TMI Tax Updates - e-Newsletter
February 28, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
-
Income Tax:
Diversion of income by overriding title - merely because the moneys flow through the assessee, it cannot be automatically inferred that it is income in the hands of the assessee. The money was always intended to be passed on to the PTC holders and therefore, it can be said that only the PTC holders had a claim on the money, if not an absolute charge - principle of diversion of income at the source by overriding title is attracted - AT
-
Income Tax:
The assessee Trust is a revocable Trust and contribution by beneficiaries is a revocable transfer. - the income shall be taxed in the hands of the beneficiaries, i.e. the Mutual Funds who purchase the PTCs from the assessee trust. - AT
-
Income Tax:
Levy of penalty u/s. 271(1)(c) - benefit of telescoping granted by the Commissioner of Income Tax (Appeals) sustained - AT
-
Income Tax:
Penalty u/ 271(1)(c) - unexplained investment - assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. - AT
-
Income Tax:
TDS u/s 194A - Interest - GNOIDA - Amounts which are payable towards interest on the payment of lump sum lease premium, in terms of the Lease which are covered by Section 194A are covered by the exemption under Section 194A (3) (f) and therefore, not subjected to TDS - HC
-
Income Tax:
TDS u/s 194I - Rent - lump sum lease payments or one time lease charges, which are not adjustable against long term lease hold charges, which are not adjustable against periodic rent, paid or paid or payable for acquisition of long term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of Section 194-I of the Act - HC
-
Income Tax:
Local authority within the meaning of Section 10(20A) - whether Vidarbh Irrigation Department Corporation is a local authority? - We do not understand as to why the Income Tax Department has preferred the instant appeal against the aforesaid judgment of the High Court where the issue has only been remanded to the Tribunal for fresh consideration. - SC
-
Customs:
Refund claim - unjust enrichment - once an assessment is provisional, it is provisional for all purposes and not necessarily provisional in respect of the particular ground - however, the CVD component of the excess duty is to be deducted from the total refund claim since the same has already been availed as CENVAT credit by the appellant in their manufacturing process - AT
-
Customs:
Classification of imported LCD Panels for CTV - classified under CTH 9013 80 10 or under Chapter SH 8529? - classification of impugned LCD Panels to be under Tariff Item No. 9013 80 10 of Customs Tariff Act, 1975 - AT
-
Service Tax:
Nature of collection of amount of service tax from the other branches / circles of the assessee - Collection or otherwise of the service tax from their own circles cannot be equated to collection of service tax in excess of the amount paid or determined. - AT
-
Service Tax:
Liability of tax - Since the appellant is not the service receiver, liability for service tax payment cannot be enforced on them. The position does not change because of the fact that the appellant was earlier discharging such service tax liability as per the authorisation given in their favor by the subsidiary company upto its withdrawal on 27.10.2003 - AT
-
Service Tax:
Business auxiliary services - In the absence of any such evidence to indicate that Adani Exports Ltd., had availed the services of appellant for production or processing of goods, we find that the impugned order holding that appellant is producing or processing of goods on behalf of Adani Exports Ltd., is unsustainable. - AT
-
Service Tax:
Classification of service - The use of device (programmable machine) for generating bills of MSEDCL cannot change the nature of the services - the service provided by the appellant falls under the category of business auxiliary service and not information technology service or business support service. - AT
-
Central Excise:
Clandestine removal - In the absence of the panchnama, adverse inference cannot be drawn against the respondent - further, the computer prints out are not reliable documents - AT
-
Central Excise:
Reversal of CENVAT credit - at the time of availment of Cenvat Credit on inputs, the final product is dutiable, later on the final product became exempt, in such a situation, Cenvat Credit is not required to be reversed - AT
-
Central Excise:
Valuation - related party transaction - rule 4 will lead to a determination of value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944 - AT
-
Central Excise:
Classification of goods - carpet - falling under sub heading 5703.90 or 5703.20 - the goods in question do not consist of a ground fabric and a pile or looped surface which is essential condition to specify the product in the sub heading note 2(B) of Section XI of the CEA, 1985 - AT
-
VAT:
Restriction on ITC credit - the firm’s registrations had been cancelled and default assessment of tax and interest under Section 32 of the Act were completed - Section 9(2) (g) was introduced only with effect from 1-4-2010 - HC
Articles
News
Case Laws:
-
Income Tax
-
2017 (2) TMI 1129
Unexplained cash credit u/s.68 - Held that:- Assessee has in its permissible limit has proved beyond doubt the identity, genuineness and creditworthiness of the loan creditors and it could not be disputed by the Revenue at any stage nor any enquiry was made in case of any other loan creditor, which could disprove the evidence placed by assessee. We therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) deleting the impugned addition on account of unexplained cash credit - Decided in favour of assessee Disallowance on account of interest expenses on cash credit - Held that:- As we have already decided adjudicating ground no.1 of Revenue wherein we have confirmed the order of ld. Commissioner of Income Tax(A) deleting the impugned addition u/s 68 and as have accordingly held that assessee has proved the identity, genuineness and creditworthiness of the cash creditors. Therefore, the interest paid on such genuine loan creditors cannot be treated as non-genuine. - Decided in favour of assessee TDS u/s 194A - disallowance u/s.40(a)(ia) - non deduction of tds on interest expenses - submission of Form No. 15 G - Held that:- We are of the view that as the assessee has filed form no.15G in the cases of 9 parties to whom interest of ₹ 3,00,348/- was paid there was no liability of deducting tax at source at assesse’s behest and, therefore, ld. Commissioner of Income Tax(A) has rightly deleted the disallowance. We find no substance in this ground raised by Revenue against ld. Commissioner of Income Tax(A)’s order for admitting additional evidence in violation of Rule 46A as from the perusal of the assessment order it is well evident that the details, names and addresses, PAN, bank statement, income-tax returns were all placed before the assessing authority and as regards form no.15G in relation to non-payment of ₹ 3,00,348/- record was very much available with the assessing authority as these forms were filed on 4.4.2009 with ITO, TDS-3, Ahmedabad. Therefore, we find that ld. Commissioner of Income Tax(A) has not admitted any additional evidence in violation of Rule 46A. We, therefore, dismiss this ground of Revenue.- Decided in favour of assessee
-
2017 (2) TMI 1128
Addition on bogus purchases - AO received an information from DGIT(Investigation), Mumbai that the assessee has entered into bogus transactions from three hawala parties without taking actual delivery of goods - Held that:- The assessee filed before the AO complete books of accounts, items wise stock register evidencing the receipts of gift materials and issue thereof as attached in the paper book page 56 to 78. In order to prove the use of gift items in the promotional activities, photographs of the functions and promotional activities and also confirmations from the shop keepers were also produced before the AO which were disbelieved by the AO on the ground that the confirmations were not bearing the PAN of the persons confirming the consumptions of gift materials. The assessee has also produced copies of bank statements of Punjab National Bank and Axis Bank evidencing the payments through banking channels by account payee cheques to the suppliers filed at pages no. 32 to 51 of the paper book. Having considered all these facts which were before the AO as well as FAA, we find that the assessee has discharged its onus by producing the books of accounts, stock register, stock tally and also filing various documentary evidences such as statements of banks etc, confirmations and photographs of the promotional events before us. The purchase made by the assessee could not be disbelieved merely on the basis of information received from the third party without carrying out any meaningful enquiry and further verification on the various records and information filed during the course of assessment proceedings. We are not in agreement with conclusion drawn by the FAA upholding the action of the AO. - Decded in favour of assessee. Allowance of auditors fees and legal and profession expenses - eligible revenue expenditure - Held that:- We find that the assessee has debited a sum on account of yearly provisions for internal audit and tax audit fee and legal and professional charges payable to Mr.K A Pandit for “Actuarial valuation for determining gratuity and leave encashment provision for staff” . The said expenses are in the nature of routine and regular expenses which are incurred and provided at the end of each year and were accordingly accounted for by the assessee on the basis of mercantile system of accounting. Further, the FAA has rightly came to the conclusion that the assessee has rightly accounted for these expenses by following the mercantile system of accounting and the same could not be disallowed by treating as provision for expenses and in the nature of contingent expenses. The FAA also noted that the said expenses are not based upon the guess work or adhoc and were provided in the same manner as in the earlier years on the basis of mercantile system of accounting. Moreover, the liability was very much ascertained and foreseeable due to regular nature of expenses. We are, therefore, inclined not to interfere with the reasoned order of the ld.CIT(A) on this issue and accordingly uphold the same by dismissing the ground raised by the revenue. Disallowance of proportionate interest - Held that:- We find that the assessee has advanced money to M/s Tracstar Investment Pvt Ltd during the year to the tune of ₹ 5,00,62,122/- which accordingly to the assessee was a business advances wholly given out of commercial expediency and business considerations as the said company bottled the liquor manufactured by the assessee and was given in that connection. The FAA also recorded the findings of facts in his appellate order that no disallowance of proportionate interest was made by the AO in the earlier years. Moreover, the assessee’s own funds were more than ₹ 124 crores and the ld. CIT(A) further recorded the finding of facts that the said advances was not given out of borrowed funds. In our opinion, the order passed by the ld. CIT(A) ,after considering the contention and submissions that the advances were given out of business consideration and commercial expediency as M/s Tracstar Investment Pvt.Ltd was providing bottling services to the assessee, does not contain any infirmities and conclusion drawn by the ld. CIT(A) is supported by the decision of the jurisdictional High Court in the case of Reliance Utilities ([2009 (1) TMI 4 - BOMBAY HIGH COURT ]) in which it has been held that the assessee’s own funds are more than the borrowed funds then no disallowance on account of interest is called for.
-
2017 (2) TMI 1127
Penalty u/s 271(1)(c) - Whether the notice issued u/s. 274 r.w.s. 271[1][c] of the Act in printed form without specifying grounds of initiation of penalty proceeding is valid, legal and tenable in law? - Held that:- Since in the impugned notice, there is no clear indication about the concealment of the particulars of the income, nor there is clear indication for furnishing of inaccurate particulars of the income on application of mind. In any case as there is no specific ground, hence there would be breach of principles of natural justice and ultimately the order imposing penalty even otherwise also cannot be sustained. Under the circumstances, the question formulated needs to be answered in the negative and in favour of the Assessee and against the Revenue.
-
2017 (2) TMI 1126
Unexplained cash credit - proof of creditworthiness - failure in discharging the onus of proving the creditworthiness - additional evidence taken on record at the appellate stage to deleted additions - Held that:- In the matter of permitting additional evidence and thereafter in considering the same at the appellate stage, the Department through the assessing officer was granted reasonable opportunity to rebut the same and after considering various aspects of the matter, concurrent findings have been recorded by both the appellate authorities namely; Commissioner (Appeals) and the ITAT. Finding no error in not only accepting the additional evidence on record, but, also in analyzing the same and holding that the creditworthiness, trustworthiness of the credit transaction have been proved beyond reasonable doubt. The aforesaid is a concurrent findings of fact recorded by the both the appellate authorities, they are reasonable in nature and we find no reason to interfere into the aforesaid concurrent finding of fact. In our considered opinion, no substantial question of law arises for consideration. The judgments relied upon by Revenue are distinguishable on facts. They were cases where additional evidence was taken on record without granting proper opportunity to the assessing officer to rebut the same, whereas in these cases,we find that the additional evidence were placed to the notice of the assessing officer. The assessing officer did give his remand report on the same, did not raise any objection to its admissibility and it is only after granting of opportunity to the assessing officer that the orders in question have been passed. Accordingly, the judgments relied upon may not apply in the facts and circumstances of the present case. - Decided against revenue
-
2017 (2) TMI 1125
Penalty u/s 271(1)(c) - whether the payment of transportation charges and claiming the same as deduction constituted concealment of income or filing inaccurate particulars of income? - Held that:- The penalty cannot be imposed merely on the basis that the assessee has not filed any appeal against the quantum addition and more so when the tribunal decision upholding the claim of the assessee to claim the payments of charges to Iraqi regime as admissible which stands upheld by the jurisdictional high court. The penalty proceedings are independent proceedings which are to be decided on the basis of merits of each case. In the present case, the Calcutta Bench of the Tribunal in Rajrani Exports (P) Ltd [2012 (6) TMI 62 - ITAT, Kolkata] has already decided that the payment made on account of transportation charges as admissible which cannot be disallowed on the basis of Volcker Committee report and hence penalty on such disallowance which is wrong and against the spirit of the Act cannot be sustained . Accordingly, we set aside the order of ld.CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.
-
2017 (2) TMI 1124
Disallowance of deduction u/s 80IB(10) - development of commercial property by Raj Chandra Commercial Co-operative Housing Society limited was a sham and the artificial bifurcation of residential and commercial project was only to claim deduction under section 80IB(10) - Held that:- As decided in the case of Shri Umeya Corporation vs. ITO [2015 (9) TMI 108 - ITAT AHMEDABAD ] it is not even the case of the Assessing Officer that the assessee did not assume the entrepreneurship risks of the housing project. The format of arrangements for transfer of built up unit, and business model of the assessee for that purpose, is not decisive factor for determining eligibility of deduction under section 80 IB (10), but that is all that the authorities below have found fault with. The objections of the authorities below are thus devoid of legally sustainable merits. In view of the above discussions, and bearing in mind entirety of the case, we are of the considered view that the stand of the authorities below, in declining deduction under section 80IB (10) and on the facts of this case, is incorrect. We vacate the same and direct the Assessing Officer to delete the disallowance. As regards the points raised by the learned CIT(A) with regard to commercial construction by some other society, it is difficult to understand and as to what it has to do with the present claim. The approval is given to the housing project and the assessee has claimed deduction in respect of projects of the same. The objections taken by the learned CIT(A) are purely on the field of surmises and conjectures. Thus reject the same. Thus deduction under section 80IB(10) allowed - Decided in favour of assessee
-
2017 (2) TMI 1123
Validity of reopening of assessment - ingenuine loans - Held that:- At the time of scrutiny assessment under Section 143 [3] and at the time of filing the return of income, the assessee specifically claimed that he had taken loans from the family members during the year under consideration. Alongwith the return of income/computation of income, it appears that the assessee also placed reliance upon materials such as return filed by Dr. Rajivram R Choudhry [HUF] stating that the said HUF sold ancestral property at Panipat in the FY 2005-2006. That thereafter, the Assessing Officer framed scrutiny assessment under Section 143 [3] of the Act and accepted the case of the assessee that he had taken loans from the aforesaid three persons and did not make any amount towards undisclosed cash investment. Thus the entire issue as such was gone into by the Assessing Officer while framing the scrutiny assessment under Section 143 [3] and it cannot be said that there was any failure on the part of the assessee in not disclosing the true and correct facts necessary for the assessment. It is required to be noted that the case of the assessee from the very beginning was that the aforesaid HUF sold the ancestral property in F.Y 2005-2006. It was never the case of the assessee that the said HUF sold the property in F.Y2008-2009. Necessary documents of Shri Rajivram R Choudhry [HUF] to show that the ancestral properties were sold in F.Y 2005-2006 were already produced on record at the time of scrutiny assessment under Section 143 [3] of the Act. Even a certificate issued by DDIT [Inv.], Panipat was issued with respect to altogether another property for which the sale proceeds were not received in FY 2008-2009. That, the property which was sold in FY 2005-2006 by HUF and others were altogether different properties for which the sale deeds were produced on the record. Under the circumstances, formation of opinion by the Assessing Officer doubting genuineness of the claim of the assessee with respect to the loans taken from the aforesaid three persons is on the wrong premise and the facts. So far as the second reason to reopen the assessment which is based on the Valuation Report of D.V.O, it is required to be noted that on DVO's report, the Assessing Officer has formed a belief that the assessee had concealed the investment to the extent of ₹ 9,21,148/= during the year under consideration. However, it is required to be noted that at the time when scrutiny assessment was framed under Section 143 [3] of the Act on 29th December 2011, there was no DVO's report. Even in the reasons recorded, it is specifically mentioned that the valuation report of DVO was received after completion of scrutiny assessment on 30th November 2012. The claim of the assessee with respect to the investment in construction of Hospital building of ₹ 2,74,,93,923/= came to be accepted by the Assessing Officer while framing the scrutiny assessment under Section 143 [3] of the I.T Act. Even otherwise, it is required to be noted that there is hardly a difference of ₹ 9,21,148/= ie., approximately of 3% of the total investment in construction of hospital building. As per the catena of decisions, DVO's valuation report can be said to be its opinion and there might be some variation in the calculation. In any case, it cannot be said that there was any failure on the part of the assessee in not disclosing true and correct facts necessary for assessment which warrants reopening beyond the period of four years. - Decided in favour of assessee
-
2017 (2) TMI 1122
Computation of income of an assessee by AO under a head of income other than what was claimed - Held that:- AO is competent to compute the income of an assessee under a head of income, other than what was claimed by the assessee, of course, after marshalling the facts properly and furnishing proper reasons. Merely by computing the interest accrued as income of the assessee instead of non taxable as claimed,, the inter-se rights of the assessee under any other statutory framework does not get affected. There is no requirement under the Income Tax Act that the AO has to get an order of the court for income determination. The requirement u/s 281 of the Act to get a suit initiated to annul a transfer of property before effecting attachment is totally different and has no connection to this issue. The Income Tax Act is a self-contained Act and the AO is entitled to determine the head of income under which the income of a particular assessee is to be assessed. The decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA ) squarely applies to the facts of this case. The assessee's appeal on this issue is dismissed. Validity of trust - Holding the trust to be not a valid trust and consequently that section 161(l) of the Act is not applicable - whether all the transactions related to securitization are a facade worked out by the Bank and the assessee trust is not a valid trust? - Held that:- That the procedures and processes involved in the formation of a trust have been followed is not in doubt. RBI Guidelines itself contemplate the securitization process to be carried out by the originator; Yes Bank in this case. Therefore, no adverse inference can be drawn of the point strenuously put forth by the Revenue that the originator has been the guiding force of the securitization process. Most of the infirmities/defects pointed out in the documents by the Revenue is mainly on the point that all the securitization transactions were carried out between 16.05.2008 and 20.05.2008 whereas the loan agreement was signed on 21.05.2008. The agreement between HPCL and Yes Bank was first signed on 15.05.2008, which provided that the standard format agreement will be signed. The standard format agreement was signed on 21.05.2008. All the procedures and documents related to the securitization process was carried out on 20.05.2008. The insistence of Revenue that only the standard format agreement has to be reckoned and not the agreement dated 15.05.2008 does not appear to be tenable. Even assuming that the agreement dated 15.05.2008 was only in the nature of a letter of intent, it cannot be disputed that the lender, Yes Bank had full knowledge of the loan and had disbursed the amount. Therefore, it is very likely that Yes Bank had initiated the securitization process, pending signing of the standard format agreement. These are all standard documents that are signed up in such transactions. The reference to the agreement in the documents related to the securitization process needs to be understood in this perspective. Even assuming that minor infirmities exist in the documents, those can at best be characterized as procedural defects and this alone is not enough to disregard the documents totally. It is a settled principle that a legal document has to be viewed in its entirety and mistakes in some of the clauses cannot, by itself, negate the existence of the documents. CIT(A) was wrong in holding that the assessee trust was not a valid trust. In our considered view all the necessary ingredients for the formation and existence of the trust have been fulfilled and all these documents, processes and money trail cannot be disregarded, only due to the marginal mistakes in the clauses in the documents and also the timing of signing of these documents. Accordingly we hold that the assessee Trust is a valid Trust. Ground of appeal No. 1 decided in favour of the assessee. Holding the trust was not a revocable trust/ contribution by beneficiaries was not a revocable transfer - Held that:- In view of the discussion above and respectfully following the principles laid down in the above referred decision in the case of India Advantage Fund-VII (2015 (4) TMI 259 - ITAT BANGALORE) and Milestone Army Navy Trust (2015 (12) TMI 1647 - ITAT MUMBAI) 1703785 we hold that the assessee Trust is a revocable Trust and contribution by beneficiaries is a revocable transfer. Having held thus, it follows that the income shall be taxed in the hands of the beneficiaries, i.e. the Mutual Funds who purchase the PTCs from the assessee trust. In this view of the matter, we allow this ground of appeal No. II raised by the assessee Diversion by overriding title - assessee’s contention is that the amounts received by the assessee from Yes Bank under the Deed of Assignment dated 20th May, 2008 are diverted at source by an overriding title to the PTC holders (Mutual Funds) and therefore the amount of ₹ 21,49,72,486 /- handed over to the assessee and paid to the PTC holders in proportion to their respective investments is not income of the assessee for the A.Y. 2009-10 - Held that:- As held by the Hon'ble Apex Court in the case of CIT vs. Tollygunge Club Ltd. (1977 (3) TMI 1 - SUPREME Court ) every receipt in the hands of the assessee need not be its income and it is only when it bears the character of income at the time when it reaches the hands of the assessee that it becomes exigible to tax. In the case on hand, even at the initial stage, even before the money flows to the assessee, it was always clearly intended to be passed on to and only to the beneficiaries, i.e., the PTC holders in proportion to their interest in the receivables (underlying assets). Thus merely because the moneys flow through the assessee, it cannot be automatically inferred that it is income in the hands of the assessee. The money was always intended to be passed on to the PTC holders and therefore, it can be said that only the PTC holders had a claim on the money, if not an absolute charge. Hence, in our considered view, the principle of diversion of income at the source by overriding title is attracted in this case. In view of the above finding of fact rendered by us, we are of the considered opinion that by the principle of diversion of income by overriding title, the receivables are the income of the PTC holders, in this case the beneficiaries of the assessee trust and therefore, whether the status of the trust is to be characterized as Trust or AOP, the income passes on to the beneficiaries. In this view of the matter, the ground of appeal at III raised by the assessee is allowed. Treating the status of the assessee as "AOP" - Revenue’s main contention is that all the players in the securitization process have acted together and in unison and have carried out an adventure in the nature of trade to earn income, which is in the nature of “business”, thus all the stake holders have to be assessed together as “AOP”. - Held that:- All the Mutual Funds beneficiaries are shown to have purchased the PTCs separately and not together by a concerted action to earn income jointly. We find that the various averments made by the learned counsel for Revenue that there has been some concerted and coordinated action on the part of the beneficiaries in completing the securitization process, has not travelled beyond the stage of suspicion and surmise and therefore in our view Revenue has not discharged the onus of establishing the existence of an AOP in the case on hand. Even otherwise, since we have already held that the assessee trust is a valid trust, the controversy regarding treating the assessee as AOP does not arise. Consequently, this ground No. IV raised by the assessee is allowed. Invalidity of assessment and the confirmation by the CIT(A)- Held that:- Since we have held the assessee to be a valid Trust, there is no question of the assessee being assessed in the capacity of an ‘AOP’, and therefore there is no requirement for adjudicating this ground No. V as the same has been rendered infructuous and is accordingly dismissed. Enhancement of Income - Held that:- Para 3.5 of the Loan Agreement states that interest has to be computed on number of day basis using 365 days as a year basis. The above wordings cannot be stretched to mean that the interest has to be charged on day to day basis. Also, the Deed of Assignment under which the assessee is to receive the amount clearly provides that the assessee is entitled to receive the amounts on the 1st of the next month and to be passed on to the PTC holders in the proportion to the amount of their investments on the very next day. In view of the above clear provisions laid out in para 3.5 of the Loan Agreement and Deed of Assignment, we are of the considered view and hold that it is crystal clear that the interest for a particular month accrues on the first day of the next month as laid out in para 3.5 of the Loan Agreement and recital in the Deed of Assignment. Accordingly, ground No. VI of assessee’s appeal is allowed. Disallowance of expenses on accrual basis (if enhancement is upheld) - Held that:- In this ground, the assessee has raised an alternate ground that if the enhancement to the income is allowed, then the corresponding outgo (expenditure) for March, 2009 be allowed. Since we have already held that the enhancement of the assessee’s income on the interest income made by the learned CIT(A) is not tenable, the claim for disallowance of expenses on actual basis is now rendered infructuous, as it does not survive for consideration. The ground of appeal No. VII being infructuous is accordingly dismissed. Charge of interest under section 234B & 234C - Held that:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H. Ghaswala (2001 (10) TMI 4 - SUPREME Court ) and we therefore uphold the action of the AO in charging the said interest. The AO is, however, directed to re-compute the interest chargeable under section 234B and 234C of the Act
-
2017 (2) TMI 1121
Reopening of assessment - arrangement to the sale of shares undisclosed - Held that:- Proviso appended to section 147 puts an embargo upon the powers of the AO for reopening of the assessment in case where an assessment was made under section 143(3) of the Income Tax Act for relevant assessment year and four years have expired from the end of the assessment year. In such cases, no action shall be taken under section 147 unless it is established that income chargeable to tax has escaped on account of failure of the assessee to disclose fully and truly all the material facts necessary for his assessment. Thus the AO was bound to demonstrate that the assessee has failed to disclose material facts fully and truly which has resulted escapement of income. If he fails to demonstrate this aspect, then, in the case where scrutiny assessment has been made and four years have expired, he cannot take action under section 147 of the Income Tax Act. A perusal of the reasons would indicate that the AO has nowhere demonstrated this fact. Apart from the above, a perusal of the assessment order passed under section 143(3) would indicate that all these facts have duly been considered and the AO has accepted the stand of the assessee. Allegation of the AO in the reasons is that in the memorandum of arrangement to the sale of shares shows that a sum of ₹ 28,90,500/- was to be received by the assessee from M/s.Manish Multi Packfilms Pvt. Ltd. It was a sum advanced by the assessee to the company. The AO has observed that a perusal of the balance sheet for the F.Y.2002-03 i.e. 31.3.2003 does not discern that the assessee has advanced any amount. The stand of the assessee is that this sum was advanced after 31.3.2003 and it was repaid during the F.Y.2003-04 itself. Therefore, it will not reflect in the balance sheet of Manish Multi Packingfilms Pvt. Ltd. in F.Y.2002-03. The AO has sought to reopen the assessment after expiry of four years without establishing nexus of the details. He has not analytically examined the alleged advance given by the assessee and his belief that this amount should be available in the balance sheet for F.Y.2002-03. When the assessee has not paid any amount in F.Y.2002-03 to the company how it will appear in the balance sheet. Without looking to the accounts, he simply recorded the reasons. Thus, there is no basis for reopening of the assessment and the ld.CIT(A) has rightly quashed it. We do not find any error in the order of the ld.CIT(A). It is upheld - Decided against revenue.
-
2017 (2) TMI 1120
Levy of penalty u/s. 271(1)(c) - additions made u/s. 69C and u/s. 68 - cash credit entries found in the books of account of partnership firm in which the assessee was a partner - Held that:- In the present case, we find that addition u/s. 68 has been made on the basis of entries in the diaries found during survey at the premises of one of the former Director of the assessee company. There is no evidence on record to show that any transfer of money either through cheque or cash during the year under consideration was recorded in the books of account of the assessee. Under such circumstances we are of the opinion that the addition u/s. 68 is not sustainable. The Hon’ble Punjab and Haryana High Court in the case of Smt. Shanta Devi Vs. Commissioner of Income Tax (1987 (10) TMI 26 - PUNJAB AND HARYANA High Court ) deleted the addition u/s. 68 in the hands of assessee, where cash credit entries were found in the books of account of the partnership firm in which the assessee was partner. Since, the addition made u/s. 68 is itself not sustainable there is no question of levy of penalty on such addition. Thus, we are of the considered view that levy of penalty u/s. 271(1)(c) of the Act on addition made u/s. 68 of the Act is liable to be set aside. One of the contention of the assessee before the First Appellate Authority was to grant the benefit of telescoping in penalty proceedings in respect of the additions made during assessment. The Commissioner of Income Tax (Appeals) rejecting the contentions of the assessee on merits and accepting the alternate submissions of the assessee granted the benefit of telescoping. Neither the ld. AR nor the ld. DR could substantiate the error in the findings of Commissioner of Income Tax (Appeals) in extending the benefit of telescoping. Thus, we uphold the benefit of telescoping granted by the Commissioner of Income Tax (Appeals). Accordingly, the solitary ground raised by the Department in appeal and the submissions of the assessee assailing penalty on addition made u/s. 69C are dismissed. -Decided in favour of assessee.
-
2017 (2) TMI 1119
Addition u/s 40(a)(ia) - non deduction of tds on payments of machinery hiring charges - Held that:- CIT(A) has directed the Assessing Officer to allow deduction of ₹ 80,14,600/- under the head “machinery hiring charges” paid to 8 parties after verifying whether said 8 parties to whom the payments have been made by the assessee has shown the amount receipt in the return of income and paid due tax thereon by following the decision of Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) and the CBDT Circular No.275/201/95- IT(B) dated 29.1.1997. We find no good reason to interfere with the order of the CIT(A), which is hereby confirmed and grounds of the revenue are dismissed.
-
2017 (2) TMI 1118
Penalty u/ 271(1)(c) - unexplained investment - Held that:- As during the course of assessment proceedings, the assessee realized that out of various investments in mutual fund some were redeemed and reinvested and the difference between the sale proceeds of the units of the mutual funds and the amount invested was wrongly considered as dividend income instead of short term capital gain. Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd. vs. CIT (2012 (9) TMI 775 - SUPREME COURT ) wherein the Hon’ble Supreme Court has held that the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. As it was pointed out by the ld. Counsel for the assessee that in other years also such mistake occurred and the department has accepted the explanation given by the assessee and has not imposed the penalty. This fact is not controverted by the revenue. Therefore, under the peculiarity of the facts in the present case CIT (A) ought not to have sustained the penalty. Therefore, we set aside the order of ld. CIT (A) and direct the AO to delete the penalty. - Decided in favour of assessee
-
2017 (2) TMI 1117
Depreciation on Goodwill//non compete fees - Held that:- As it is specified in agreement that unless permitted by the assessee i.e. SMPL, WAVE and Mr. V. F. John Yesudhas will not do anything which may amount to competition with the present assessee. Hence in the present case also, the assessee i.e. the acquirer gets the right to enforce the performance of the terms of agreement under which the seller WAVE and Mr. V. F. John Yesudhas including their associates, partners and relatives shall not compete with the assessee i.e. the acquirer. Hence, in our considered opinion, the facts of the present case are similar to the facts in the case of the judgment in the case of CIT vs. M/s Ingersoll Rand International Ind. Ltd. (2014 (6) TMI 934 - KARNATAKA HIGH COURT ) and in the present case also, this right acquired by the assessee can be transferred to any other person in the sense that the assessee acquirer gets the right to enforce the performance of the terms of agreement under which the seller is restrained from competing. Therefore, respectfully following this judgment, we hold that even if the right acquired by the assessee is held to be non compete right then also, it is eligible for depreciation u/s 32 (1) (iii). - Decided in favour of assessee
-
2017 (2) TMI 1116
Deduction u/s 80IB(10) denied - non-fulfillment of conditions with respect to built up area - Revenue is in appeal against the order of CIT(A) in allowing prorata deduction under section 80IB(10)where the built up area of two dwelling units exceeded the limits prescribed - Held that:- As decided by Tribunal in assessee’s own case for assessment year 2009-10 the assessee eligible for pro-rata deduction as any project where some of residential units exceeded the built up area then also proportionate deduction is to be allowed to the eligible units. In view thereof, we find no merit in the grounds of appeal raised by the Revenue against the order of CIT(A) in allowing proportionate deduction. However, since the assessee is held to be entitled to claim the deduction on the two units as projections and open terrace are not to be included in built up area for such projects which were sanctioned before 01.04.2005, the assessee is held to be entitled to claim the deduction on such units also and consequently, where all the units of project are eligible units, the assessee is entitled to the deduction claimed under section 80IB(10) of the Act in respect of whole project. Accordingly, we hold so. The grounds of appeal raised by the Revenue are thus, dismissed and the Cross Objections filed by the assessee are allowed.
-
2017 (2) TMI 1115
Reopening of assessment - validity of notice - Held that:- We are of the view that as the petitioner has not come to this Court with clean hands, this petition cannot be entertained. There is no reason for us to disbelieve the affidavit filed by the Assessing Officer dated 8th February, 2017 in the absence of any affidavit disputing the above facts. However, considering the fact that the deponent to the petition is 76 years old, we have not examined the issue of imposing of costs. The contention urged by Mr. Andhyarujina on behalf of the petitioner across the bar would give rise to disputed question of fact and thus outside the pale of writ jurisdiction. Thus we dismiss the petition. We now take up the direction issued by us to the Assessing Officer by our order dated 25th January, 2017. Shri Ahire, in his affidavit has stated assessment was getting time barred on 31st December, 2016. The notice for re-opening is dated 30th March, 2016. The reasons recorded in support of the impugned notice are served upon the petitioner on 14th October, 2016. The petitioners filed its objection to the reason only on 19th December, 2016. Thus in the above facts, we find that the undue delay on the part of the petitioner in objecting to the reasons, made it impossible in the present facts to give time to the petitioner in accord with the decision of this Court before passing an Assessment Order under Section 143(3) of the Act on 28th December, 2016.
-
2017 (2) TMI 1114
TPA - selection of comparable - exclusion of Bosch Chassis System India Ltd. and non-inclusion of Escorts Ltd. - Held that:- In view of the admission of the assessee and in view of the present facts and circumstances, we hold that both Bosch Chassis System India Ltd. and Escorts Ltd. having different accounting year ending are not to be included in the final set of comparables in order to benchmark the international transaction of the assessee, while applying TNMM method. We direct so. The Assessing Officer/Transfer Pricing Officer is directed therefore to recompute the adjustment, if any, in the hands of the assessee in this regard. The Ld. Authorised Representative for the assessee pointed out that in case if Bosch Chassis System India Ltd. is excluded from the final set of comparables, its margin would be within +/-5% and no adjustment is to be made on account of Arm’s Length provisions. Accordingly, we direct the Assessing Officer to work out the margins of the comparables and compare it with the PLI of the assessee. Corporate guarantee adjustment made in the hands of the assessee - Held that:- The facility provided by the assessee to its AE under which Corporate Guarantee was given by the assessee on behalf of the subsidiary. The Transfer Pricing Officer while benchmarking the international transaction of the assessee was of the view that against the provision of Bank Guarantee, the assessee should have charged some amount as Guarantee fee and he worked out the above in the hands of the assessee by adopting the Guarantee fee @1%, i.e. resulting in addition of ₹ 6,40,000/-. The assessee is in appeal against the order of the Assessing Officer/ Transfer Pricing Officer. Thus we direct the Assessing Officer to apply the rate of 0.5% as charges for providing Bank Guarantee to the Associate Enterprise and restrict the addition accordingly. Grounds raised by the assessee are thus partly allowed. Deduction allowable in view of the provisions of section 43B - Held that:- Under the provisions of section 43B of the Act, it is provided that in case the assessee does not deposit certain sums within the stipulated period, then the said amount is to be disallowed in the hands of the assessee but the assessee is entitled to claim the same as deduction in the year of payment. The assessee claims that the provisions made on account of excise duty, bonus and sales tax were offered to tax in assessment year 2007- 08 since the amounts were not deposited, however, the said amounts have been paid in the year under consideration but by an inadvertent error, while filing the return of income, the said deductions were not claimed. Following the ratio laid down in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ) we hold that the assessee can raise such a plea before the authorities, i.e. during the course of assessment or appeal proceedings. Accordingly, we find no merit in the observations of the Dispute Resolution Panel in rejecting the claim of the assessee relying on the ratio laid down by the Hon’ble Supreme Court in the case of Goetze India Ltd. Vs. CIT (2006 (3) TMI 75 - SUPREME Court). Reversing the same, we direct the Assessing Officer to verify the claim of the assessee and allow the same in accordance with law
-
2017 (2) TMI 1113
Registration u/s 12A denied - assessee Trust was not following any charitable activities and hence cannot be termed as a Charitable Organization and for reaching the aforesaid conclusion he inter-alia noted that the News letter titled “SIMA” which was published by assessee was a News letter meant for the Members only and did not reach out to general public - Held that:- On perusing the objectives of the Trust it is seen that the objects of the assessee are inter alia to promote and advance Medical and Allied Sciences in different branches and to promote improvement in Public Health and Medical Education. Thus the objects of the Trust, prima facie, appears to be of charitable in nature. Further, we are of the view that in order to ascertain the true nature and purpose of the Trust, the objectives are to be considered as a whole and not in isolation. Another aspect of issue is the introduction of first proviso of sec (15) holding that activities of the trust was commercial in nature. In this connection, we find that the Amritsar Bench of Tribunal in the case Kapurthala Improvement Trust vs. CIT, Jalandhar [2015 (7) TMI 77 - ITAT AMRITSAR] has held that first proviso to section 2(15) have no role in matters relating to registration of a trust or institution under section 12A or 12AA for granting or declining registration or in respect of cancellation of registration. Before us, Revenue has not placed any material on record to demonstrate that the Trust was either not genuine or its activities were not as professed in the Trust Deed. Further, before us, ld. AR has submitted a list of branches of Medical Associations having similar objects as that of assessee but in different cities and which have been granted the status of exemption u/s 12A of the Act. Ld.D.R., has not pointed out any difference in the objects of the assessee Trust and the others which have been granted exemption u/s 12 A by the authorities. Thus we set aside the impugned order of CIT and the CIT is directed to grant registration in terms of Sec.12A of the Act. - Decided in favour of assessee
-
2017 (2) TMI 1112
Estimation of agricultural income in the hands of the assessee - Held that:- The assessee’s land holding is large and the family members of the Bagwan group are engaged in cultivation of vegetables and flowers and in some cases in fruits on the said land. Majorly the agricultural land holding is cultivated with vegetables and flowers. The assessee is not maintaining the books of account regularly. As we have already held that there is need for estimation for agricultural income in the hands of the assessee. The Ld. Authorised Representative for the assessee before us agreed to the proposition that 80% of the standard yield reported by ICAR in the case of Vegetable yield be adopted to work out the income from Vegetables and flowers in the hands of the assessee on the basis of individual land holdings. Accordingly, we hold so. Necessary evidence would be furnished in this regard by the assessee. The Assessing Officer shall give reasonable opportunity of hearing to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case the assessee has already shown the yield below 80% of the standard yield reported by the above said Government bodies, then the Assessing Officer is directed not to disturb the same and accept it. Expenses on contractual factor - Held that:- While estimating the agricultural income the Assessing Officer/Commissioner of Income Tax (Appeals) had taken note of the facts of Shri Badshah Bagwan, wherein the statement of one person was recorded who stated that for carrying on the agricultural activities on part of the land, he was getting batai @50% of the receipts. The said statement was withdrawn on a later stage. However, the said fact was adopted by the Assessing Officer and the Commissioner of Income Tax (Appeals) in order to estimate the income in the hands of the assessee. We have already decided the issue of estimation in the hands of the assessee in the paras hereinabove with our directions. We further hold that no further deduction is to be made on account of contractual farming factor @50%. The basis for the said estimation is pursuant to the facts of Shri Badshah Bagwan and where the statement of the said person was never confronted to the assessee nor the information supplied to the assessee, the said information cannot be applied to decide the issue against the assessee. In any case, in the facts of the case, the assessee has claimed that it has grown vegetables on its agricultural land holding and he pleads that the said vegetables are not grown on sharing system basis. We find merit in the plea of the assessee in this regard and accordingly we hold so. Estimation of agricultural income in the hands of the assessee is on account of sugarcane wherein part of the land was under the crop of sugarcane from A.Y. 2001-02 onwards - Held that:- No merit in deducting any amount towards batai expenses in respect of the estimation of income arising from sugarcane plantation. We direct the Assessing Officer to apply 80% of the rates available to the surgarcane produce as sugarcane is sold to Mills. Necessary evidence would be furnished by the assessee to establish its case. The Assessing Officer shall give reasonable opportunity of hearing to the assessee before adjudicating the issue of income arising from sugarcane produce and also as held in the case of vegetables and flowers. Unexplained investments - Held that:- Once the amount has been so assessed, i.e. on account of agricultural income and/or on account of income from other sources then the source of the aforesaid assets found during the course of the search, stand explained. However, we have already adjudicated the issue of estimation of agricultural income in the hands of the assessee in the respective years in the paras hereinabove and the Assessing Officer is directed to verify as to where the said agricultural income assessed in the hands of the assessee justifies the source of acquisition of the assets found during the course of search. Once the income is estimated in the hands of the assessee the same is presumably held to have been utilized for the acquisition of the assets and there is no merit in any other addition in the hands of the assessee on account of unexplained investment in assets found during the course of search. We hold so Addition made towards investment in benami FDRs and interest charged - Held that:- Where the addition on account of unexplained deposits has already been made in the hands of Pat Sanstha there is no merit in making any further addition in the hands of the assessee on account of same FDRs. Accordingly, we uphold the order of the CIT(A) in this regard and dismiss the grounds of appeal raised by the revenue. Consequently no addition is warranted on account of interest chargeable on the said FDRs. The revenue has failed to address the issue raised by way of grounds of appeal Nos.9 to 11 and also in the absence of any addition made by the Assessing Officer on any other account except non acceptance of agricultural income and the addition on account of FDRs there is no merit in the other grounds of appeal raised and the same are dismissed. Entitlment to deduction u/s.80P - Held that:- As in Shri Mahavir Nagari Sahakari Pat Sanstha Ltd. Vs. DCIT [2000 (2) TMI 234 - ITAT PUNE] as held that cash credits on account of various deposits in benami/bogus names, even if, taxed, would be considered as income of the same business, i.e. providing credit facilities to its members and accordingly would be entitled to deduction u/s.80P of the Act. Following the same proposition as laid down by the Pune Bench of the Tribunal in various cases we hold that the assessee is entitled to claim deduction u/s.80P of the Act on the aforesaid addition made under section 68 of the Act even if certain errors were found in the explanation of the assessee. Accordingly we uphold the order of the CIT(A) and dismiss the grounds of appeal raised by the revenue.
-
2017 (2) TMI 1111
Penalty under Section 158BFA(2) - income which was not undisclosed income but was determined on the basis of estimation on the application of Weight Formula on gross credits in various bank statements considered as turnover - Held that:- HC order confirmed [2015 (3) TMI 409 - DELHI HIGH COURT]. Assessee’s argument that there was no fresh material since the entire amount was disclosed earlier and that amount has not been varied, in our opinion, is not accurate. The determination in the course of block assessment order was based upon a material discovered, i.e. in the form of statement made by the assessee under Section 132(4) of the Act; that radically changed the character of the income originally declared. Consequently, the estimation directed by the ITAT was accepted by the assessee. In view of the above circumstances, this Court is of the opinion that the question of law urged has to be answered against the assessee - Decided in favour of the Revenue.
-
2017 (2) TMI 1110
Local authority within the meaning of Section 10(20A) - whether Vidarbh Irrigation Department Corporation is a local authority ? - Held that:- Section 10(20A) of the Act stipulates certain kinds of income which are not to be included in total income. This provision came for interpretation before this Court in the case of Gujarat Industrial Development Corporation and others v. Commissioner of Income-tax [1997 (8) TMI 3 - SUPREME Court] . We find that the High Court in the impugned judgment has referred to the aforesaid judgment and observed that since the Income Tax Appellate Tribunal did not consider the issue in the light of the provisions of the Vidarbha Irrigation Development Corporation Act,1997, under which the respondent-assessee has been constituted, as well as the provisions of Maharashtra Irrigation Act,1976 and Bombay Canal Rules,1934, the High Court has remanded the case back to the Tribunal for fresh consideration. We do not understand as to why the Income Tax Department has preferred the instant appeal against the aforesaid judgment of the High Court where the issue has only been remanded to the Tribunal for fresh consideration. In these circumstances, we are not inclined to interfere with the impugned judgment and dismiss this appeal.
-
2017 (2) TMI 1109
TDS u/s 194I - non-payment of TDS required to be deducted from the payments of lease rent/interest/other payments for acquisition of a plot of land on 90 years lease from GNOIDA - entitled to the benefit of Section 10 (20) - Held that:-Industrial townships per se need not be statutory bodies; they can be private entities as well. Jamshedpur in Bihar with a population of a million plus, is maintained by the Jamshedpur Utilities and Services Company Ltd, a private entity. It provides all the essential municipal services; yet the city has no “official” or statutory municipal corporation. Therefore, whenever the nature and characteristics of the services provided by an entity or corporation- irrespective of statutory grant by the state (or lack of profit motive, or even that it has attributes or trappings of state or its power), are such that it is essentially or mainly an industrial township, and its governing structure is not “self-governing”, the power under Article 243Q is exercised. GNOIDA cannot obviously challenge that exercise of power. It follows, therefore, that it is not a municipality. Therefore, its contentions that it is a municipality and entitled to the benefit of Section 10 (20) are without merit. The court is of opinion that clearly these payments are not “rent”. That they are annual payments cannot be doubted. Yet, part of the payment is clearly capital in nature. Clause 1 of the lease deeds entered into in each of the cases, clearly points to the fact that a small percentage of the agreed amounts were paid as part of the lease premium and were towards acquisition of the asset; they fell, consequently in the capital stream and were not “rents”. The balance of such premium payments were spread over a period of 8 to 10 years, in specified annual or bi-annual installments. Here, distinction between a single payment made at the time of the settlement of the demised property and recurring payments made during the period of its enjoyment by the lessee is to be made. This distinction is clearly recognized in Section 105 of the Transfer of Property Act, which defines both premium and rent. Such payments were held to constitute capital and not “rent” or advance rent, in Durga Das Khanna v CIT [1969 (1) TMI 1 - SUPREME Court ] This view is also reinforced by the Income Tax Circular No. 35/2016 dated 13 October, 2016 issued by the Central Board of Direct Taxes (CBDT) which clarified that “lump sum lease payments or one time lease charges, which are not adjustable against long term lease hold charges, which are not adjustable against periodic rent, paid or paid or payable for acquisition of long term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of Section 194-I of the Act Interest on overdue payments or other such amounts are concerned, however, they cannot be called “capital” payments. In the present case, the court holds that since the GNOIDA insisted that its payments not be subjected to TDS, it should ensure that the appropriate amounts are credited, or credit to the extent applicable, is given to the Petitioner/ lessees. A direction to that effect is given to the second respondent, GNOIDA to ensure compliance; the Revenue is consequently directed not to pursue coercive and penal proceedings against the petitioners under Section 201/221 of the Income Tax Act. Whether GNOIDA is an institution of the kind covered by Section 194A (3) (f)? - Held that:- Amounts which are payable towards interest on the payment of lump sum lease premium, in terms of the Lease which are covered by Section 194A are covered by the exemption under Section 194A (3) (f) and therefore, not subjected to TDS - any payment of interest accrued in favour of GNOIDA by any petitioner who is a bank – to the GNOIDA, towards fixed deposits, are also exempt from TDS.
-
Customs
-
2017 (2) TMI 1135
Classification of imported goods - LCD Panels for CTV - classified under CTH 9013 80 10 or under Chapter SH 8529? - Held that: - this Tribunal in the case of appellant, M/s Samsung India Electronics Pvt Ltd, M/s Moser Baer India Ltd Versus Commissioner of Customs, Noida [2015 (10) TMI 2258 - CESTAT NEW DELHI] have decided the classification of impugned LCD Panels to be under Tariff Item No. 9013 80 10 of Customs Tariff Act, 1975 - appeal allowed - decided in favor of appellants.
-
2017 (2) TMI 1134
Refund claim - unjust enrichment - nexus between the import price and the purchase order price negotiated with the Department of Telecommunication/ MTNL - excess payment of customs duty because of wrongly invoiced consignments from the supplier - Held that: - the assessments were made provisionally subject to SVB clearance of the invoice values at which the appellant has undertaken imports from their principals. In fact, it is further on record that the refund claim originally filed by the appellant on 21.4.1997 was returned to them by the departmental officers with the direction to re-file it after the finalisation of the provisional assessments. In any case, it is settled law that once an assessment is provisional, it is provisional for all purposes and not necessarily provisional in respect of the particular ground considered as has been held by the Hon’ble High Court of Madras in the case of Collector Central Excise vs. India Tyre & Rubber Co. Ltd. [1997 (1) TMI 100 - HIGH COURT OF JUDICATURE AT MADRAS] - Refund allowed. However, the CVD component of the excess duty is to be deducted from the total refund claim since the same has already been availed as CENVAT credit by the appellant in their manufacturing process - appeal allowed - decided partly in favor of appellant.
-
Corporate Laws
-
2017 (2) TMI 1131
Scheme of Demerger allowed - Board of Directors of Applicant Company-I, Applicant Company-IV and the Applicant Company-V in their separate meetings held on 28.07.2016; and the Board of Directors Applicant Company-II and Applicant Company-III in their separate meetings held on 27.07.2016, have approved the proposed scheme. Rest all the requirement of convening the meetings accordingly convened.
-
2017 (2) TMI 1130
Scheme of Amalgamation - Held that:- Considering the approval accorded by the shareholders of the Transferor Company and shareholders, secured and unsecured creditors of the Transferee Company to the proposed scheme; the affidavit filed by the Regional Director, Northern Region and the report filed by the Official Liquidator, not raising any objection to the proposed scheme, there appears to be no impediment to the grant of sanction to the proposed scheme. Consequently, sanction is hereby granted to the proposed scheme under the provisions of the Act. The Petitioner Companies shall comply with all the statutory requirements in accordance with law. A certified copy of this order, sanctioning the proposed scheme, be filed with the ROC, within thirty (30) days of its receipt.
-
Service Tax
-
2017 (2) TMI 1153
Refund claim - N/N. 41/2007-S.T., dated 6-10-2007 - CHA services - denial on the ground that CHA has not produced his licence to show that he was acting as Customs House Agent and as such the services rendered by him cannot be considered to be Customs House Agent Services - Held that: - the Service Tax stands admittedly deposited by the said service provider under the CHA services and no objection was raised by the Revenue at that particular point of time. The fact that he is a member of the Bombay Customs House Agents’ Association is also not being disputed by the Revenue. In such a scenario, the refund of Service Tax paid on the services received from the CHA cannot be denied - appeal dismissed - decided against Revenue.
-
2017 (2) TMI 1152
Whether the sponsorship of the Indian Premier League would amount to the sponsorship of a sporting event for the period under dispute? - Held that: - the said services get classified under the definition of sponsorship services on a finding that appellant is paying an amount to BCCI for being sponsorer of a team - It is a case of the appellant that Indian Premier League is sports event, hence not taxable under sponsorship services. Whether the service tax amount received by the appellant from their other branches has been deposited by the appellant with the Government or otherwise? - Held that: - the said provision will apply only in respect of the collection of any amount from the recipient of the taxable services, in excess of the service tax assessed or determined and paid. It is undisputed in the case in hand that appellant had discharged the correct amount of service tax from place where they were supposed to discharge the service tax liability. Collection or otherwise of the service tax from their own circles cannot be equated to collection of service tax in excess of the amount paid or determined. Appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1151
Liability of tax - who is the person liable for payment of service tax for the services rendered by PWCDA, London to KPTCL? - whether the appellants office in India can be considered as the local address of the appellants subsidiary in London? - Held that: - Since PWCDA London is a non-resident service provider, in terms of the CBEC circular, the service receiver in India is liable to pay service tax. Since the appellant is not the service receiver, liability for service tax payment cannot be enforced on them. The position does not change because of the fact that the appellant was earlier discharging such service tax liability as per the authorisation given in their favor by the subsidiary company upto its withdrawal on 27.10.2003 - demand of service tax made on the appellant is without justification. The demand has also arisen on account of the inability on the part of the appellant at the time of investigation to produce the original documents such as invoices and TR 6 challans evidencing the payment of service tax. The appellant has submitted that there are now in a position to submit the original documents for verification. Since the learned DR has also no objection, we remand the matter to the original adjudicating authority for verification of the original documents. Appeal allowed in part and part matter on remand.
-
2017 (2) TMI 1150
Refund claim - Rule 5 of the CCR, 2004 - rejection on the ground that the output service i.e. IT service was made liable for payment of service tax only with effect from 16.5.2008, whereas the refund claims are pertaining to the period prior to 16.5.2008 - time limitation - Held that: - appellant cannot be denied the refund of accumulated CENVAT credit only on the ground that software services were made liable to payment of service tax only w.e.f 16.5.2008. Time limitation - Held that: - refund claims should be considered as filed within time as long as they have been filed within the period of one year from the date of receipt of the consideration for the services exported. Matter on remand to decide that the nexus between the input services with the service exported as well as verification whether the claims have been filed within the period of one year from the date of receipt of consideration - appeal allowed by way of remand.
-
2017 (2) TMI 1149
Business auxiliary services - Appellant had accrued certain benefits under foreign trade policy under the target plus scheme during the relevant period which entitled the appellant to transfer the sale benefits to any other entity by mentioning their name on the documents like invoice and shipping bills. It is the case of Revenue that appellant having received 1% of FOB value from Adani Exports Ltd, the said amount is liable to be taxed under business auxiliary services under the category of production or processing of goods on behalf of client. Held that: - Revenue wants to include the amount received by appellant under the category of production or processing of goods for or on behalf of client which we find incorrect and unsustainable, for the simple reason that there is nothing on record to show that Adani Exports Ltd., is getting the diamond jewellery manufactured by appellant; nor there is any agreement brought on record to show that Adani Exports Ltd., had in fact placed an order with the appellant for manufacturing and export of diamond jewellery. In the absence of any such evidence to indicate that Adani Exports Ltd., had availed the services of appellant for production or processing of goods, we find that the impugned order holding that appellant is producing or processing of goods on behalf of Adani Exports Ltd., is unsustainable. The appellant herein themselves cannot claim the commission for the activity undertaken by them. Appeal allowed - decided in favor of appellants.
-
2017 (2) TMI 1148
Classification of service - Business auxiliary services - use of electronic device to provide the service - Held that: - activity of Billing in the process of sale of goods produced or provided by or belonging to the client would be covered in the clause (vii) of the Section 65(19) as business auxiliary service . Clause (i) read with clause (vii) includes in its ambit the activity of billing - In the instant case the activity of the appellant is clearly that of generating bills for MSEDCL and is squarely covered in the definition of business auxiliary service clause (vii) as billing - the prime purpose of the activity is to generate bills and it is only incidental that electronic programmable devices are used for this purpose. The use of this device cannot change the nature of the services - the service provided by the appellant falls under the category of business auxiliary service and not information technology service or business support service. Extended period of limitation - Held that: - Recording of a statement during the investigation cannot be considered as disclosure of information. The appellants were engaged in providing the service much before the recording of statement and they had not voluntarily come forward to pay service tax on the service or to disclose the full details to the Revenue - extended period rightly invoked. Benefit of N/N. 12/2003-ST and/or exclusion of the cost of material used during the provision of service - Held that: - To avail the notification they have to prove that they had sold the goods during the provision of service to the client and produce necessary evidence like payment of VAT to establish the same. Abatement of the value of the goods and material consumed - pure agent or not - Rule 5(2) of the Service Tax (Determination of Value of Taxable Services) Rules, 2006 - Held that: - as the appellants are service providers to MSDECL and service tax is payable on the value recovered by the appellants from the service receiver. The claim of deduction, if any, has to be supported by N/N. 12/2003-ST or the Service Tax (Determination of Value of Taxable Services) Rules, 2006. It is seen that the appellants do not qualify for any such deduction. Appeal dismissed - decided against appellant.
-
Central Excise
-
2017 (2) TMI 1147
Classification of goods - carpet - classified under sub heading 5703.90 of the First Schedule to the Central Excise Tariff Act, 1985 or under sub heading 5703.20? - Held that: - on going through the sub heading sub heading 5703.90 note 2(B) (ii) of Section XI of the Central Excise Act, 1985 wherein the textile products consisting of a ground fabric and a pile or looped surface no account shall be taken of the ground fabrics in the description of the goods or in the process of manufacture - the goods in question do not consist of a ground fabric and a pile or looped surface which is essential condition to specify the product in the sub heading note 2(B) of Section XI of the CEA, 1985. In the absence of such evidence sub heading note 2 (B) Section XI of the CEA, 1985 is not applicable to the facts of this case - appeal dismissed - decided against Revenue.
-
2017 (2) TMI 1146
Imposition of penalty u/r 25 - the appellant has defaulted in payment of duty liability - Held that: - the appellant is defaulted in the making the payment of duty in time two times i.e. June 2003 and October, 2003. For the default of June 2003, the appellant paid duty along with interest but for October, 2003, the appellant paid the duty on pointing out by the Department. But no penalty has been imposed on the appellant for the default for the period October, 2003. In this circumstances, the appellant is on better footing for the default of June, 2003 by passing duty along with interest. Further in the show cause notice, there is no allegation against the appellant that they have not paid the duty for the month of June, 2003 by way of fraud, collusion, wilful misstatement, suppression of facts or within an intent to evade payment of duty - penalty set aside - appeal allowed - decided in favor of assessee.
-
2017 (2) TMI 1145
Benefit of N/N. 214/86 dated 25.03.86 - denial on the ground that the sister concern has taken benefit of N/N. 49-50/2003 dated 10.06.2003 - Held that: - As per CCR, 2004, when the assessee manufacturing dutiable goods, the assessee is entitled for benefit of input used in manufacturing of dutiable goods - as the respondent is paying duty in their final product, the respondent is entitled to take cenvat credit on inputs used in manufacturing of their final product. Penalty u/s 11AC - Held that: - there is no allegation that the respondent was having mala-fide intention not to pay duty, as per provisions of Section 11AC of the Act. As contents of the Section 11AC are missing, therefore, the Ld. Commissioner (A) has rightly dropped the penalty against the respondent. Appeal dismissed - decided against Revenue.
-
2017 (2) TMI 1144
Jurisdiction - whether the appeals pertaining to payment of drawback as provided in Chapter - X of the Customs Act, 1962 and the rules made thereunder including those for condonation of delay in submitting brand rate applications are maintainable before the Appellate Tribunal under the Central Excise Act, 1944? - In view of the differing decisions of the Tribunal in entertaining the appeals pertaining to drawback matters, the issue is placed before Hon’ble President for referring it to the Larger Bench to decide the issue - matter on remand.
-
2017 (2) TMI 1143
Valuation - related party transaction - Held that: - the respondents were not clearing their entire production to the Gear Division of their own Company or to their sister concern M/s Sadhu Overseas - the respondents were also selling the goods (more than 65% their production) to independent buyers such as M/s Maruti Udyog Ltd. etc. In this background, we find that the Commissioner (Appeals) has correctly applied the decision of the Larger Bench of the Hon’ble Tribunal in the case of M/s Ispat Industries Vs. CCE, Raigad [2007 (2) TMI 5 - CESTAT, MUMBAI], wherein the Hon’ble Tribunal held that The provision of rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of rule 4 will lead to a determination of value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944 - appeal dismissed - decided against Revenue.
-
2017 (2) TMI 1142
Time limitation - area based exemption - for the period March, 2010 to October, 2011, the show cause notice has been issued by invoking extended period of limitation i.e. on 30.11.2012 - whether the facts and circumstances of the case, the extended period of limitation is invokable or not? - Held that: - The declaration given by the assessee were examined and the Range Superintendent held that the appellant is entitled for exemption under N/N. 50/2003 ibid. In that circumstances, it cannot be said that the appellant has suppressed the fact of manufacturing of Red Oxide from the department. Therefore, the change of suppression of facts is not sustainable against the appellant - the SCN is not maintainable which has been issued by invoking extended period of limitation - appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1141
Refund - appellant filed a refund claim on excise duty paid during the period 01.01.2009 to 11.01.2009 on the ground, they had commenced the production only on 12.01.2009 - capacity based duty paid on Pan Masala Packing Rules, 2008 - Held that: - The similar issue came in the Hon’ble High Court of Punjab & Haryana in the case of Godwin Steels (P) Ltd. Vs. CCE, Chandigarh [2010 (5) TMI 322 - PUNJAB & HARYANA HIGH COURT], where it was held that Factory started production from middle of the month, therefore, it was wholly unjust for the department to recover the duty for the whole month - as no production was started till 12.01.2009, therefore, appellant is entitle for refund of duty for the period 01.01.2009 to 11.01.2009 paid by them - appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1140
Reversal of CENVAT credit - whether appellant is required to reverse Cenvat Credit on inputs in a situation where at the time availing Cenvat Credit, the final product is dutiable but on later stage, the final product become exempted or not? - Held that: - The said issue came up before Hon’ble High Court of Punjab & Haryana in the case of CCE, Panchkula Vs. HMT (TD) [2010 (4) TMI 1036 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that at the time of availment of Cenvat Credit on inputs, the final product is dutiable, later on the final product became exempt, in such a situation, Cenvat Credit is not required to be reversed - the appellant is entitled for refund claim - appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1139
Shortage of goods - demand - CENVAT credit on raw material found short - duty on finished goods found short - penalty - the finished goods manufactured on a particular day was not entered in RG-1 even after same were loaded in the tankers meant for clearances for such goods - Held that: - there is shortage of inputs and during the process there are some process losses to the tune of 0.5% to 0.9%. This Tribunal in appellants own case CASTROL INDIA LTD. Versus COMMISSIONER OF C. EX [2007 (10) TMI 91 - CESTAT, MUMBAI] allowed the process loss up to the 0.5% and appellant has also intimated to the department with regard to the processes loss in 1999 itself - the duty has been paid on losses beyond permissible limits. In that circumstances, it cannot be alleged that the appellant has availed excess Cenvat credit with intent to evade payment of duty - appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1138
Clandestine removal - no panchnama was drawn while physical verification of the stock - Held that: - As panchnama is the prime document to record the stock verification and the same has not been drawn in the case. Therefore, it is doubted that whether any physical verification of stock done or not. In the absence of the panchnama, adverse inference cannot be drawn against the respondent - further, the computer prints have been relied upon to alleged clandestinal removal of goods but no procedure prescribed u/r 36 (B) CEA, 1944 has been followed. Therefore, the computer prints out are not reliable documents - the charge of the clandestinal removal of goods is not sustainable - appeal dismissed - decided against Revenue.
-
2017 (2) TMI 1137
Refund claim - unjust enrichment - Held that: - as appellant has been able to prove that buyer of the goods has issued certificate, they have not availed excess duty on the appellant. In that circumstances, on the strength of credit notes, the appellant is entitled for refund claim - appeal allowed - decided in favor of appellant.
-
2017 (2) TMI 1136
Reversal of CENVAT credit - Rule 3(5) of the CCR, 2004 - clearance of inputs as such - interest - penalty - Held that: - on realisation that the appellant has wrongly availed the credit of SAD has reversed the same. Later on, the SCN was issued. In that circumstances, mala-fide intention of the appellants are missing, therefore, no penalty is imposable on the appellant. Interest - Held that: - The fact that whether the appellant was having sufficient balance in their cenvat credit account or not is to be verified by the adjudicating authority, therefore, the matter is remanded back to the adjudicating authority to verify the fact that during the impugned period the appellant was maintaining sufficient balance in their cenvat credit account. If there was sufficient balance in their cenvat credit account, the demand of interest is not sustainable. Appeal allowed by way of remand.
-
CST, VAT & Sales Tax
-
2017 (2) TMI 1133
Release of C and F Forms - whether Section 43 of PVAT is confined to issuance of statutory and declaration forms under the PVAT, as contended by the petitioner or, would it extend to C and F Forms, which are, admittedly, issued under the CST Act and/or the Rules framed thereunder - Held that: - The respondents will treat the present Writ Petition as a representation and, accordingly, pass orders qua the request of the petitioner, for issuance of C and F Forms - appeal disposed off - matter on remand.
-
2017 (2) TMI 1132
Interpretation of statute - Section 9(2)(g) of of DVAT Act - The input credit claims were disallowed by the VATO with the rationale that the firm’s registrations had been cancelled and default assessment of tax and interest under Section 32 of the Act were completed - Held that: - The proviso creates an exception where tax is deferred or deferrable under any Package Scheme of Incentives implemented by the State Government. In that event a deeming fiction is created by the proviso under which the tax is deemed to have been received in the Government treasury for the purposes of the subsection. In all other cases, an actual deposit of taxes is mandated before a set off is allowed” - In the present case, the VAT Act is silent; Section 9(2) (g) was introduced only with effect from 1-4-2010 - Section 9(1) which grants input credit to purchasing dealers to an extent is controlled by Section 9(2) that lists specific situations where benefit can be denied - appeal dismissed - decided against Revenue.
|
