TMI Tax Updates - e-Newsletter
February 19, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
The petitioner is admittedly not a foreign Company. - Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b), no draft order can be passed in the case of the petitioner u/s 144C(1) - HC
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Income Tax:
Addition under Section 41(1) - The loan transactions were on the capital account and the writing off the loan was also on capital account and did not find place in the Profit and Loss Account - Thus the cessation of the liability by itself would not lead to the attraction of Section 41(1) - HC
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Income Tax:
Reopening of assessment - notice addressed to a dead person - The Revenue was unable to issue a notice to the LR of the deceased Assessee under Section 147/148 of the Act within the period of limitation. That would be a plain illegality and not a mere irregularity - HC
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Income Tax:
TDS u/s 194C - tds liability - truck operators - Section 194C(2) had no application in the circumstances of the case when the union was merely acting in representative capacity and there was no separate contract between the union and its members for performance of the work - HC
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Income Tax:
Penalty u/s 271(1)(c) - dthe return which was filed on the basis of the certificate issued by the Chartered Accountant though under mistake, the assessee could take the benefit on the basis of bonafide belief. - HC
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Income Tax:
Exemption u/s 10B - AO has rightly apportioned the foreign participation cancellation expenses in the hands of both the units and necessary additions/ disallowances have been made in the hands of the respective units - AT
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Income Tax:
Exemption u/s 10B - as the assessee has failed to demonstrate with convincing reason that no indirect expenditure on account of salary and bonus was incurred in respect of Vapi Unit, we uphold the view of the Departmental Authorities that salary expenditure has to be allocated to both the units on the basis of turnover - AT
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Income Tax:
Disallowance of exemption of Capital Gains u/s 54 - exemption with respect to advance received as per the agreement to sell - sale deed was executed during the subsequent year - a hyper technical approach cannot be adopted to an incentive granting provision - AT
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Customs:
Valuation of import of H. Acid and Bita Napthol on High Seas Sales basis - Subsequent to clearance M/s ACCIL collected the debit note amount from four of the importers - Demand of duty confirmed with penalty invoking extended period of limitation - AT
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Customs:
Remission of duty on warehoused goods - damage due to unprecedented floods - In the normal course, remission of duty under Section 68 of the Customs Act is granted if there is loss on account of natural causes. However relinquishment of title and consequent remission of duty is not permissible where an offence has been committed - AT
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Customs:
Warehousing charges cannot be imposed during detention period but demand of Warehousing charges confirmed for period after the date when option to get the goods released were given but not exercised - HC
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Customs:
Import of goods against fake, forged and fabricated DEPB scrips - That caused huge loss of Revenue - Revenue has very successfully proved its case and oblique motive of the appellant enriched him at the cost of Revenue. Therefore all the appeals are liable to be dismissed - AT
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Indian Laws:
Contempt proceedings for not obeying court orders - The purpose is not to “execute” any order, for which purpose the aggrieved party shall have to take recourse to other proceedings known to law. - one cannot use contempt jurisdiction for enforcement of money decrees. - HC
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Service Tax:
Classification of services - providing services relating to transportation of light Commercial Motor Vehicles & Multi Utility Vehicle, manufactured by M/s Force Motors Ltd. by way of getting them driven by skilled drivers - None of the limbs of BAS covers the impunged activity - Taxable under BSS w.e.f. 1.5.2006 - AT
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Service Tax:
Refund of service tax on the basis of credit note - value of services provided (sharing of expenses) earlier got reduced as per the mutual agreement - refund allowed - AT
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Central Excise:
Demand of duty on Branded jewellery - appellant stopped using the brand name Tanishq and started using the mark Q and I and the jewellery were cleared and sold in the market, therefore the mark Q and I represents brand name or trade name - demand of duty confirmed - AT
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Central Excise:
Valuation - various cosmetic products - Transaction Value u/s 4 or MRP based value u/s 4A - manufacturer was not in error in discharging the duty liability on the clearance made by them of these products to salons and beauty parlors u/s 4A of the Central Excise Act, 1944 - AT
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Central Excise:
Clandestine removal of branded Gutkha - investigation conducted by the Revenue having loopholes is not proper. - the allegation of clandestine manufacture and removal of goods is not sustainable - AT
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Central Excise:
SSI Exemption - brand name - units from where the manufacturer / assessee have been procuring their products were using registered trademarks - even if the affixing of a sticker to the footwear in question may amount to manufacture, the Respondents would nevertheless be entitled to exemption under the aforementioned notification as an SSI unit. - demand set aside - HC
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Central Excise:
Manufacture of rosin and turpentine without aid of power - seeking retrospective exemption is not a constitutional right - HC
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VAT:
Seized goods disappeared / were stolen - The Crime Branch will pursue the investigation of aforementioned FIR to its logical end as expeditiously as feasible. - But no relief to the appellants - HC
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VAT:
Form-F - Interstate movement of final goods returned by a job workers to his customer, after job work - furnishing and scrutiny/verification of the declaration in that form is a requirement in law and if that is fulfilled, the burden on the dealer is taken to be discharged. If that declaration is not furnished, then, the consequences follow. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (2) TMI 527
Eligible assessee as defined under Section 144C(15)(b) - whether the Assessing Officer was competent to pass a draft assessment order under Section 144C(1)? - whether the petitioner does not fall in the category of an “eligible assessee”, as defined under Section 144C(15)(b)? - Held that:- The petitioner is admittedly not a foreign Company. Secondly, the Transfer Pricing Officer has not proposed any variation to the return filed by the petitioner. The consequence of this is that the Assessing Officer cannot propose an order of assessment that is at variance in the income or loss return. The Transfer Pricing Officer has accepted the return filed by the petitioner. In view of the which, neither of the two conditions are satisfied in the case of the petitioner and thus the petitioner for the purposes of Section 144C(15)(b) is not an “eligible assessee”. Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b), no draft order can be passed in the case of the petitioner under Section 144C(1). As the petitioner, not being an “eligible assessee” in terms of Section 144C(15)(b) of the Act, the Assessing Officer was not competent to pass the draft assessment order under Section 144C (1) of the Act. The draft assessment order dated 31.03.2015 is accordingly quashed. - Decided in favour of assessee
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2016 (2) TMI 526
Addition under Section 41(1) - ITAT deleted the addition - Held that:- The loan transactions were on the capital account and the writing off the loan was also on capital account and did not find place in the Profit and Loss Account. Apart from this it has been found as a matter of fact that the respondent / assessee had not got the benefit of any allowance or deduction in the assessment for any prior year in respect of loss, expenditure or trading liability incurred by the respondent / assessee. Thus the cessation of the liability by itself would not lead to the attraction of the provisions of Section 41(1) in the subsequent year (i.e., the assessment year in question) when the liability ceased to exist. The Tribunal having correctly applied the law and followed the decision in Shivali Construction (2013 (6) TMI 130 - DELHI HIGH COURT ), cannot be faulted in its decision which is impugned before us. A similar decision of this court is also reported in Commissioner of Income-Tax v. Tosha International Ltd, (2008 (9) TMI 31 - HIGH COURT DELHI ). Since the issue on law already stands settled by the said decisions of this court, no substantial question of law arises for our consideration. - Decided against revenue
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2016 (2) TMI 525
Rectification of mistake - Interest income earned - income from other sources OR business income - Held that:- In the present case, the Court finds that the order dated 12th October, 2012 merely records that the Assessee did not carry on the business of Vyaj Badla during AY 2006-07. As pointed out by Mr Aggarwal, although in the AY in question the Assessee may not have carried out the business of Vyaj Badla, it was necessary for the ITAT to examine, in light of the stand of the Revenue in the earlier and later AYs, whether the interest income earned by the Petitioner should be treated as business income. That plainly the ITAT failed to do in the order dated 12th October, 2012. The impugned order in the rectification application also failed to deal with this aspect. While, it is true that the Assessee could have challenged the order dated 12th October 2012 in an appeal before this Court, the Assessee cannot be faulted for approaching the ITAT under Section 254 (2) of the Act for rectification of the above order in view of the law explained by the Supreme Court in Honda Siel Power Products Ltd. v CIT (2007 (11) TMI 8 - Supreme Court of India ). In that view of the matter the impugned order dated 19th December, 2014 passed by the ITAT is set aside and the application for rectification filed by the Assessee before the ITAT under Section 254 (2) of the Act is treated as disposed of. However, this would require the restoration of the appeal to the file of the ITAT to examine the grounds urged by the Assessee on the rule of consistency as far as treatment of the interest income earned by the Assessee.
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2016 (2) TMI 524
Reopening of assessment - notice addressed to a dead person - Held that:- ITO took the stand that since the intimation of the death of Shri Inder Pal Singh Walia on 14th March 2015 was not received by her office “therefore the notice was not issued on a dead person”. To say the least this was a strange stand to take since the death certificate of Shri Inder Pal Singh Walia confirming the date of his death as 14th March 2015 is on record. With the Department having not been able to counter this basic fact, the stand taken by it that the notice was not issued to a dead person on 27th March 2015 was plainly untenable. Another stand taken in the letter dated 18th July 2015 is treating the endorsement made by the postal authority ( ‘addressee expired’) as a refusal by the family members of the Assessee to accept the notice. This was again plainly erroneous. The notices were not addressed to the family members. Therefor, there was no occasion for them to refuse such notice. The postal authority had correctly noted that the person to whom the notice was addressed had indeed expired by then. In the present case where the initial notice under Section 147/148 of the Act was issued to a dead person. The Revenue was unable to issue a notice to the LR of the deceased Assessee under Section 147/148 of the Act within the period of limitation. That would be a plain illegality and not a mere irregularity.- Decided in favour of assessee
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2016 (2) TMI 523
Depreciation on assets of the Haryana State Electricity Board - whether Tribunal was correct in holding that the respondent company would be entitled to depreciation on assets of the Haryana State Electricity Board, with whom the respondent company had a sale and lease back transaction that was both in form and content a financial lease? - Held that:- The Apex Court in ICDS (2013 (1) TMI 344 - SUPREME COURT ) has held that for claim of depreciation to be allowed, the condition precedent are ownership of the assets and user for purposes of business i.e. not usage of the assets by the Assessee itself but for purposes of its business of leasing. Both in ICDS (Supra) and this case, the respondent is in the business of leasing. Thus, claim of depreciation is allowable - Decided in favour of assessee
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2016 (2) TMI 522
Validity of approval issued under Section 10 (23 C) (vi) - whether in view of CBDT circular dated 27th of October, 2010, the petitioner was required, to file an application for exemption and if not, whether the Chief Commissioner could have rejected the application, for exemption? - Held that:- A perusal of Clause (4), reveals that approvals granted on or after 1st December, 2006, shall be valid till they are withdrawn. The argument by counsel for the revenue that the circular would come into effect from October, 2010, by reference to Clause (5) of the circular is not tenable as Clause (5) of the circular, applies to approvals granted under Section 80(4) and not to exemptions granted under Section 10 (23 ) (vi) of the Act. We, therefore, have no hesitation in holding that as Clause (4) of CBDT, circular No.7 of 2010, provides that an exemption once granted shall operate in perpetuity till withdrawn, the impugned orders passed by ignoring Clause (4) are contrary to law. The petition is allowed, the impugned orders are set aside and the Commissioner of Income Tax Exemption, Chandigarh, the officer empowered, to consider an application for exemption, is directed to pass a fresh order after taking into consideration Clause (4) of the CBDT circular.
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2016 (2) TMI 521
Addition on Land Development Expenditure - Capital or revenue - Held that:- Keeping in view the main objects of the assessee, the activities of the assessee, the nature of expenses incurred and also the legal principles noticed hereinbefore, had concluded that the expenditure was revenue in nature
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2016 (2) TMI 520
TDS u/s 194C - tds liability on payments made by the assessee to the truck operators on account of transportation charges - Held that:- Section 194C(2) of the Act had no application in the circumstances of the case when the union was merely acting in representative capacity and there was no separate contract between the union and its members for performance of the work as required for applicability of section 194C(2) of the Act. In such circumstances, section 40(a)(ia) of the Act was not applicable. See Commissioner of Income Tax v. Truck Operators' Union [2011 (3) TMI 1017 - PUNJAB AND HARYANA HIGH COURT ] - Decided in favour of assessee
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2016 (2) TMI 519
Re-computation of the book profit for the purpose of Minimum Alternate Tax (MAT) under Section 115JB - increasing the book profit by making an addition of depreciation in the profit and loss account - Held that:- Relegating the petitioner to avail alternative remedy under the Act, we are not inclined to entertain this petition in writ jurisdiction under Article 226 of the Constitution of India. Consequently, the petition stands dismissed
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2016 (2) TMI 518
Expenditure incurred on procurement of research reports - revenue v/s capital expenditure - Held that:- The expenditure incurred in respect of same business is allowable as revenue expenditure, even if it is for expansion of the business. In the instant case here too admittedly the expenditure even as per the revenue is for expansion of business and therefore such expenditure on research reports obtained in the course is revenue expenditure.
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2016 (2) TMI 517
Penalty u/s 271(1)(c) - deduction under Section 80IC disallowed - Held that:- Admittedly, the assessee had filed return of income declaring nil income on 30.9.2009 after claiming deduction under Section 80IC. At the time of making return, the issue was debatable and penalty could not have been levied. Further, the Tribunal noticed that the assessee had disclosed all the particulars of the income and had not concealed anything. Once proper disclosure had been made, penalty was not attracted in view of the judgment of the Apex Court in CIT vs. Reliance Petroproducts Pvt. Limited, (2010 (3) TMI 80 - SUPREME COURT ). Further the return which was filed on the basis of the certificate issued by the Chartered Accountant though under mistake, the assessee could take the benefit on the basis of bonafide belief. - Decided in favour of assessee
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2016 (2) TMI 516
Condonation of an inordinate delay of 940 days in re-filing the present appeals - Held that:- The explanation offered in the applications is that “as per the usual practice” if an appeal is assigned to a standing counsel on the panel, unless the Department is contacted by the said counsel, the status of the appeal is actually not followed up with the counsel. It is stated that the present cases were assigned to a standing counsel and initially filed on 27th April, 2013. No follow up action was taken thereafter by the Department. The said standing counsel resigned in August 2014 and returned the cases allocated to him including those lying in defect. They were then re-allocated to another counsel in April 2015. It is simply stated that time was consumed in allocating matters. No effort has been made to explain the delay of over eight months in re-allocating the cases. The explanation offered is unconvincing and is wholly unsatisfactory. Considering that the delay involved in re-filing the appeals is nearly three years, this can hardly qualify as a valid justification.
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2016 (2) TMI 515
Unexplained deposits in the bank account - AO treated it as income from other sources - contention of the assessees that the deposits are agricultural income rejected - Held that:- Keeping in view the past history of the assessee, in which agricultural income from Mango Orchard was accepted by the Revenue, we are of the view that in this year the agricultural income declared by the assessee at ₹ 24,70,800/- should be accepted, but they are required to explain the excess deposit in the joint bank account and for this purpose we restore the matter to the Assessing Officer with a direction to examine the nature of excess deposit in the bank account. If both the assessees fail to explain the source of deposit of the difference amount of ₹ 19,85,000/-, the Assessing Officer may make addition in accordance with law. - Decided partly in favour of assessee for statistical purposes.
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2016 (2) TMI 514
Disallowance u/s 14A - Held that:- We find that the assessee had voluntarily disallowed a sum of ₹ 4,67,484/- u/s 14A of the Act with some basis. We find that the assesee does not have any debt funds and hence no interest is debited. The fact is that no investments were made during the previous year relevant to Asst Year 2009-10 out of the money borrowed from outside the company. Thus there is no element of interest cost involved in connection with investment made during the year. The Learned AO without controverting the said workings and without recording his satisfaction with cogent reasons as to why the said figure is incorrect, directly embarked on invoking Rule 8D(2) of the Rules. In our opinion, this action of the Learned AO is not in accordance with law. We hold that the satisfaction need to be recorded in terms of Rule 8D(1) by the Learned AO and not by the Learned CIT-A We also find lot of force in the alternative arguments of the Learned AR that only investments yielding exempt income should be considered for the purpose of disallowance u/s 14A read with Rule 8D of the Rules. - Decided in favour of assessee
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2016 (2) TMI 513
Exemption u/s 10B - Disallowance of foreign participation expenses - bifurcation between two units - Held that:- What is to be seen is when the initial deposit was made, whether it was claimed as an expense in the profit and loss account or shown as an advance in the balance sheet. In the instant case as submitted by the ld. AR, the initial deposit was shown in the balance sheet as an advance in the account of Gem & Jewellery Export Promotion Council. Therefore it cannot be said conclusively that the said advance pertains to unit-I only. The assessee has not brought on record any specific documentation to substantiate that the foreign participation relates to the goods being manufactured at unit-I only. Merely by paying the initial deposit and showing the same as an advance in the balance sheet of unit- I, it cannot be said that the expenses pertains to unit-I only, as per the well laid down principle of the law that the entry in the books of accounts are not determinative of real nature of the transactions. Given that both the units are in the same business and 100% of its production is exported and there was no local sale in unit-I held by the AO, and in absence of any contrary facts brought to our notice by ld. AR, a more logical view which emerges is that the booking of stalls in the exhibition was done for both the units and the expenses should relate to both units. In light of above, we are of the considered view that the AO has rightly apportioned the foreign participation cancellation expenses in the hands of both the units and necessary additions/ disallowances have been made in the hands of the respective units - Decided against assessee Proportionate addition in hands of unit-II which is 100% EOU @ 25% of unverifiable purchases - Held that:- We have gone through the submissions of the ld. AR as well as the order of the lower authorities. Given that the said disallowance relates to unverifiable purchases and the fact that the said disallowance is in hands of unit-II which is enjoying tax exemption u/s 10B of the Act. We do not like to interfere with the order of the ld. CIT(A). - Decided against assessee
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2016 (2) TMI 512
Disallowance of claim u/s 80IA made in respect of the sale of Carbon Credit - Held that:- It is now settled proposition in law that in principle the receipts on sale of carbon credits should not brought into the "Profit & Loss Account" and it relates to the "balance sheet‟ item. Consequently, the question of making a claim u/s 80IA(4) of the Act, allowability of the same or otherwise becomes an academic exercise. In view of the above, the questions raised by the Revenue in its appeal and the cross objections raised by the assessee are required to be dismissed as academic.
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2016 (2) TMI 511
Claim of deduction under section 10B - Held that:- the issue in dispute is squarely covered in favour of the assessee by the orders of the Tribunal in assessee’s own case for preceding assessment years. From the material on record, we find that this is a recurring dispute between the assessee and the Department right from the assessment year 2003–04. The Assessing Officer in the preceding assessment years had disallowed assessee’s claim of deduction under section 10B on the very same reason which was followed by the Assessing Officer in the impugned assessment order. However, as could be seen, the disallowance of claim of deduction under section 10B made by the Assessing Officer was challenged by the assessee before the learned Commissioner (Appeals) in the preceding assessment years. The learned Commissioner (Appeals) allowed assessee’s claim of deduction under section 10B in the assessment years 2003–04 to 2006–07 and 2008–09. Against the orders of the learned Commissioner (Appeals), the Department preferred appeals before the Tribunal. However, the Tribunal upheld the decision of the learned Commissioner (Appeals) by . dismissing the appeal by the Department in respect of all these assessment years. Thus we uphold the decision of the learned Commissioner (Appeals) in allowing assessee’s claim of deduction under section 10B.- Decided in favour of assessee MAT - Exclusion of income of SEZ Unit while computing book profit under section 115JB - Held that:- Taking into consideration the effect of CBDT Circular no.3/2008 and relying upon the decision of the Tribunal, Mumbai Bench, in Genesys International Corporation Ltd. v/s ACIT, [2012 (12) TMI 491 - ITAT MUMBAI] held that income / profit relating to SEEPZ unit has to be excluded while computing book profit under section 115JB. - Decided in favour of assessee Addition of deemed dividend under section 2(22)(e) - CIT(A) deleted the addition - Held that:- Only reason for which the Assessing Officer has treated the amount as deemed dividend is both the companies have some common shareholders cannot be a reason for treating the amount as deemed dividend under section 2(22)(e). As held by the learned Commissioner (Appeals) since the Assessing Officer has failed to establish that assessee is the beneficial shareholder or even a shareholder, provisions of section 2(22)(e) cannot be applied. Also the issue in dispute is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in case of CIT v/s Universal Medicare Pvt. Ltd. [2010 (3) TMI 323 - BOMBAY HIGH COURT ] thus we do not find any reason to interfere with the order of the learned Commissioner (Appeals). - Decided in favour of assessee.
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2016 (2) TMI 510
Adjustment of brought forward loss and depreciation before allowing exemption under section 10B - Held that:- We direct the Assessing Officer to consider assessee’s claim of set–off / adjustment of unabsorbed depreciation and business loss keeping in view the decision of the Tribunal and Hon'ble Jurisdictional High Court in assessee’s own case holding that unabsorbed depreciation and brought forward loss of non–eligible unit cannot be set–off against the current profit of eligible unit while computing deduction under section 10B. - Decided in favour of assessee Reallocating salary expenditure while computing deduction under section 10B - Held that:- It cannot be accepted that assessee has not incurred any expenditure towards salary and bonus in respect of Vapi Unit when admittedly, it must have maintained an administrative set up also for Vapi Unit. The contention of the learned counsel that salary and bonus of Vapi Unit have been included under the head “Personnel Cost” as shown in Schedule–11, neither appears to common sense nor logical as in that case, there is no need to show such expenditure separately for Dombivali Unit as the assessee has also claimed such expenditure in respect of Dombivali unit under Schedule–11 like Vapi Unit. Therefore, as the assessee has failed to demonstrate with convincing reason that no indirect expenditure on account of salary and bonus was incurred in respect of Vapi Unit, we uphold the view of the Departmental Authorities that salary expenditure has to be allocated to both the units on the basis of turnover. - Decided against assessee Assessment of interest income twice by the Assessing Officer - plea of the assessee that interest income has been assessed twice as part of the business income having shown by the assessee in the Profit & Loss account and again as income from other sources - Held that:- We think it appropriate to direct the Assessing Officer to verify assessee’s claim and decide the issue accordingly. We make it clear that the Assessing Officer while deciding the issue should bear in mind that the same income cannot be taxed twice. - Decided in favour of assessee by way or remand
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2016 (2) TMI 509
Short deduction of tax at source - non deducting tax at appropriate rate - Held that:- We direct the Assessing Officer to verify whether taxes have been paid by the payees in respect of the amount received by them from the assessee and if upon such verification it is found that the deductees have paid tax on the amount received by them from the assessee cannot be treated as an assessee in default. - Decided in favour of assessee for statistical purposes. Liability to pay interest under section 201(1A) - Held that:- As held by the Hon'ble Supreme Court in Hindustan Coca Cola Beverage (P.) Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA ), assessee is liable to pay interest under section 201(1A) till the date of payment of taxes by the deductees on the income received by them from the deductor assessee
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2016 (2) TMI 508
Applicability of the provisions of section 40(a)(ia) - whether the provisions of section 40(a)(ia) are attracted to the facts of the present case after the amendment introduced by the Finance Act, 2010 where the tax has not been paid by the specified date but paid before the due date of filing of return u/s.139(1) - Held that:- Since in the instant case the assessee has admittedly deposited the tax so deducted before the due date of filing of return of income u/s.139(1) of the I.T. Act, therefore, respectfully following the decision of ITO Vs. Anand Buildcon (2012 (9) TMI 987 - ITAT PUNE) and in absence of any contrary decision brought to our notice we uphold the order of the CIT(A) in deleting the disallowance. - Decided in favour of assessee
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2016 (2) TMI 507
Disallowance of exemption of Capital Gains u/s 54 - exemption with respect to advance received as per the agreement to sell - sale deed was executed during the subsequent year - Held that:- We reject the conclusion of the ld. CIT (A) that agreement to sell is a mere start of the sale and cannot become the act of sale for section 54 of the Act. Moreover, it needs to be appreciated here that a hyper technical approach cannot be adopted to an incentive granting provision. Here is a case, where the assessee is a widow who has received advance in June 2005 against sale of her share and thereafter, purchased a residential property in August 2005, but yet exemption is not held eligible on the ground that the sale is in September 2006. According to the Revenue, had the sale deed be executed in August 2006, everything will be in order. We do not subscribe to such a pedantic application of the incentive provision. It was on account of such an approach, the Hon‘ble Apex Court in Sanjeev lal & Anr. Vs. CIT & Anr. (2014 (7) TMI 99 - SUPREME COURT ) has held as above. - Decided in favour of assessee Exemption claimed u/s 54 in respect of cost of construction of the new house in finishing the house - Held that:- Having regard to the evidence and payment having been made to discharge the said bill, in the absence of any evidence to the contrary, there is no justification to restrict the claim to ₹ 4 lakhs on estimate basis. In Saleem Fazelhoy v. DCIT (2006 (6) TMI 139 - ITAT BOMBAY-G ), it was held that expenditure incurred on making house habitable is considered as investment in purchase of house, and hence deduction u/s 54F of the Act is allowable. In the another case in Mrs. Gulshanbanoo vs. JCIT (2002 (1) TMI 1296 - ITAT MUMBAI), it was held that cost of new house for the purpose of section 54, include not only cost of purchase of new house but also includes other necessary expenditure to make house habitable. Ld. Counsel also relied on the Order of the Ahmedabad Bench in the case of Shri Srinivasa R. Desai [2014 (1) TMI 883 - ITAT AHMEDABAD]. The assessee after purchasing the flat has incurred further cost which are in the nature of cost of construction and it has been held that the cost so incurred will form an integral part of the qualifying investment under section 54 of the Act. In the light of the aforesaid case laws, the claim of the assessee stands allowed and we order accordingly. - Decided in favour of assessee
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2016 (1) TMI 1089
Unexplained expenditure u/s.69C - FAA had reduced the addition to 20% - Held that:- AO had made the addition on the basis of information received from the Sales tax department, but, he did not make any independent inquiry. He did not follow the principles of natural justice before making the addition. The FAA had reduced the addition to 20%, but he has not given any justification except stating that same was done to plug the probable leakage revenue. Considering the peculiar facts and circumstances of the case,we are reversing the order of the FAA. Effective ground of appeal is decided in favour of the assessee Disallowance made under conveyance expenses/office expenses/travelling expenses, telephone expenses and warehouse/godown rent - Held that:- FAA had analysed the said agreement and had reached the conclusion that the assessee had no connection with that agreement. As the assessee had not proved that he had paid the warehousing charges therefore, the FAA rightly upheld the disallowance. For claiming deduction u/s.37(1) of the Act the assessee has to lead evidences in his support-he has to produce documentary evidence to prove that expend was actually incurred and was incurred wholly and exclusively for the purpose of business in the case of Ramanand Sagar (2002 (2) TMI 52 - BOMBAY High Court )the Hon’ble Bombay High Court has held that the burden of proof is on the assessee to establish beyond doubt that the expenditure is solely incurred for the purpose of business. In the case before us, the incurring of expenditure disallowed by AO and upheld by the FAA itself is not proved. - Decided against assessee Addition on capital introduced - Held that:- We find that the assessee had filed the cash flow statement and the balance sheet in his support, that the FAA had not analysed the documents properly, that availability of cash was prima facie established. In our opinion, it requires further investigation. Therefore, in the interest of justice we are remitting back the issue to the file of the AO for fresh adjudication, who will decide the matter afresh after affording a reasonable opportunity of hearing to the assessee. Addition on account of bogus purchase - Held that:- AO had added ₹ 10.50 lakhs to the income of the assessee for the year under appeal and FAA had reduced it to ₹ 2.10 lakhs. We have deleted the addition made under the head bogus purchases while deciding the appeals filed by the assessee for both the AY.s. So, deciding the effective ground of appeal against the AO, we uphold the partial deletion made by the FAA.
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Customs
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2016 (2) TMI 542
Valuation of import of H. Acid and Bita Napthol on High Seas Sales basis - Subsequent to clearance DRI Officers found that M/s ACCIL had raised debit notes in respect of the said consignments and have collected the debit note amount from four of the importers. It was, therefore contended that the assessable value should be the value declared by the importer + the value of the debit note. Held that:- It is clearly stated in the circular that the actual High Seas Sales contract price paid by the last buyer would constitute the transaction value under Rule 4 of Customs Valuation Rules, 2004. It is also mentioned that the importer is required to furnish entire chain of documents such as original invoice, High Seas Sales contract, the details of service charges, commission paid etc, to establish the link between the first international transfer of goods to the last transaction. In the instant case, it is clearly established that M/s ACCIL has entered into the sales agreement with the other appellants and had not furnished the details to Customs authorities, but raised the debit notes and recovered higher amounts from their buyers. Demand of duty confirmed with penalty invoking extended period of limitation - Decided against the assessee.
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2016 (2) TMI 541
Remission of duty on warehoused goods - Demand of duty on goods stocked in Duty Free Shops (DFS) whose Bond period had expired - Private Bonded Warehouse in Domestic Tariff Area (DTA) - damage to the goods in the arrival hall DFSs due to unprecedented floods on 26 th July, 2005. - they applied for waiver of Custom duty and for permission to destroy the goods rendered unfit. They wrote on 25/2/2008 for relinquishment of the title to the flood affected goods and remission of duty. Held that:- In the normal course, remission of duty under Section 68 of the Customs Act is granted if there is loss on account of natural causes. However relinquishment of title and consequent remission of duty is not permissible where an offence has been committed. In the present case offence of not extending the bond period was committed and such goods are to be treated as goods improperly removed in terms of Section 72(1)(b) for violation of Section 61(1)(b) as goods had not been removed before the expiry of the bond period. - Appeal dismissed - Decided against the appellant.
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2016 (2) TMI 540
Levy of personal penalty against CA and appraiser for abetment in mis-declaration of export goods to avail wrong DEPB credit - Held that:- Revenue failed to prove the active involvement of CA and therefore no penalty could be levied. - However, the allegation against Shri A.K. Kaul (Appraiser) that he was actively involved in the fraudulent activity proved, therefore, leniency cannot be taken against him.
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2016 (2) TMI 539
Levy of demurrage charges - levy of Warehouse charges for detained goods - Mis-declaration of description of the goods - import of waste Oil or Heavy Cut Oil - Held that:- the word demurrage merely signifies a charge, which may be levied on goods after expiration of free days. The Central Warehouse Corporation or its partner, respondent no. 5 could not demand any warehouse charge on the goods, which were detained by the Customs Authority. They were bound to comply with the terms and conditions of their appointment letter read with clause 6 (l) of the Regulations of 2009. The contention of the respondents that clause 6(l) is not applicable in view of the word 'subject to' given in clause 6(l) and, therefore, section 63 of the Act would prevail, is patently erroneous. The terms and conditions of the licence clearly prohibits the service provider to demand warehouse charges on the goods seized, detained or confiscated by the Customs department. We are, therefore, of the opinion that the respondent nos. 3, 4 and 5 had no authority of law to demand warehouse charges on the goods seized or detained by the Customs Department. The petitioner was entitled for release of the goods without payment of warehouse charges. We are, however, of the opinion that once a stand was taken by the respondents to release the goods on payment of charges, the petitioner should have got the goods released upon payment of the charges, as demanded by the respondents, by depositing the same under protest and thereafter should have contested the matter. Allowing the goods to remain in the custody of respondent nos. 3, 4 and 5 after 11.04.2014 on the pretext that the petitioner is not liable to pay demurrage charges becomes arbitrary and unjustified especially when the respondents had made their stand clear insisting upon payment of warehouse charges, even though such stand of respondent nos. 3, 4 and 5 was unjustified. The writ petition is allowed and a writ of mandamus is issued holding that the respondents no. 3, 4 and 5 are not entitled to demand warehouse charges on the goods that was initially detained but subsequently released by the Customs authority till 11.04.2014, i.e., the date when the counter affidavit of respondent nos. 3 and 4 was filed before the High Court and their stand became clear. For the period 12.04.2014 onwards till the date of actual clearance, the petitioner would be liable to pay warehouse charges.
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2016 (2) TMI 538
Import of goods against fake, forged and fabricated DEPB scrips - That caused huge loss of Revenue for which the appellant was called upon to explain the reason why he shall not be penalized under law - Held that:- Result of investigation remained unchallenged. Appellant acted mala fide and to the detriment of interest of Revenue. Ill will of the appellant came to record. Entire pleading of the appellant is ill-founded. Show Cause Notice has properly brought the appellant to charge exhibiting civil and evil consequences of law granting opportunity of rebuttal to him. Nothing was dealt behind his back by the adjudicating authority. Crystal clear factual findings of the learned Adjudicating Authority remained un-rebutted before Tribunal and echoing evidence on record demonstrated that adjudications were made quite reasonably as the facts and circumstances warranted. Direct and corroborative evidence gathered by investigation were so believable, that lent credence to the case of Revenue. Genesis of the case compels to irresistibly conclude that Revenue has very successfully proved its case and oblique motive of the appellant enriched him at the cost of Revenue. Therefore all the appeals are liable to be dismissed. That is ordered accordingly. - Decided against the appellants. Regarding serious lapse of the Officers of Customs and DRI - Held that:- The wheels of Justice may appear to grind slowly but it is the duty of all of us to ensure that they do grind steadily and grind well and truly. The justice system cannot be allowed to become soft, supine and spineless. Hence, it is left to the CBE&C to deal the matter with the DG (Vigilance), CBEC and make the nation corruption free.
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Service Tax
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2016 (2) TMI 548
Waiver of pre-deposit - appellant submitted that the requirement of ₹ 1.25 crores with proportionate interest as pre-deposit as directed by the Tribunal was unfair and excessive. - Held that:- After hearing learned counsel for the parties and keeping in view the totality of the facts and circumstances of the case coupled with the fact that the appellant has already deposited the principal amount of ₹ 1.25 crores, in terms of order dated 4.11.2015, the instant appeals are disposed of by making the interim order dated 4.11.2015 absolute. The Tribunal is directed to hear the appeals on merits without insisting for any further deposit.
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2016 (2) TMI 547
Tour operator service - The main plea is that the appellant do not get covered under the term "tourist vehicles" because their vehicles do not meet the specifications laid down in Rule 128 of the Motor Vehicles Rules, 1989. The other contention is that Vehicles Registration Authority grants separate licence under Section 2(7) of the Motor Vehicles Act for contract carriages and under Section 2(43) read with Rule 128 for tourist vehicles. Lastly, the contention is that they would not be covered under Service Tax levy even after 10.09.2004 because they are not engaged in the business of planning, scheduling and organizing or arranging tours. Held that:- appellant were not engaged in the business of planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of ‘tour operator' service but were adhering to the conditions laid down with various customers. Therefore it cannot be said that they were covered under the first part of the amended definition of ‘tour operator'. As already discussed, the vehicles are also not ‘tourist vehicles' so as to be covered under the second part of the definition. - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 546
Classification of services - providing services relating to transportation of light Commercial Motor Vehicles & Multi Utility Vehicle, manufactured by M/s Force Motors Ltd. by way of getting them driven by skilled drivers - Support Service for Business or Commerce (BSS) and / or Business Auxiliary Service (BAS) - Held that:- It is seen from the agreement that the appellant was not providing skilled drivers to the service recipient. Indeed, the appellant took the responsibility for transportation of the vehicles. It is thus evident that the appellant was entrusted to manage distribution and logistics in relation to transport and delivery of the vehicles at the service recipient's depots/dealer's premises. It was not merely making available skilled drivers to the service recipient. Indeed, the drivers were never provided the service recipient but were engaged by the appellant to fulfill its responsibility as per the agreement. Its responsibility as per the said agreement was not merely executory but required proper management supervision and coordination of various aspects relating to fulfillment of its responsibilities as per the said agreement. Therefore the services rendered clearly fell under the scope of managing distribution and logistics. None of the limbs of BAS covers the impunged activity - the services rendered by the appellant were clearly, unambiguously and fully covered within the scope of managing distribution and logistics and therefore the impugned services were classifiable under BSS and liable to service tax with effect from 1.5.06. Extended period of limitation - the facts relating to the value of services rendered during the period January 2008 and September 2008 were not available with Revenue and the appellant deliberately did not provide them in a timely manner in spite of repeated and numerous reminders sent over a period of several months. - Once suppression is established as it has been in the present case , Revenue gets a period of 5 years to issue show cause notice as per the proviso to Section 73(1) ibid. Demand pertaining to the period 1.5.06 to 31.12.07 along with interest and penalty under Section 78 is upheld. - Decided against the assessee.
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2016 (2) TMI 545
Refund of service tax on the basis of credit note - value of services provided (sharing of expenses) earlier got reduced as per the mutual agreement - whether there has been excess payment of tax and whether the bar of unjust enrichment will arise in relation to such excess payment of tax. - The original authority rejected the claim for refund on the ground that such a reduction did not appear to have extended beyond the second component of the compensation, i.e. the share in expenses, in the service agreement. Held that:- The charges levied from M/s Nicholas Piramal India ltd by the appellant are amply evident in the debit notes pertaining to the quarter April 2007 and September 2007. It cannot but be accepted that the credit note issued in October 2007 is intended to reduce the amounts payable by the client to the appellant to the extent of ₹ 2,93,50,000/-. The contention of the learned Chartered Accountant that any payment can be released only after withholding of tax deducted at source is borne out by the lesser amounts entered in the ledger and the bank statements. We find no flaw in this contention and there is no counter by Revenue that can contest this. Regarding unjust enrichment - Re-negotiation after initial payments does not, in any way, weaken the claim of the appellant because the fact of reduced net consideration is incontrovertible; the transaction does not extend to a chain beyond the appellant and M/s Nicholas Piramal and therefore, it can be deduced that the incidence of tax has had no scope of being passed on. - Refund allowed - Decided in favor of assessee.
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Central Excise
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2016 (2) TMI 549
Validity of issuance of notice in the late night on the date of retirement - Additional Commissioner of Central Excise at Mysore - during night of 31.03.203, a Memorandum dated 31.03.2013 along with certain Articles of Charge, Statement of Imputations of Misconduct and Misbehavior were served on the respondent - learned Advocate appearing on behalf of the petitioners-Union of India. contends that the respondent is deemed to have been in duty till the midnight of 31.03.2013 and therefore, the department was justified in serving Articles of Charge in between 10.00 p.m. and 11.00 p.m. on 31.03.2013 and consequently, the same is deemed to be issued while the respondent was in service. Held that:- The respondent was not supposed to perform his duties as an Additional Commissioner any more till midnight, as argued by the learned counsel for the petitioner. After relieving from his duties, the respondent will not continue as a ‘Government Servant’. If it is so, it is clear that the Articles of Charge etc., were not served on the Government Servant. There is no ground to interfere in the impugned order of the Tribunal in as much as the Tribunal is justified in concluding that the Articles of Charge were served on the respondent only after he was relieved from the duties.
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2016 (2) TMI 535
Demand of duty on Branded jewellery - It was alleged in the show-cause notices that the appellant have affixed the mark Q and I on the jewellery and cleared without payment of duty. - it was alleged that the appellants were paying excise duty on the branded jewellery under the brandname Tanishq and paid duty @ 2% advelorem for the clearances made upto June 2006. Thereafter, appellant stopped using the brand name Tanishq and started using the mark Q and I and the jewellery were cleared and sold in the market, therefore the mark Q and I represents brand name or trade name. Held that:- These gold jewelleries are sold in exclusive Tanishq show rooms and the invoices/bills and the certificate of authenticity etc. bear the appellant s brand name Tanishq and the appellant's decision to sell the jewellery without using logo of "Tanishq" or "Goldplus" but affixed with the markings of Q & I and sold through their exclusive outlets/showrooms clearly falls within the definition of "Brand name/Trade name of Chapter Note 12 and the Explanation to the Notification No.4/2005 dt.1.3.2005. Therefore by respectfully following the ratio of apex Court decision in the case of Grasim Industries and Australian Foods India Pvt. Ltd. [2013 (1) TMI 330 - SUPREME COURT] we have no hesitation to hold that jewellery manufactured and cleared by the appellants during the relevant period are branded jewelllery and chargeable to duty. Demand confirmed with reduced penalty - Decided against the assessee.
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2016 (2) TMI 534
Cenvat Credit - clandestine clearance of Inputs - It has been alleged in the show cause notice that the imported inputs so diverted to local markets appears to have been sold in cash to the persons, who did not need Central Excise invoices and no record has been kept by the assessee regarding such transactions. The buyers of such unaccounted raw materials appear to have used it for unaccounted production and clearance of articles of non-ferrous metal. And the input shown have been receipt in the factory at Silvasa by the assessee appears to have been substituted by bazaar (local) non-duty paid scraps. Held that:- the non-receipt of inputs and non-use of the same in final product are based upon the statements and the records of transporter. But, the assessee during investigation categorically stated that they paid charges to the transporter, inputs were used in the manufacture of final product, duly recorded in their statutory records. The investigating officers had not verified the records of the assessee and merely proceeded on the basis of statement of third party. The inference of non-receipt of inputs and denial of Cenvat Credit on the basis of the statements of third party, who had failed to disclose the details of supply of inputs in mid-way, cannot lead any conclusion, the assessee in their statements stated the receipt of the inputs and used in the manufacture of final product and duly recorded in the statutory records, which cannot be discarded by mere assumption and presumption. Search was conducted at the premises of appellants, but, not a single evidence was found of purchase of bazaar scrap by the appellant as alleged in the show cause notice. - the said allegation is totally on the basis of assumption and presumption. - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 533
Valuation - various cosmetic products - Transaction Value u/s 4 or MRP based value u/s 4A - technical professional products meant for professional use in salons - these products used by the professional in the hair style business - Held that:- it is clear from the records that the products professional technical products are sold by the appellant through the dealers and wholesalers to the salons and beauty parlors for their consumption, the fact which is not disputed in the appeal. If that be so, we find that the learned adjudicating authority was correct in holding that the respondent was not in error in discharging the duty liability on the clearance made by them of these products to salons and beauty parlors under the provisions of Section 4A of the Central Excise Act, 1944. - Decided against the revenue.
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2016 (2) TMI 532
Clandestine removal of branded Gutkha - entire demand has been confirmed on the basis of seized documents from third parties - statement of third parties - denial of cross examination - violation of provisions of section 9(D) of the Central Excise Act, 1944. - Held that:- In the impugned order, the statement of appellants were relied upon by the adjudicating authority to allege clandestine manufacture and removal of goods. We find that all the appellants filed their affidavits and these affidavits have not been examined. Therefore, statements given at the time of investigation cannot be blindly relied, as affidavits supplied by the appellants have substantial evidentiary value. Moreover, no cross examination has been granted by the adjudicating authority to reveal the truth in the matter. Therefore, the statement of appellants are not reliable in the absence of corroboratory evidence. We also take note of the fact that Shri Ajay Gupta who is prime witness of the case was not examined and is not made the party to the case. In the light of the decision of this tribunal in the case of M/s. Aswani & Co. [2014 (12) TMI 1213 - CESTAT NEW DELHI] and the discussion herein above, the case of the revenue remains inconclusive. Therefore, we hold that investigation conducted by the Revenue having loopholes is not proper. Accordingly, the allegation of clandestine manufacture and removal of goods is not sustainable. Consequentially, the impugned order is not sustainable in the eyes of law. - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 531
SSI Exemption - brand name - units from where the manufacturer / assessee have been procuring their products were using registered trademarks - Held that:- when the Department went in appeal before the Customs, Excise & Service Tax Appellate Tribunal ('CESTAT), no ground was raised that the Respondents was buying the products from a person using a registered trademark. The Department did not urge before the CESTAT that it had documents in its possession to substantiate such plea. It is not understood why, information concerning registration of trademarks, which is in the public domain, could not be gathered by the Department and placed before the CESTAT. Permitting the Department to do so at this stage, nearly eight years after the issuance of the show cause notice, is neither justified nor proper. The CESTAT has held that even if the affixing of a sticker to the footwear in question may amount to manufacture, the Respondents would nevertheless be entitled to exemption under the aforementioned notification as an SSI unit. Revenue appeal dismissed. - Decided against the revenue.
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2016 (2) TMI 530
Restoration of appeal - Counsel pointed out that Advocate of the petitioner has remained absent and the petitioner was not aware about dismissal of the appeal. In any case, the appeal was dismissed for not being able to fulfill the pre-deposit requirement, which the petitioner is prepared to do now. - Held that:- When the question is only of pre-deposit not having been made and the appeal having been dismissed without consideration on merits, Courts have taken somewhat liberal stand in allowing the party to pursue the appeal by fulfilling such requirement even after substantial time-gap. Orders of this Court and the Supreme Court are not necessary to be cited. In view of the facts on record, the Tax Appeal of the petitioner would be restored before the CESTAT on the condition that the petitioner fulfills the pre-deposit requirement.
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2016 (2) TMI 529
Manufacture of rosin and turpentine without aid of power - seeking retrospective exemption - writ of mandamus for directing the respondent to issue a Notification under Section 11C of the Act extending the benefit of not requiring the Central Excise Duty for the units manufacturing rosin and turpentine without the aid of power, except for the purpose of using electricity to pump, for lifting up water to overhead tanks; for the period from 27.05.1994 to 28.02.2006. Held that:- The categorical finding in the case of M/s Gurukripa Resins Pvt. Ltd. [2011 (7) TMI 26 - SUPREME COURT OF INDIA] is that the use of pump for lifting water would amount to manufacturing with the aid of power and the clarification of 1978 was deemed to have been withdrawn from 27.05.1994 and, thus, the units using pump for lifting water would not be entitled to exemption from the period 27.05.1994 to 28.02.2006. In view of the findings returned by the Supreme Court in the case of M/s Gurukripa Resins Pvt. Ltd., which manufacturing unit was admittedly identically situated as that of the petitioner’s unit, the petitioner cannot, thus, seek the benefit of quashing of the decision communicated by the Ministry of Finance by letter dated 30.09.2014. The power under Section 11C is discretionary and it is not mandatory for the Government to issue a notification under Section 11C under all circumstances. As emerges from the counter affidavit, the policy of the Government is to issue such a notification only if it benefits a large section of the trade and not if it benefits only a few assessees. As per the respondent, only two manufacturers would be affected by such a notification. We do not find any fault with such a view and decision of the Government. We are further of view that discretion is granted to the Government to issue or not to issue such a notification and the discretion has been exercised after conducting survey and resurvey and on a justifiable ground, the said decision, in our view, does not require any interference. - Writ petition dismissed - Decided against the assessee.
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CST, VAT & Sales Tax
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2016 (2) TMI 544
Seized goods disappeared / were stolen - Seizure of 24 cartons containing gold and silver jewellery as well as cash - - It is stated that “the thela pullers and pushers, who were in-charge of the goods, ran away and in such circumstances the burden of safety and security of the detained goods became the responsibility of the Department, which was the first such experience of the branch with such eventuality”. - Held that:- The provisions of the DVAT Act are being flouted with impunity since it seems extremely unlikely that such valuable consignment would be first despatched through a railway van and then transported on thelas openly without any protection through a busy locality of Delhi in broad daylight. Clearly the Respondent’s enforcement team has not, prior to the incident on 1st March 2014, been performing its duty, or otherwise things would not have come to such a pass. The Respondent on its own admission appears to have no infrastructure to deal with such contingency where the goods valued at around ₹ 4 crores are required to be detained and kept in the custody of the DT&T. This is an unfortunate instance of the DT&T being unable to ensure the safety of the detained goods, resulting in some portion of it being stolen and a criminal case having to be registered in that behalf. The Crime Branch will pursue the investigation of aforementioned FIR to its logical end as expeditiously as feasible. As far as the main prayer in the petition is concerned the Court is not inclined to order release of the goods at the present stage and in the circumstances narrated above to any of the Petitioners. As already noticed, Petitioners 1 and 2 are thela pullers and the question of releasing the goods that have been detained to either of them does not arise. In the absence of proper documentation in respect of the goods being produced to the satisfaction of the CTT, the order dated 20th May 2014 passed by the Assistant Commissioner cannot be faulted and does not call for interference. - Decided against the appellants.
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2016 (2) TMI 543
Levy of sales tax / VAT / CST - Stock transfer - Form-F - Interstate movement of final goods returned by a job workers to his customer, after job work - Scope of Section 6A of Central Sales Tax Act, 1956 - Maharashtra Value Added Tax Act, 2002 (for short “the MVAT Act”) - Constitutional validity of Trade Circular No. 2T of 2010 dated 11.01.2010 and circular no. 16T of 2007 dated 20.2.2007 - Jurisdiction to issue Trad circular. Held that:- furnishing and scrutiny/verification of the declaration in that form is a requirement in law and if that is fulfilled, the burden on the dealer is taken to be discharged. If that declaration is not furnished, then, the consequences follow. The goods might have been despatched for job work and not as and by way of sale, but that is the plea or case of the dealer. If that is the case and the burden is on him to prove it, then, he has to obtain the declaration. If the declaration is not being issued by some States in the form prescribed, namely form 'F' and the dealer made all the efforts to obtain it but failure to produce it is not his fault, then, he may, as the Hon'ble Supreme Court of India clarifies, request the Assessing Officer to take that circumstance into consideration. If that request is made, the Assessing Officer can, depending upon the facts and circumstances of a particular case, pass such orders as are permissible in law. Therefore, we do not agree that the circular of 2010 misinterprets the order of the Hon'ble Supreme Court of India. Mr. Sridharan, as is complained by Mr. Sonpal, canvased very detailed submissions and often repeated them so as to bring home the point. We are conscious of the fact that the amendment was brought into the CST Act by insertion of section 6A. That is with a specific object and purpose. That is to emphasise that the Central Sales Tax is not leviable in respect of the transactions of transfer of goods from head office to branch or vice versa, as these transactions do not amount to sale, but the legislature was mindful of the fact that a blanket understanding of this type encourages evasion of taxes. Rather, that facilitates it. Therefore, by an amendment, it stepped in and placed burden on the dealers to prove transfer of goods in such cases is not by way of sale. Declaration referred to in sub-section (1) of section 6A of the CST Act shall be in form 'F' and the proviso thereto clarifies that a single declaration of the nature mentioned in the proviso may suffice. There is no serious legal infirmity or error of law apparent on the face of the record, leave alone perversity in the impugned interim orders, we have no alternative but to dismiss the Writ Petition. It is accordingly dismissed. Rule is discharged. - Decided against the assessee.
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Wealth tax
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2016 (2) TMI 506
Levy of penalty u/s 18(1)(c) of Wealth Tax Act, 1957 - assessee demonstrated before AO that assessee is a non-technical person and solely dependent upon the advice of his accountant in respect of technical matters, accordingly, assessee was under the impression that liability for filing of Wealth Tax return would be looked after by his accountant. As the assessee received the notice for filing wealth tax return, he immediately acted and reacted accordingly and paid the demand of tax on time. - Held that:- it is clear that there was sufficient cause which prevented the assessee to pay wealth tax in the wealth tax return. Therefore, in the interest of natural justice, we delete the penalty imposed by Assessing Officer and confirmed by Ld. CWT(A). - Decided in favor of assessee.
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Indian Laws
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2016 (2) TMI 537
Whether an illegal transfer of mining lease was involved - Held that:- The original lessee gave declaration while seeking transfer, that no consideration was received which though apparently correct was actually false as the subsequent transaction of sale of shares was integral part of the first transaction of transfer of lease to private company which soon thereafter became subsidiary of another company. The said real transaction cannot be ignored to find out the substance. Thus, acquisition of mining lease contrary to rules is void. Requirement of previous consent cannot be ignored nor taken to be formality subject only to pay dead rent or agreeing to follow same terms. The lessee privately and unauthorisedly cannot sell its rights for consideration and profiteer from rights which belong to State. There is no warrant for any contrary assumption. The State has to exercise its power of granting or refusing permission for transfer of lease in a fair and reasonable manner but following doctrine of public trust. As already seen, in the present case, the original lessee sought transfer merely by disclosing that the partnership firm was to be transformed into a private limited company with the same partners continuing as directors and there was no direct or indirect consideration involved. It was specifically declared that no pecuniary advantage was being taken in the process which is clearly false. The permission to transfer the lease in favour of a private limited company was granted on that basis. Thus, it was a case of suppression veri and suggestio falsi. Once it is held that transfer of lease is not permissible without permission of the competent authority, the competent authority was entitled to have full disclosure of facts for taking a decision in the matter so that a private person does not benefit at the expense of public property.
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2016 (2) TMI 536
Contempt proceedings for not obeying court orders - Remedy for getting the orders or the Court executed - Fight for control over the various entities under the Supermax group which is supposedly the 2nd largest manufacturer of razor blades and allied products in the world. - family fight, between the father and one son on one side and the other son on the other side. - Held that:- contempt proceedings and execution proceedings, are two separate remedies available and can be invoked simultaneously and that contempt is a matter between the court and the person against contempt of court whereas the purpose behind execution proceedings is to enjoy the fruits of the decree in his favour. The object of proceedings under the Contempt of Courts Act, 1971, is to punish a party guilty of the disobedience as contemplated by section 2(b) of the said act. The purpose is not to “execute” any order, for which purpose the aggrieved party shall have to take recourse to other proceedings known to law. - one cannot use contempt jurisdiction for enforcement of money decrees. The conduct of Respondent no.3 and Respondent no.4 actually makes a mockery of the judicial process. Their conduct extends beyond the parties to the action and affects the interest of the public in the administration of justice. Their conduct is specifically intended to impede and prejudice the administration of justice. Judiciary is the bed rock and hand maid of orderly life and civilized society. If the people could lose faith in justice imparted by this court or disobey orders of this court, woe to be to orderly life. The fragment of civilized society would get broken up and crumble down. Respondent nos.3 and 4 are held to be guilty of contempt of court for willful disobedience of the directions given by the court It should be remembered that when a party in whose favour an order has been made approaches the court to punish the disobedience of its order, he does not use those proceedings to get the order executed but merely brings to the notice of the court the objectionable conduct of the party disobeying the order and seeks action against that party for committing contempt of court. There is a clear distinction taken - having order executed and bringing to notice of the court willful disobedience on the part of the guilty party and seek to have him punished for contempt of court. Offender to undergo simple imprisonment of six months and three months respectively.
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2016 (2) TMI 528
Availability of alternative remedy - Recovery proceedings against the guarantors initiated by the bank for defaulters of loan - principal borrower company failed to pay even principal amount - Held that:- We are not impressed with the arguments canvassed by learned Senior Counsel for the petitioners that powers under Article 226 of the Constitution of India be exercised as there is bar under Section 22 of the SICA, 1985 and the Tribunal has no jurisdiction or the Tribunal lacks jurisdiction to entertain application filed under Section 19 of the RDDB Act, 1993, for the reason that the very issue and the grounds can be raised before the appellate Tribunal, which has jurisdiction, power and discretion to entertain and consider such grounds on merit.
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