129A of the CA, 1962 provides for an appeal before the Appellate Authority against any decision or order passed by the Commissioner of Customs as an adjudicating authority or even an order passed by the Commissioner of Appeals under Section 129A of the Act - the petitioner should avail such alternative remedy in accordance with Section 129A of the Act - petition disposed off with a liberty and direction to the petitioner to avail such alternative remedy before the Appellate Tribunal in accordance with law.
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2017 (12) TMI 1038
Refund of Extra Duty Deposit (EDD) - denial on the ground of unjust enrichment - Held that: - Tribunal in the case of SKF Technologies (I) Pvt. Ltd [2016 (11) TMI 986 - CESTAT BANGALORE], has held that EDD (extra duty deposit) made during the pendency of investigation by SVB is in the form of a security and the doctrine of unjust enrichment is not applicable for the refund of EDD - refund allowed - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (12) TMI 1037
Respondent no.7 liable to be struck out as being an unnecessary appendage - whether pending adjudication of Company Petition filed by the Appellants before the learned Tribunal, proceedings against Respondent no.7 could be justifiably scuttled on the ground that it had no link with Respondent no.1 - Conversion Agreement had been fraudulently executed with the object of taking away the Conversion Agreement from premium in which the Appellants and their group had 53.40 percent shareholding to a concern where the Appellants had no stake. Held that:- There is ample material on record to demonstrate that “The Eastern Manufacturing Company Limited” and “Eastern Manufacturing Private Limited” is one and the same entity which has entered into conversion agreement with Respondent no.7. Minor typographical errors in the nomenclature of the company cannot detract from the fact that the name, CIN number and address of Respondent no.1 has been clearly stipulated in the statutory documents forming part of records. The agreement dated 29th May, 2009 is relied upon by both parties in respect of their respective stands. The disputed agreement relates to Jute Mill of Respondent no.1 located at 1, Ali Hyder Road, Post Office Titagarh, 24 Parganas (North), West Bengal which is clearly and sufficiently identified. Respondent nos.1 and 7 have not come forward with an alternate location or address for the aforesaid Jute Mill. Appellants have alleged that the aforesaid Jute Mill has been transferred by Respondent no.1 to Respondent no.7 in pursuance of conversion agreement. At the time of arguments we clearly asked Counsel for Respondent no.7 - “Are you in possession of the Company at the address given as of Respondent no.1?” And the learned Counsel stated - “Yes”. Considering all this and stand taken by Appellants, deletion of Respondent no.7 from the array of respondents would prejudicially affect the Appellants. Moreover, the Appellants cannot be denied the opportunity to explain and establish that despite of difference in nomenclature, the company is one and the same. Nor can the Appellants be denied an opportunity to seek an amendment to rectify the error in the name and style of the Respondent no.1. The Tribunal overlooked the material facts. Viewed thus, we hold that Respondent no.7 is a necessary party. The finding recorded by the Tribunal in passing the impugned order cannot be supported. It being erroneous is liable to be set aside.
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2017 (12) TMI 1034
Striking of name of company from registrar of companies - reasonableness for the Registrar to assume that the appellant company was not carrying on any business or operation - Held that:- The appellant company has been carrying on its operation which is evident from the fact that it made payment to its employees (para 5), it provided services to Hitachi Systems Micro Clinic Private Limited (para 5), it received payment for the services provided to various clients of the company as per details given in preceding para 5 and it has availed services from various agencies as revealed in preceding para 6. The appellant company has also taken on lease office space for running its operation and has also reflected its turnover for the financial year 2014-15, 2015-16 and 2016-17 (para 6). It has even entered into Memorandum of understanding with various entities as extracted in preceding para 8. There are assets available as is mentioned in supra para 9. In the face of the aforesaid it would not be reasonable for the Registrar to assume that the appellant company was not carrying on any business or operation for a period of two immediately preceding financial year. The appellant company cannot thus be regarded as a defunct company. The fact remains that there is no plausible explanation as to why it has not filed its annual returns and balance sheets before the ROC. There is thus a serious lapse on the part of the appellant company. In the facts and circumstances explained in the preceding paras we are of the view that the appellant company fulfils the requirement of Section 252(1) read with Section 252(3) of the Companies Act which overwhelming warrant its restoration. As a sequel to the above discussion this appeal is allowed. The appellant company is restored to its original name.
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Insolvency & Bankruptcy
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2017 (12) TMI 1036
Corporate Insolvency Resolution Process - default in payment of huge debt - Held that:- The record of the financial debt as per the Books of the Corporate-Applicant; certificate of eligibility of the Interim Resolution Professional, updated Books of Account showing default; copies of the audited financial statement for the Financial Year ending 31.03.2016 and 31.03.2017 all have been placed on record. The copies of notices issued by the financial creditors and recovery certificate issued against Applicant Company can be termed as conclusive proof of default. There has been admission of default also. In the light of default in payment of such huge debt, it has been submitted that the applicant company is in dire need of a resolution plan in the interest of all the stakeholders. The present application has been filed in requisite form-6 containing the required particulars in terms of sub-section (2) of Section 10 of the Code. The applicant satisfies all the statutory requirements. Therefore, we are inclined to admit the application. In view of the above, we are satisfied that the present application is complete and that the applicant corporate debtor has committed a default. Therefore, as the application is complete the present application is admitted under section 10(4)(a) of the Code. The corporate insolvency resolution process shall commence from the date of this order as per sub-section (5) of Section 10 of the Code.
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2017 (12) TMI 1035
Corporate insolvency procedure - Held that:- We do not accept the submissions made on behalf of the Appellant in view of the fact that after admission of an application under Section 7 of the ‘I&B Code’, once moratorium has been declared it is not open to any person including ‘Financial Creditors’ and the appellant bank to recover any amount from the account of the ‘Corporate Debtor, nor it can appropriate any amount towards its own dues. If the ‘Corporate Debtor’ has borrowed some amount from the Appellant-’Indian Overseas Bank’ and the Appellant- Indian Overseas Bank’ come within the definition of ‘Financial Creditor’ as defined in Section 5(7) of the ‘I&B Code’, it is always open to the Appellant- Indian Overseas Bank’ to file its claim before the ‘Interim Resolution Professional’ for getting the amount back. If the Appellant claims to be ‘Financial Creditor’ and files such claim before the ‘Interim Resolution Professional’ showing the principal amount and interest thereon, the ‘Interim Resolution Professional will consider the same and the Appellant being ‘Financial Creditor’ may be taken in the Committee of Creditors’. We find no merit in this appeal, therefore, we are not inclined to interfere with the impugned order dated 13th October, 2017.
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Service Tax
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2017 (12) TMI 1070
Demand of service tax - Validity of SCN - scenario after the attachment of the Central Goods and Service Tax Act, 2017 as well as the omission of Entry 92C from List-I of the Seventh Schedule of the constitution - Held that: - this Court is of the prima facie opinion that the impugned notice dated 23.10.2017 is without jurisdiction - further proceeding under the impugned notice is hereby stayed until the returnable date.
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2017 (12) TMI 1032
Refund claim - service tax paid on reverse charge basis in terms of Section 66A, mistakenly, on non-taxable activity - denial on the ground of unjust enrichment - Held that: - the tax entry on “supply of tangible goods for use” itself came into effect only from 16/05/2008. The tax liability under such entry is not even existing at the time when the appellant entered into contract with DMRC. Hence, the question of factoring such tax liability in the contract price is not possible. Reliance placed in the case of Himatsingka Seide Ltd. vs. CC, Bangalore [2005 (3) TMI 333 - CESTAT, BANGALORE], where the Tribunal held that there can be no presumption that duty collected in excess of what is payable is passed on to the buyers. Whenever there is a composite price inclusive of all duties, the meaning is the price includes only the duty payable. No presumption can be made that excess duty paid by mistake is passed on to the buyer - In the present case, there is not even a tax liability on the date of conclusion of contract with DMRC. The lower authorities fell in error in holding against the appellant on the question of unjust enrichment - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1031
Refund claim - service tax paid on the commission, now the bank guarantee is surrendered by M/s. HAL ahead of expiry period of 31 months - refund denied on the ground of time limitation - Held that: - refund has to be filed within one year from the date of payment and the date of payment in the present case was 05.08.2009 and the refund was preferred on 04.11.2009 which is beyond the period of one year - reliance placed in the case of Assistant Collector of Customs Vs. Anam Electrical Manufacturing Co. [1997 (1) TMI 80 - SUPREME COURT OF INDIA] wherein the Supreme Court has categorically held that the “relevant date” for the purpose of refund u/s 11B read with Section 83 of the FA is from the date of payment - appeal dismissed - decided against appellant.
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2017 (12) TMI 1030
Delay in payment of service tax - demand of interest and penalty - extended period of limitation - Held that: - As far as the penalty under section 77 and 78 is concerned, I find that there is no suppression of fact in the present case. Therefore, the extended period of limitation cannot be invoked. Interest - Held that: - the service tax has been paid on R&D Cess but there was a delay in the payment of the same. But the appellant’s stand is that they have paid the interest which is disputed by the Revenue - the matter is remanded back to the original authority for fresh computation of interest after considering the submissions of both the parties. Appeal allowed in part and part matter on remand.
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2017 (12) TMI 1029
Ineligible availment of advance tax deposited - Rule 6(1A) of the Service Tax Rules, 1994 - Revenue's case is that assessee had not produced the original documents evidencing payment of service tax for the services rendered by them for the period in question. Held that: - intimation of such adjustment was with the Department and at the most it was only a procedural lapse and on account of procedural lapse excess payment made by the assessee cannot be retained by the Government and therefore the action of the Revenue was held to be not sustainable - Moreover the respondent-assessee is a PSU and there is no mala fide intention on the part of the assessee - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1028
Refund claim - input services consumed within SEZ - telephone services - internet services - maintenance and repair services - denial on the ground of non-inclusion of the specified service category in the approval list of service required for authorised operation - Held that: - the adjudicating authority has not disputed the fact of receipt of these services in the SEZ unit and the same are consumed by the appellant unit - non-inclusion of the services in the list of services approved by the Development Commissioner for authorised operations is just a procedural lapse which cannot be considered as a ground for rejection of refund claim - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1027
Refund claim - service tax paid under mistake - time limitation - reference of matter to Larger Bench - Held that: - When the very scope and ambit of Notification No.22/2006-ST is under sub-judice before the Apex Court, it is premature on the part of the Tribunal to decide that issue and overreach the jurisdiction of the Apex Court - appeal is remanded to the adjudicating authority.
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2017 (12) TMI 1026
SEZ unit - refund of unutilized CENVAT credit - input service - “exports” in accordance with rule 6(a) of Service Tax Rules, 1994 - POPOS Rules - case of Revenue is that such service did not confirm to the definition of ‘exports’ was a consequence of the finding that the place of provision of service which should be outside India as per Place of Provision of Service Rules 2012 was not - Held that: - The destination of the services rendered by the appellant being undoubtedly the location of overseas clients, it necessarily follows that the domestic tax should not be carried outside the country. This requires, refund of such tax, which in the present case, is represented by accumulated CENVAT credit - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (12) TMI 1025
CENVAT credit - tyres used in RBO (material handling equipment) for mining operations - Department was of the view that the tyres for material handling equipment falling under Central Excise Tariff 4011 99 00 are outside the ambit of the definition of capital goods under Rule 2(a) of the CCR - Held that: - The cenvat credit for such dumpers / dippers were allowed since these are used in the mining activity for movement of ore and other things in the captive mines - these vehicles are not meant to be used for movement of materials in the mines. Such goods cannot be covered under capital goods since they are in the nature of motor vehicle other than dumper and dipper - tyres of such vehicle can also not be allowed for availing cenvat credit. Appeal dismissed - decided against appellant.
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2017 (12) TMI 1024
Clandestine removal - Cement - allegations against the appellant are that they have manufactured cement clandestinely and cleared with payment of duty - Held that: - The circumstantial evidence in the form of two trucks found standing in front of the factory is not supported in the form of a panchnama. The capacity of the factory to produce cement containing clinker and slag 50:50 is doubtful - we are of the view that the evidences can, at the most, give rise to doubt in the mind of a prudent man that the entire receipt of raw materials and clearance of finished products is not accounted. However, the allegations of clandestine clearance is a very serious charge and is required to be established on the basis of tangible evidence. But this onerous burden has not been discharged by Revenue. The department has failed to bring on record tangible evidence to support the allegation of clandestine clearances. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1023
Waste - Liability of duty - fly ash emerging during the process of burning in the furnace - Held that: - this Tribunal in several cases has consistently held that fly ash is in the nature of process waste and no duty will be payable on such goods - identical issue decided in the case of M/s Jai Balaji Industries Ltd. Versus CCE & ST, Raipur [2017 (6) TMI 898 - CESTAT NEW DELHI], where it was held that the fly ash emerging during the course of generation of electricity cannot be considered as a manufactured product liable to Central Excise Duty - demand on fly ash set aside. Liability of duty - mill scale - Held that: - similar issue has come up before the Hon’ble Bombay High Court in the case of Hindalco Industries Limited vs. Union of India [2014 (12) TMI 657 - BOMBAY HIGH COURT] in which the Hon’ble High Court considered the dutiability of dross, skimming of various non-ferrous metal arising as process waste during the course of manufacture. The Hon’ble High Court has held that dross, skimming etc. are merely the refuse, scum or rubbish arising in the process of manufacture of aluminium sheets and, therefore, cannot be said the result of treatment, labour or manipulation whereby a new and different article emerges with a distinctive name, character or use - mill scale is not liable for levy of excise duty. Clandestine removal - shortages of finished products - Held that: - Once the appellant has accounted the finished products manufactured in its record, it is incumbent upon him to clear the same after payment of proper Central Excise duty. Having failed to do so, the appellant will be liable to pay such duty alongwith interest as has been done in the impugned order. This portion of the demand merits no interference and is sustained - demand on shortages are upheld. The matter is remanded to the adjudicating authority for the limited purpose of requantification of demand as well as the associated penalties. Appeal partly allowed by way of remand for purpose of quantification.
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2017 (12) TMI 1022
Quantification of duty - Department is aggrieved that Commissioner should have quantified net duty liability without delegating that to the Range Officer - Held that: - the adjudicating authority may very well call for verification report in case it is necessary from a Range Officer etc. However, arriving at the net duty liability or net differential duty liability is not only the prerogative of such adjudicating authority but it is also his responsibility - we remand the matter back to the adjudicating authority for the limited purpose of quantifying the demand in respect of the three assessees on the basis of the conclusions arrived at in the impugned order. Penalty u/s 11AC on Sai Poly - Held that: - the adjudicating authority, in de novo adjudication in respect of M/s.Sai Poly, while indicating the quantum of penalty under Section 11AC, however at the same time shall give the option of reduced penalty of 25% of the duty so determined of course, subject to the conditions for availing such reduced penalty - appeal allowed in part. Penalty u/r 26 of CER 2002 on M/s.J.K. Fishnets and on Shri P.R. Sampath Kumar - Held that: - these penalties are very much on the lower side and are not incommensurate with the acts and omissions of person concerned - penalties upheld. Appeal allowed in part.
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2017 (12) TMI 1021
CENVAT credit availed on imports effected against N/N. 54/2003 - bills of entry for import of inputs on which duty liability has been discharged by debit of ‘Duty Free Credit Entitlement (DFCE) - Held that: - That there is a duty liability is not in dispute; it is the manner of payment of the duty that, in the context of entitlement to CENVAT credit, that is objected to. CENVAT Credit Rules, 2004 does not make such distinction and credit should be admissible even in the absence of a clarificatory insertion in a customs notification - Respondent is an exporter and is, thereby, entitled to a refund of taxes/duties on all inputs and it is the superfluous activity of collecting the additional duty for subsequent refund that would be the consequence of the proposition made on behalf of Revenue. Such procedural burden should not be visited lightly upon an exporter if the government is serious about promotion of exports - credit allowed - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1020
Jurisdiction - power of first appellate authority to remand - CENVAT credit - rejected goods - Held that: - This summary disposal without examining the material brought on record in the appeals filed before him displays lack of application of mind and neglect of his role as an appellate authority. Appeal proceedings are not mere eyewash and statistics of disposal are not substitutes for delivery of justice and the constitutional imperative to collect such taxes as are authorised by law and not to deprive the consolidated fund of any tax that is authorised by law. In the absence of a proper and considered disposal of the appeal, the impugned order is set aside and the proceedings restored to first appellate authority for fresh determination - appeal allowed by way of remand.
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2017 (12) TMI 1019
Demand of interest - case of appellant is that though there is a mistake in carrying forward of closing balance of 31st March as opening balance in the month of April, 2009 they have reversed the excess amount of ₹ 8,52,596/-therefore mistake stands corrected, hence no interest is chargeable - Held that: - appellant have reversed excess amount of ₹ 8,52,596/- in the month of April, 2009 as against excess balance shown on 1st April, 2009 of ₹ 5,61,411/-. Therefore wrongly availed excess credit of ₹ 5,61,411/- stands reversed in the same month therefore there is no question of interest liability - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1018
CENVAT credit - rejected goods - Rule 16(2) of the CER, 2002 - Held that: - appellants are still ready to produce those invoices which can correlate the receipt and clearance of rejected goods. Since these documents were not considered by the Learned Commissioner (A) by observing that they are not on the paper book of the appeal, this case needs to be remanded back to the original authority to pass a de novo order after considering all the evidences which the appellant may produce in their favor to prove their claim - appeal allowed by way of remand.
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2017 (12) TMI 1017
Refund of unutilized CENVAT credit - DTA unit which was subsequently converted to 100% EOU - Board Circular No.77/99-Cus dated 18.11.1999 - Held that: - refund claim is against the export of the goods therefore unjust enrichment is not applicable - reliance placed in the case of SAI CREATION Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [2012 (8) TMI 842 - CESTAT MUMBAI], where it was held that When Section 11B providing for grant of refund of excise duty specifically provides that in certain specified situations, the provisions of unjust enrichment shall not apply, the law has to be interpreted and enforced accordingly - the appellant is entitled for the refund subject to verification of the documents by the sanctioning authority - appeal allowed by way of remand.
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2017 (12) TMI 1016
Classification of goods - synthetic web equipment - appellant claims that the synthetic web equipment supplied by the appellant to Defence and Paramilitary forces were exclusively meant for use by those personnel and such goods are not at all sold in the market and it shall be classifiable under the Tariff heading 63079090 - whether goods classifiable under CETH 6307.9090 or under CETH 4202.1990? - Revenue says that Tribunal has already taken a view to hold that the goods in question would fall in Tariff Heading 4202.1990, in the case of MKU Pvt. Ltd. [2012 (7) TMI 832 - CESTAT NEW DELHI]. Held that: - When the decision cited by Revenue is read, that does not throw light as to whether common parlance theory was considered by Tribunal to classify the goods following the ratio laid down by the Apex Court in the aforesaid judgments. For non consideration of such principle, the decision of the Tribunal is per incurium and cannot be said to be a precedent on the subject - There is no dispute by Revenue that the goods in question are as per the literature placed on record by the learned counsel and used by military and paramilitary personnel. The goods of the appellant shall fall under Tariff Heading 6307.9090 - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (12) TMI 1015
Benefit of ‘Composition Scheme’ - Section 15 of the KVAT Act, 2003 - denial on the ground that they purchased certain goods from outside the State or in the course of inter-State Trade or Commerce including the capital goods like Plant and Machinery and in view of the Circulars issued by the Head of the Department, namely Commissioner of Commercial Taxes, Circular No.14/2013-14 on 05/10/2013 and Circular No.20/2013-14 on 18/12/2013, such benefit is sought to be denied to them. Held that: - this Court does not find anything offending or beyond the language of Section 15 of the KVAT Act, 2003 and Rule 135 of the KVAT Rules, 2005 in the said Circulars. The said Circulars merely explain the provisions of the said Section 15 of the KVAT Act, 2003 and Rule 135 of the KVAT Rules, 2005 in a contextual manner. The Assessing Authorities or even the Appellate Authorities while dealing with such issues are still free to take their independent view of the matter and one cannot say that they are bound by the terms of the Circulars issued by the Commissioner of Commercial Taxes which are nothing but administrative guidelines for their sub-ordinate Assessing Authorities and the learned Commissioner of Commercial Taxes has such powers under the KVAT Act, 2003. Validity of Section 15 of the KVAT Act, 2003 - Held that: - this Court cannot reconsider the issue de novo merely because some arguments are sought to be raised which as contended by the learned counsel for the petitioners, was not raised earlier. They are free to raise any such questions relating to validity of the said provisions before the Division Bench of this Court where the appeal against the said judgment of the learned Single judge namely Writ Appeal No.1654/2009 is pending in the same case. This Court does not find any reason to allow the assessees petitioners to by-pass the regular appellate remedies available to them under the KVAT Act, 2003 before the Appellate Forums and if such petitions are directed only against the Show Cause Notices issued by the Assessing Authorities, the assessees may first show cause before the concerned Authorities themselves. The writ petitions are considered to be premature and do not deserve to be entertained by this Court at this stage - petition dismissed.
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2017 (12) TMI 1014
Garnishee order - temporary interim protection - Held that: - this Court is of the opinion that though it was of the petitioner-assessee to file its RSA also before the concerned KAT only and seek even the interim relief from the same Tribunal but in the peculiar facts and circumstances of the case the petitioner-assessee is provided a period of one week time to prefer such appeal before the KAT and also seek interim relief from the Tribunal concerned - petition disposed off.
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2017 (12) TMI 1013
Jurisdiction - interpretation of statute - Section 48-A of the TNVAT Act - case of petitioners is that, under Section 48 -A of the TNVAT Act, the first respondent has no power to interpret Entry in the schedules to the Act, and is entitled only to clarify regarding the rate of tax - Held that: - when an application is made by the dealer, requesting for clarification as to the rate of tax on the commodity dealt with by him, essentially, the first respondent has to examine what is the type of commodity, under which, Entry it would fall and then, proceed to determine the rate of tax of that particular commodity. Therefore, while issuing such clarification, the first respondent is empowered to clarify any point, concerning the rate of tax, and therefore, to state that the first respondent has no power to interpret the Entry in the schedule to the Act, is not tenable. Classification of goods - yarn - case of petitioners is that all types of yarn, that are packed in hank form are taxable at 5% and the statute does not make a further distinction regarding what is the type of hank yarn, that should be exempted but the exemption shall enure to hank yarn of all kind - Held that: - the Hank Yarn Packing Notification issued by the Government of India pertains to yarn made out of the cotton. Hence, the term ''hank yarn'' used in the Budget Speech shall be referable to only cotton yarn packed in hank form. The intent of the Central Government as well as the State Government is to protect the handloom Industries. Both the Central and the State Governments were concerned about the plight of the poor hand loom weavers, and their family members, and they need to be provided with adequate quantity of yarn in hank form, so that, they can earn their livelihood by operating the hand loom - to state that Entry 44 of Part-B of the fourth schedule to the TNVAT Act should be interpreted to mean any type of yarn, packed in hank form, is a plea, which would be unacceptable, and not the intention of the Government to grant exemption. Admittedly, the Government inserted hank yarn in Sl.No.44 only during 2006-07, and as rightly pointed out by the learned Special Government Pleader, this being an exemption clause, strict interpretation has to be given to such exemption clause, and there is no room for any liberal interpretation with regard to such exemption. What is required to be taken note of, is the plain terms, based on which, exemption was conceived and granted, and if this is examined, it is clear that the exemption was to reach particular section of weavers, viz. Handloom weavers. Likewise, the Hank Yarn Packing Notification issued by the Ministry of Textiles, Government of India, 17.04.2003, is to protect the handloom weavers, and under the said statutory notification, the term 'Yarn' has been defined only as cotton yarn. To interpret that Entry 44 to mean to include all types of yarn packed in hank form is incorrect way of interpreting the exemption provision. Petition dismissed - decided against petitioner.
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2017 (12) TMI 1012
Attachment of Bank accounts - dis-allowance of input tax credit on the purchases made from various vendors - clauses (a) and (b) of sub-section (1) of section 44 of the Act - Held that: - A plain and simple reading of the aforesaid provisions will suggest that the power under the same is to be exercised when there is a person who has debtor-creditor relationship with the dealer and from whom his money is due or may become due to him or the person who holds or may subsequently hold money for or on account of such dealer - the bank and the assessee do not have debtor-creditor relationship - impugned notices of attachment of the bank accounts is to be set aside. Issuance of the impugned notices of attachment during pendency of the appeal and the stay application of the petitioner - Held that: - it is expected of the authority to stay its hands till the stay application is decided, unless the same is not decided on account of default on the part of the petitioner or it is found that the petitioner is unnecessarily delaying the hearing of the stay application and in absence of any exceptional circumstances, there is no warrant for the respondent authorities to proceed to initiate coercive recovery in exercise of powers under section 44 of the Act by attaching the bank account of the petitioner. Petition allowed - decided in favor of petitioner.
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Wealth tax
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2017 (12) TMI 1011
Wealth tax assessment - valuation of properties - Held that:- AO was compelled to estimate the values of properties as indicated above and assessed the net wealth of the assessee at ₹ 2,68,77.200/- as against ₹ 76,75,209/- on estimate basis vide his order dated 31.12.2009. After hearing both the parties and perusing the records especially the orders passed by the revenue authorities, we are of the view that the AO has given full opportunity to the assessee for substantiating its claim before him, but the assessee has not produced any evidence with respect to his contention relating to adoption of value of properties for Wealth Tax purposes and even before the Ld. CIT(A) and also before us. However, keeping in view of the tax effect involved in the case, being old matter and in the interest of justice, we are inclined to not set aside the issue in dispute to the AO and giving liberty to assessee to produce the evidence for its claim. But in the interest of justice, we think it proper to make reasonable estimate of properties too.
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Indian Laws
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2017 (12) TMI 1033
Bail application - Bribery - It is alleged that huge tax benefits were given to the assesses for which those assesses had paid huge amount by way of bribe - The petitioner is alleged to be functioning as a custodian of ill gotten money of the principal accused Sri Tapas Kumar Dutta - Held that: - huge ill gotten money/cash and other evidence, which prima-facie supports the payment of bribe, has been recovered from the house of Tapas Kumar Dutta, but nothing was recovered from the other income tax officers to suggest quid pro quo. The call details also suggest that this petitioner was in regular touch with Tapas Kumar Dutta. The case of this petitioner stands on different footing to that of the other officials of the Income Tax Department, because no incriminating cash or asset was recovered/ collected from their possession to suggest that the same was bribe money and the only allegation against them is that they have reassessed the income tax files as per the observation and direction given by the main accused Tapas Kumar Dutta, while he was setting aside the original assessment orders. Thus, case of this petitioner cannot be equated with the Income Tax Officers and thus is absolutely different. Bail application rejected.
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