TMI Tax Updates - e-Newsletter
March 12, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Set-off of loss sustained in business against betting and gambling income - It is not the case of the assessee that the income being brought to tax is earned from owning and maintaining the horses. - the provisions of Section 58(4) of the Act will not come into play - HC
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Income Tax:
Penalty u/s 271B - Filing of audit report is not mandatory and it is directory - The retention of seized/impounded books of accounts and documents is evidenced - delay was not intentional - penalty waived - HC
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Income Tax:
No infirmity in the order of AO in treating the entire loan processing fee paid for obtaining loan from bank being capital in nature. The assessee however, would be entitled to claim depreciation by capitalizing this figure with the cost of asset acquired by it - AT
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Income Tax:
Deduction u/s.80-IA - There is no occasion or need for the set off of unabsorbed deprecation against income assessable under other heads of income, i.e., under Chapters IV-C and IV-F, as the assessee claims or does. - AT
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Income Tax:
TDS u/s 194-I - payment is for non-use of the property for the pre-contracted period - it would be inappropriate to characterize the payment made for the use of property so as to fall within the meaning of expression “rent” u/s 194-I - AT
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Income Tax:
Unexplained credits received - The assessee during the section 153 proceedings before the AO could not produce any documents to substantiate the receipts on account of FDR receipts in her capital account - addition confirmed - AT
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Income Tax:
Depreciation on intangible asset disallowed - Customer Base, Material Suppliers, Technical Manpower,Technology and Patents - AO directed to allow depreciation on the WDV of intangible assets acquired - AT
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Income Tax:
Assessment framed in consequence of the legally void notice u/s. 158BC r.w.s. 144 of the Income-tax Act vide order dated 22-08- 2002 is bad in law - assessment cancelled - AT
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Corporate Law:
Loans and/or advances made by the companies to their employees, other than the managing or whole time directors (which is governed by section 185) are not governed by the requirements of section 186 of the Companies Act,2013
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Service Tax:
Cenvat Credit - input services - outdoor catering services - Rule 2(l) of the Cenvat Credit Rules, 2004 - credit allowed - HC
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Service Tax:
Cenvat Credit - Refund under Rule 5 - Method for calculation of relevant date - the relevant date should be the date on which the consideration has been received where the claimant is service provider and consideration paid where the claimant is service receiver. - AT
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VAT:
If the sale was within the State of Maharashtra, then, the Assessee firm was liable to pay tax within it because it procured or obtained the goods from outside Maharashtra. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (3) TMI 345
Validity of assessment u/s 153C - Held that:- It is palpable that the AO of Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., did not record any satisfaction that some money, bullion, jewellery or books of accounts or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, failed to confer any valid and lawful jurisdiction on the AO of the assessee to proceed with the matter of the assessment u/s 153C of the Act. We, ergo, set aside the initiation and the ensuing assessment on the assessee as void ab initio. The reliance of the ld. DR on some decisions on other legal issues or merits is of no consequence in view of the lack of jurisdiction of the AO to proceed with the assessments u/s 153C of the Act. - Decided in favour of assessee.
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2015 (3) TMI 323
Set-off of loss sustained in business against betting and gambling income - whether only the net income is to be taxed u/s 115BB? - assessee is a breeder and owner of race horses - Held that:- This Court is not inclined to accept the view as propounded by the Tribunal and the Commissioner (Appeals), as Section 115BB of the Act is a standalone special provision, which makes it clear that income of an assessee, not being income from activity of owning and maintaining race horses, would fall under Section 115BB of the Act. In view of the specific provision contained in Section 115BB of the Act under Chapter XII of the Act, which provides for determination of tax in certain special cases, the special rate of tax is applicable for the entire income of winnings from horse racing and should be subject to tax at the special rate provided therein. It is not the case of the assessee that the income being brought to tax is earned from owning and maintaining the horses. Therefore, in our considered opinion, the provisions of Section 58(4) of the Act will not come into play. We are, therefore, of the considered view that the total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal holding that the loss sustained in business can be set off against betting and gambling income and only the net income is to be taxed u/s 115BB, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. Accordingly, the order passed by the Tribunal is set aside. - Decision of the assessee in its own case [2015 (1) TMI 439 - MADRAS HIGH COURT] followed - Decided in favour of assessee.
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2015 (3) TMI 322
Loss in non-performance of the contract and expenditure on increase in forward cover for foreign exchange of a new joint venture which did not materialise - revenue expenditure or capital expenditure - Tribunal considered the expenditure of revenue nature - Held that:- In the case on hand, a careful reading of the order of the Tribunal and the facts as narrated it is clear that there is absolutely no justification for the Department to hold that there was a new line of business on which there occurred a loss. The parameters enunciated in the decision in Suhrid Geigy Ltd. Case (1995 (12) TMI 25 - GUJARAT High Court) is squarely attracted to the facts of the present case, justifying the loss of the assessee as a business loss, as admittedly, the assessee is in the business of marketing bulk drugs, formulations, etc., and one of its ventures has ended in a loss and that loss is attributable to business and it cannot be deemed to be a new enterprise and a capital expenditure. - Decided in favour of the assessee/respondent.
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2015 (3) TMI 321
Penalty under Section 271B - no reasonable cause for delayed filing of the audit report - Held that:- In the case on hand, the assessee filed return of income on 27.3.1990 and the audit report was obtained on 27.4.1990 and submitted during the course of the assessment proceedings. The reason given by the assessee for the delay in submitting the audit report was that the books were impounded on 29.12.1989. The retention of seized/impounded books of accounts and documents is evidenced by the letter dated 29.12.1989 issued by the Assistant Commissioner of Income Tax, Central Circle II-(3), Chennai. Therefore, it is evident that the delay was not intentional, but due to circumstances beyond the control of the assessee Filing of audit report is not mandatory and it is directory. Moreover, the explanation offered by the assessee for the delay satisfies the reasonable cause to be shown by the assessee. - Decided in favour of the assessee.
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2015 (3) TMI 320
Godown/Ware Houses rents received - business income OR income from house property - Held that:- Findings of fact arrived at by the Tribunal is not in dispute. The decision of Commissioner of Income Tax V. Indian Warehousing Industries Ltd. [2002 (9) TMI 90 - MADRAS High Court] and Chennai properties and Investments Ltd. (2003 (3) TMI 28 - MADRAS High Court) are distinguishable on facts. In those cases, the receipts itself are rental receipts. Whereas, in the present case, the assessee itself had retained the possession and there is no fiduciary relationship of landlord and tenant. The Tribunal, by going into the individual aspects of the business to correctly come to the conclusion that it is a case of warehousing business and, therefore, would fall only under the head 'Business Income'. - Decided in favour of the assessee
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2015 (3) TMI 319
Disallowance on account of depreciation - transfer of assets was a “scheme of demerger” duly approved by the Hon’ble High Court of Delhi - whether provisions of Explanation 3 to section 43(1) of the I.T. Act were explicitly applicable in the assessee’s case? - AR’s objection that the AO had not determined the actual cost of the assets as laid down in Explanation 3 to sec. 43(1) - Held that:- AO was very reasonable in adopting WDV as actual cost and his action was supported by the judgments of various Hon’ble Courts. As regards, the submission of ld. Counsel that raising of loans of ₹ 165 crores on the assets is reflective of their value, ld. DR submitted that banks have not analyzed the issue of actual cost of the assets as per the specific provisions of the Income-tax Act. Even the CIT(A) has given findings of the order that ‘arrangement of fund and furnishing security thereof to the lending bank do not fortify the case of the appellant for the purpose of applicability of Explanation 3 of sec. 43(1) of the Act’. The approval granted by the Hon’ble Delhi High Court had persuasive value for deciding the actual cost of assets to the assessee. It could not be ignored particularly because Hon’ble Court expressly considers the bonafide of the entire scheme. However, this is not binding on Income-tax Authorities while considering the actual cost as contemplated in Explanation 3 to section 43(1).The assessee company was set up to spearhead the power sector initiatives of the Avantha Power & Infrastructure Group. The objective of demerger of the power asset of Ballarpur Industries Ltd. was to create platform, wherein the company could undertake larger power projects. The company’s plans were to expand their generation capacity and development efforts in order to capitalize on the prevailing and foreceable future and meet balance deficit between electricity demand and supply in India.The AO has not disputed the objective with which assessee had made this arrangement. The main/primary objective of assessee is relevant for purposes of Explanation 3. If the primary objective was not tax reduction. The Explanation 3 could not be invoked. Companies Act prescribes normally such rates which may ensure the achievement of aforementioned objective. However, under the Income Tax Act such rates are prescribed which ensure that assessee recovers its capital cost in shortest possible of time. Therefore, the rates of depreciation prescribed under Companies Act are more realistic. Under the Companies Act the object is that the company’s assets should continue in the books upto their entire life span. Be that as it may, since two WDV’s were available before the AO for determining the actual cost, he could not have ignored the WDV as per the books of the company the adoption of which was more beneficial to company. Admittedly, there is very minor difference (235 - 214.16) crores in the valuation of assets as per books of BILT and the actual consideration paid by the assessee company. Therefore, this aspect clearly establishes the bonafide of assessee in adopting the actual cost of assets at ₹ 235 crores. We, therefore, do not find any reason to disturb the findings of ld. CIT(A). - Decided in favour of assessee. Allowability of loan processing fees - Held that:- The effective date as per the decision of Hon’ble High Court sanctioning the scheme of demerger was 01/04/06 and the assessee company had acquired the running plant of Ballarpur Industries Ltd. and the loan was taken in July, 2006. However, this loan was for paying the purchase price of assets acquired by the assessee and, therefore, the AO has rightly observed that the incidence of expenditure occurred prior to obtaining assets. Here we have to examine the nature of payment with reference to the assessee company which has acquired the power business of Ballarpur Industries Ltd. Since, the entire amount of loan had been obtained for acquiring the asset, therefore, all the expenses incidental to the acquisition of loan have to be treated as capital in nature. Merely because assessee had acquired going concern will not alter the nature of payment in the hands of the assessee. The intention of the legislature is that all the expenses incurred up to the date of acquisition of asset have to be treated as capital in nature. We, therefore, do not find any infirmity in the order of AO in treating the entire loan processing fee paid for obtaining loan from bank being capital in nature. The assessee however, would be entitled to claim depreciation by capitalizing this figure with the cost of asset acquired by it. - Decided against assessee.
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2015 (3) TMI 318
Disallowance of payments made to John Deere India Pvt. Ltd - Held that:- The nature of expenditure pertained to the year under consideration of "technical consultancy fees" was made in accordance of an agreement dated 31-03-2000 which was signed by one MD of John Deere India Pvt. Ltd. On the other hand; from the side of the assessee it was signed by one Deputy CHO. The said agreement had provided as per the terms for reimbursement of monthly salary and that it was revenue in nature deserves to be affirmed. Issue stands covered in favour of the assessee by the decision of the Hon'ble ITAT, Pune in the assessee’s own case in preceding year i.e. A.Y. 2001-02 - Decided against revenue. Disallowance of Software maintenance and other system expenditure - Held that:- Identical addition made by the Assessing Officer in the preceding years i.e. A. Yrs. 2002-03 to 2004- 05 by holding that the said expenditure is in the nature of capital expenditure and could not be allowed as a revenue expenditure was deleted by CIT(A) and confirmed by the Tribunal. - Decided against revenue. Sale tax / purchase tax subsidy received by the assessee from SICOM - whether a revenue receipt on the ground that the subsidy given was for increasing the profitability of the assessee? - Held that:- We have considered the “1979 Package Scheme of Incentives” and as well as Package Scheme of 1993 introduced by the Govt. of Maharashtra. As rightly argued by the Ld. AR the object and purpose for which the incentive by way of sales tax subsidy is given are the identical in both the Incentive Schemes. It is true that in the preceding years the Tribunal has set aside the issue to the file of the Assessing Officer for the fresh adjudication but in our opinion as the issue has been settled by the jurisdictional High Court on the identical subsidy, we do not consider it necessary to again set aside the issue to the file of the Assessing Officer and to create the complexity of the litigation. We, therefore, following the decision of the Reliance Industries Ltd. (2003 (10) TMI 255 - ITAT BOMBAY-J ) hold that the sales tax subsidy availed in “Package Scheme of Incentives 1993” is a capital receipt and cannot be taxed as a revenue receipt in the hands of the assessee - Decided against revenue. Transfer pricing adjustment - selection of comparable - rejection of the TNMM method adopted by the assessee and substituting the said method with CUP by the TPO/DRP - Held that:- Admittedly, for all those assessment years starting from 2004-05 onwards and also for the A.Y. 2008-09 the Assessing Officer has accepted the TNMM method as a most appropriate method for determining the ALP in respect of the sale of tractors by the assessee to the AEs.Though the TPO/DRP has gone on discussing the provisions of law but have conveniently ignored to put of record how the facts of the current year are different from the fact in A.Ys. 2004-05 and 2005-06 as in those years the TNMM was adopted by the assesse for determining the ALP which has been accepted as a most appropriate method by the TPO without any objection or reservation. There is no dispute on the proposition that the doctrine of the res judicata is not applicable to tax proceedings but at the same time if there is no change of the facts in respect of the a particular issue and the Revenue has a particular approach or method to determine the taxability then there must be consistency and this view is expressed by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (1991 (11) TMI 2 - SUPREME Court). - Decided in favour of assessee. ALP adjustment made by the Assessing Officer - Held that:- Out of the 8 companies selected as a comparable in this year i.e. A.Y. 2006-07, 7 companies were also selected in A.Y. 2005- 06 and only KAMCL is added as a new comparable companies in this year. On perusal of the data in our opinion KAMCL cannot be considered as a comparable in the A.Y. 2006-07 as said company is not admittedly in the business of manufacturing tractors. But in respect of the remaining 7 companies as per the data placed before us, all those companies are in the line of same business i.e. tractor manufacturing. If we put the remaining 7 companies selected by the assessee. he average operating margin of 7 companies is at 5.71% as against 11.17% of the export segment of the assessee company. It is also seen that the assessee has share in the sale of tractors in domestic market also. We, accordingly, hold that the transaction of export of tractors to its AEs is at ALP within the settle parameters. - Decided in favour of assessee.
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2015 (3) TMI 317
Deduction under section 80P(2)(a)(i) denied - as per AO assessee has admitted nominal Members in violation of A.P. Cooperative Societies Act /Rules, 1964 as amended on 28.01.2002 Held that:- As far as the so-called violations of the provisions of A.P. Cooperative Societies Act, 1964 are concerned, this ground does not arise in the case of assessee as it is not registered under the said Act, but under APAMACS 1995. There is a finding by Ld. CIT(A) that assessee was registered under the said Act vide the Registration granted on 19.11.1997 by the Registrar of A.P. Mutually Aided Cooperative Societies. Therefore, analysing assessee’s activities and determining the so-called violations by the A.O. is misdirected. The issue of transactions with nominal Members or non-Members is not an issue as the assessee has clearly claimed deduction under section 80P only to the extent of transactions with its Members. Since the transactions are inter-linked, assessee has proportionately claimed deduction under section 80P(a)(i) by taking the transactions with the Members and the gross receipts. Ld. CIT(A) also examined this aspect on factual basis and excluded certain other incomes also. Therefore, on facts, the issue of violation of provisions of A.P. Cooperative Societies Act, 1964 does not arise at all. - Decided in favour of assessee. Activity of the assessee is not ‘banking activity’ among its Members but finance business of accepting deposits (surety bonds for accused) and investing them in FDs/advancing loans to Members - Held that:- In this case, as rightly pointed out by the Ld. CIT(A), assessee is not involved in business of banking and has only involved in providing credit facilities to the Members of the Society. Even though it has other objects, basically as per the assessee’s admission before the authorities, the receipts of interest is on the loans provided to the Members per se. Most of the deposits accepted are from Associate Members who are not generally given any loans as their deposits are for surety on the bonds given to the accused and these amounts received from such non-Members are deposited in other Cooperative Societies/ Cooperative Banks or Scheduled Banks. As can be seen from the order of the A.O. itself, he has identified the amounts of interest received from the Cooperative Societies/Cooperative Banks and deduction under section 80P(2)(d) was allowed. Ld. CIT(A) also corrected certain calculation errors in restricting deduction under section 80P(2)(d) - Decided in favour of assessee. Disallowance of mediclaim and insurance claim - Held that:- The receipts from the Members are separately considered for allowing proportionate deduction under section 80P(2)(a)(i). In case, this expenditure is not allowed, the income to that extent will go up from the income computed on the transactions with Members. The deduction under section 80P(2)(a)(i) also has to be proportionately increased. This is an academic view, but the fact is that the expenditure is an allowable expenditure, as it is spent for the benefit of the Members, in the course of society activities, as permitted by the bye-laws of the society. In view of this, we are of the opinion that the expenditure cannot be disallowed as personal in nature. Assessing Officer is directed to allow the amounts and compute the incomes accordingly on proportionate basis between the incomes on the transactions with Members and on transactions with Associated/Nominal Members and allow deduction under section 80P(a)(i) accordingly. - Decided in favour of assessee. Disallowance of doctor’s salary - Non deduction of tds - Held that:- Since the issue pertains to deduction of TDS on doctor’s salary to the tune of ₹ 1,40,910, in the absence of relevant details before us, whether the payment falls under TDS provisions or not has to be examined by the A.O. and therefore, we set aside this issue to the file of A.O. for fresh adjudication, after affording a reasonable opportunity of being heard to the assessee. However this expenditure is to be allowed as deduction as it was spent for the objects of society as revenue expenditure u/s 37(1), if not disallowable for violation of TDS provisions as contended by AO. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 316
Penalty u/s 158BFA(2) - undisclosed peak investment in business and undisclosed interest earned on pawing items given to others - Tribunal allowed part relief - Held that:- Since the addition was made on estimate basis, penalty u/s 158BFA(2) is not justified. - Decided in favour of assessee. Penalty u/s 271(1)(c) - Held that:- Undisputedly assessee has made a voluntary surrender during the course of search and returned additional income filed in response to notice under section 153A of the Act and accordingly the tax was also paid. Since the Revenue has not brought out a case to show that the surrender was made when the assessee was cornered by the queries raised by the Revenue authorities. Therefore, we are of the considered view that it was a voluntary surrender made by the assessee at the first instance, therefore, penalty under section 271(1)(c) of the Act should not be levied. We hold that penalty is not justified by following the Tribunal decision in assessee’s own case for assessment year 2003-04. - Decided in favour of assessee. Penalty 271(1) (c) - Held that:- For invoking explanation 5 to section 271(1) (c), it is essential that some tangible assets/documents must have been found which would reflect concealed income of the assessee and which have become basis for making addition of concealed income and if the addition is not made on such basis then explanation 5 cannot be invoked. In the present case also, the additional income declared by the assessee is not on the basis of any seized material and therefore, in our considered opinion, the present issue is squarely covered in favour of the assessee by this Tribunal decision in assessee’s own case. Respectfully following the same, we delete the penalty. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Held that:- When the assessee is not complying with the notice u/s 142(1) but assessment order was passed u/s 143(3) and not u/a 144, that meant that subsequent compliance in assessment proceedings was considered good compliance and non compliances earlier were ignored and therefore, levy of penalty u/s 271(1) (b) was not justified - Decided in favour of assessee. Disallowance of expenses on vehicle - Held that:- The assessee was having only one car and on this basis, he was of the opinion that the personal user cannot be ruled out and therefore, he made disallowance of 1/5th of the expenses. We find no infirmity in the order of the Assessing Officer and of CIT(A) on this issue. - Decided against the assessee. Addition made on account of application of provisions of 50C - Held that:- Find force in the submissions of Learned A.R. of the assessee that Assessing Officer should have referred the matter to D.V.O. and therefore, we set aside the order of CIT(A) and restore the issue to the file of Assessing Officer for fresh decision after referring the matter to D.V.O. for valuation of the property u/s 50C (2). - Decided in favour of assessee for statistical purposes. Penalty u/s 271(1)(c) - Held that:- The purpose of imposing penalty u/s 271(1)(c), it is essential that the concealment should be established beyond doubt. In the present case, the addition was made on the basis that the donor is not relative of the assessee but this does not amount to establishment of concealment of income beyond doubt. Hence, in our considered opinion, penalty is not justified. We, therefore, delete the penalty. - Decided in favour of assessee. Addition on enhancement of jobwork charges - Held that:- Addition was made by the Assessing Officer on the basis that there is possibility that the assessee has not issued cash memo in some cases. Before observing so, not even a single instance has been pointed out by the Assessing Officer of a cash memo not accounted for by the assessee. The CIT(A) has also confirmed this addition on this basis alone that the addition is only of 10% of the returned income. This is no basis for confirming an arbitrary addition. Hence, we delete this addition. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Held that:- This is not disputed by Learned D.R. of the Revenue that the assessment was completed u/s 143(3) and not u/s 144 of the Act. Hence, the Tribunal decision cited by Learned A.R. of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income-tax [2007 (8) TMI 386 - ITAT DELHI-G ] is squarely applicable in the present case wherein held by the Tribunal that if assessment is completed by the Assessing Officer u/s 143(3), it meant that even if there was some non compliance of notices u/s 142(1), subsequent compliances in assessment proceedings were considered as good compliance and default committed earlier was ignored and therefore, levy of penalty u/s 271(1)(b) is not justified.- Decided in favour of assessee. Unaccounted cash credit - Held that:- As per the details available an amount of ₹ 40,000/- was deposited in ICICI bank on 13/06/2007 and another amount of ₹ 19,000/- was deposited in bank on 14/06/2007 and total amount deposited in June was ₹ 59,000/-. As per the chart, showing availability of cash in June 2007, the assessee is showing opening cash balance of ₹ 4.15 lac and closing cash balance of ₹ 3.99 lac after reducing this amount of ₹ 59,000/-. Similarly, an amount of ₹ 25,100/- was deposited in ICICI on 19/07/2007. As per the chart showing availability of cash in July, 2007, there was opening cash of ₹ 3.99 lac and closing balance of ₹ 4.16 lac. In September 2007, cash deposited was ₹ 1.34 lac and as per the chart showing availability of cash in the September 2007, there was opening cash balance of ₹ 4.58 lac and closing balance of ₹ 3.67 lac after reducing this amount of ₹ 1.34 lac. Considering all these facts, we are of the considered opinion that the addition made by the Assessing Officer is not justified because if it is held that the cash balances shown in this chart is not acceptable than not only cash deposit in bank but the closing balance shown also stands unexplained. Since, no addition is made by the A.O. for closing balance, it means he has accepted the same. The deposit in bank is much lower than that and hence even if part opening balance is ignored as unestablished than also no addition is called for. We, therefore, delete the same. - Decided in favour of assessee.
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2015 (3) TMI 315
Non-granting of exemption under section 11(4A) - assessee was registered under section 12A of the I.T. Act. - Held that:- During the year under consideration the surplus income generated by the assessee trust in the super market is to the extent of ₹ 77,45,329 out of which a sum of ₹ 11,96,410 was claimed to be applied for charitable purpose. From the details available on record, it appears, a sum of ₹ 11,50,000 was donated to other institutions. No details is available with regard to application of income to the extent of ₹ 46,410. The fact remains is that the assessee trust has not applied the funds to the object of the trust. In fact, it donated the funds to the other institutions. It is not known whether the other institutions to which donations are made has similar objects like that of assessee. However, section 11(3)(d) introduced by Finance Act, 2002 with effect from 01-04- 2003 clearly says that any income which is credited or paid to a trust or institution is not eligible for exemption and the same has to be treated as income of the assessee. Since the assessee has not applied the surplus funds from the business of super market for charitable purpose as per the object of the trust, the assessee is not eligible for exemption. - Decided against assessee.
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2015 (3) TMI 314
Claim of revenue expenditure - Registration fees paid Registrar of Companies to Registrar of Companies, Stamp duty, Filing fees of Form 5 for increase in share capital and Miscellaneous Expenses - these expenses were debited by the assessee under the head Miscellaneous expenditure in its profit & Loss A/c and on the same the assessee has claimed 1/5th deduction u/s. 35D - Held that:- In the present day scenario, the authorized/paid up capital is not static and can also be reduced as per provisions of the Companies Act. Considering the judicial analysis discussed elsewhere in the light of the factual matrix of the balance sheet, in our understanding of the law and the facts of the case in hand, we allow the additional plea raised by the assessee before us and direct the AO to treat the expenditure of ₹ 3,50,00,858/- as revenue expenditure. - Decided in favour of assessee.
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2015 (3) TMI 313
Disallowance of depreciation u/s 32 - invoking Explanation 3 of Section 43(1) of the I.T. Act, 1961 - CIT(A) deleted the addition - Held that:- The benefit of enhanced depreciation got almost mitigated because of interest payment of the outsider viz. all banks as is evident from the working submitted. The assessee has taken loan from Banks for making payment for availing this facility and had paid more than 2 crores towards loan processing charges. The AO has not disputed the objective with which assessee had made this arrangement. The mainprimary objective of assessee is relevant for purposes of Explanation 3. If the primary objective was not tax reduction. The Explanation 3 could not be invoked. No infirmity in the order of the Ld. CIT(A) and therefore, no interfere is required on our part, hence, we uphold the impugned order passed by the Ld. CIT(A), which is in accordance with the ITAT’s Order in assessee’s own case for the Asstt. Year 2007-08 [2015 (3) TMI 319 - ITAT DELHI] - Decided in favour of assessee.
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2015 (3) TMI 312
Deduction u/s.80-IA - assessee claims that no part of the brought forward unabsorbed depreciation of ₹ 75.07 lacs pertains to the any of the two eligible undertakings, i.e., Tex International (TI) and Royal Energy Company Unit-1, the profit from which is admittedly at ₹ 39.03 lacs and ₹ 0.36 lacs respectively - in the view of the Revenue, the income of the eligible undertakings, being the TI unit and Royal Energy Unit No.1, as included in the GTI, cannot exceed ₹ 2,83,720/-, i.e., the amount assessable u/s.28 (Rs.77,90,882 - ₹ 75,07,162). Further, this would be irrespective of whether the brought forward unabsorbed depreciation of ₹ 75.07 lacs is in respect of the eligible or the non-eligible undertakings - Held that:- If the unabsorbed depreciation exceeds the business income of ₹ 77.91 lacs, the same would stand to be set off against the income assessable u/s.22 and/or section 56 in-as-much as the same, per the deeming of section 32(2), forms part of the current years’ depreciation, and is to be given effect to, save for a precedence to the provision of sections 72(2) & 73(3), which are inapplicable in the present case in-asmuch as there is no brought forward business loss. There is no occasion or need for the set off of unabsorbed deprecation against income assessable under other heads of income, i.e., under Chapters IV-C and IV-F, as the assessee claims or does. How, for instance, s. 70 come into play without first determining the income assessable u/s. 28, and which would only be after giving effect to the provision of s. 32. The charge of depreciation u/s.32, it must be appreciated, is one, single charge, i.e., irrespective of the different sources of income where-under it may arise and, accordingly, would, in terms of section 32(1) r/w s. 32(2), allowable under the income assessable u/s.28, which per section 29 is to be computed in accordance with the provisions contained in sections 30 to 43D. The provision of section 32(2) itself does not admit of such a course in-as-much as the brought forward depreciation claim merges with the current year’s depreciation, so that it is a single charge, to be allowed to the extent of the available profit. The profit of Units B-2 and B-3, therefore, cannot be, on account of unabsorbed depreciation, negative, but at best at nil. The said depreciation, in view of the available income from the other units (being Units A & B1), and in-as-much as it forms part of the current years’ depreciation allowance, has to be set off there-against. - Decided against assessee.
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2015 (3) TMI 311
Transfer pricing adjustment - adjustment of ₹ 61,958/- with respect of the international transaction of import of raw materials from the associated enterprise - Held that:- A working of the comparability analysis was furnished at the time of the hearing. The Ld. Representative submitted that the detailed working related to the transactions where common products were being imported from associated enterprises, which were also being purchased from third parties in India. The Ld. Representative pointed out that as per the said working there was no necessity of making any adjustment to the stated value of the imports from the associated enterprises. Nevertheless, we find that the aforesaid working, which is claimed to have been prepared as per the decision of the Tribunal in assessment year 2007-08 requires to be verified by the Assessing Officer. We therefore direct the Assessing Officer to verify the aforesaid working - Decided in favour of assessee for statistical purposes. International transaction on account of drop shipment commission - Held that:- Ostensibly, in terms of sub-clause (i), the price charged or paid in a “comparable uncontrolled transaction” is to be identified for the purpose of determining the arm’s length price of the international transaction being tested. It is starkly evident that in the present case, the comparable transaction picked-up by the TPO, namely, agreement between assessee and Henkel USA is a transaction between two related/associated enterprises and therefore it is a controlled transaction and not a “uncontrolled transaction”. Such a transaction undertaken between two controlled entities, in our view cannot be considered as a ‘comparable uncontrolled transaction’, as envisaged in clause (a) of sub-rule (1) of rule 10B of the Rules. Hence, on this count itself, the adjustment made by the TPO by considering the agreement between Henkel USA and assessee as an arm's length price for the impugned international transaction has to fail. Therefore, the addition made by the TPO on this count hereby directed to be deleted. - Decided in favour of assessee. Provision for onerous charges - Assessing Officer has denied the claim on the ground that it was a contingent liability - compensation for the unexpired lock-in-period - non deduction of tds - Held that:- The said liability cannot be treated as contingent liability. The liability is an ascertained liability because it has arisen because of the assessee having opted to terminate the said lease-deed prematurely. It is also nobody’s case that the said decision was not a business decision. Therefore, the liability having crystallized in view of the terms and conditions of the leasedeed, we find that its incurrence cannot be said to be contingent. Therefore, the stand of the Revenue to say that it is a contingent liability is not justified. TDS u/s 194-I - In an appreciation of the terms and conditions of the lease-deed which required the assessee to pay such sum, it can be seen that the said payment is for non-use of the property for the pre-contracted period. In other words, the payment at best can be seen to be for breach of a contractual obligation of taking premises on rent, but cannot be said to be for use of the property. Therefore, in our view, it would be inappropriate to characterize the sum of ₹ 12,50,700/- as a payment made for the use of property so as to fall within the meaning of expression “rent” u/s 194-I of the Act. Therefore, in our view, the provisions of section 40(a)(ia) of the Act are not attracted in the present case, as tax u/s 194-I of the Act was not required to be deducted. - Decided in favour of assessee.
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2015 (3) TMI 310
Unexplained credits received - accommodation entry received from Sh. S.K. Gupta - Held that:- The assessee during the section 153 proceedings before the AO could not produce any documents to substantiate the receipts on account of FDR receipts in her capital account. The AO’s finding that no such credit is appearing in the bank account statement provided by the assessee and since assessee could not produce any documents substantiate the same. The AO added the said amount to the total income of the assessee as unexplained credit. Before the CIT(Appeals) also the assessee had made all the contentions which has been raised before the CIT(Appeals). The CIT(Appeals) has not accepted the contentions raised by the assessee since the assessee could not offer any evidence to support the explanation that was given before him. Before us also the ld. AR could not produce any documents to substantiate his explanation regarding this aspect, so that we could take a different view on the issue. Therefore, we are inclined to confirm the order of the CIT(Appeals) in this behalf and, therefore, the appeal preferred by the appellant on this issue stands dismissed. - Decided against assessee. Penalty u/s 271AAA - CIT(A) deleting the penalty imposed on the surrender of income - Held that:- Since the penalty was imposed on an assessee who was also searched along with the appellant Smt. Uma Singal and whose penalty was also levied on the similar grounds has now been deleted by this Tribunal on the reasons afore-stated. Respectfully concurring with the view of the coordinate bench of the Tribunal and, therefore, we uphold the order of the CIT(Appeals). Therefore, the revenue’s appeal against deletion of the penalty is imposed. - Decided in favour of assessee.
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2015 (3) TMI 309
Transfer pricing adjustments - selection of comparable - Held that:- As far as the comparables objected by assessee as relying on the case of M/s.Cisco Systems (India) Private Ltd., Vs. DCIT (2014 (11) TMI 849 - ITAT BANGALORE), the co-ordinate bench after examining in detail, excluded Bodhtree Consulting Ltd., Infosys Ltd., Kals Information Systems Ltd (Seg) and Tata Elxsi (Seg) from the list of comparable. Comp-U Learn Global Tech India Ltd. - As relying on case of M/s Kenexa Technologies Pvt. Ltd. Vs. DCIT [2014 (11) TMI 587 - ITAT HYDERABAD] wherein assessee submitted before the DRP that Comp-U-Learn Tech India Ltd. was engaged in the development of new software (product development) in ITES call centre and BPO services. It was further submitted that schedule XIII of the Annual Report shows software development expenditure at only 25% of the total expenditure. The TPO extracted the 133(6) notice and held that the company has nil onsite revenue and satisfied all the filters applied by the TPO. We are of the opinion that some more analysis has to be done and we direct the TPO to look into the financial statement of the company and also provide an opportunity to the assessee to submit relevant details to substantiate its claim that Comp-U-Learn Tech India Ltd. is not a comparable company - Decided in favour of assessee for statistical purposes. I-Gate Global Solutions Ltd - On a perusal of the P&L account of this company for the year ended March 2009 it is seen that the company has claimed ‘expenses’ towards raw materials, stores and spares. Therefore, it needs to be examined in detail whether assessee’s claim that the company is into product development is correct. As relevant informations required for coming to a definite conclusion are not before us, we are inclined to remit the issue of comparability of this company to AO/TPO for considering afresh. - Decided in favour of assessee for statistical purposes. Inclusion of comparable - CG-VAK Software Exports Ltd (Seg) - Held that:- Considering the assessee's submission that employee cost is more than 80% of the total revenue and in the annual report, the expenditure was categorized under the heading ‘Cost of Services’, which should be considered as employee’s cost. It was further submitted that TPO should have obtained information by using his powers u/s.136 seeking clarifications in relation to the employees cost and other related costs. Having examined the annual report placed in Paper Book Page No.205, we are prima-facie satisfied that cost of services reported as separate item in Schedule 15 to the accounts pertains to employee cost. However, the TPO has not examined this aspect nor he obtained any information, therefore, in the interest of justice, we are of the opinion that selection of this comparable should be re-examined by the TPO after giving due opportunity to assessee. - Decided in favour of assessee for statistical purposes. Goldstone Technologies Ltd - TPO rejected this company under the foreign exchange earnings filter - Held that:- Since company is in the process of providing IPTV services and on the basis of information available in public domain, satisfies all selection criteria adopted by the TPO. It was further submitted that Assessing Officer has powers to obtain the information u/s.133(6) and assessee should be given opportunity to examine the contrary disclosures if any, in the annual report. Considering assessee’s submissions and reliance on the annual report, we are of the opinion that this comparable also can be re-examined by the TPO whether it satisfies all the filters adopted by the TPO and the company is comparable to the assessee’s functions. For this purpose, selection of this comparable is restored to the file of the TPO who should examine afresh after giving due opportunity to assessee. - Decided in favour of assessee for statistical purposes. Larsen & Toubro Infotech Ltd - Held that:- On a question about the turnover of this company, it was fairly admitted that the turnover of this company is ₹ 1,870 Crores during the year. Since the turnover itself is very huge and that company has multi-faceted activities, we are of the opinion that this company cannot be selected as comparable on the basis of functional analysis as well as on turnover basis. - Decided against assessee. Quintegra Solutions Ltd - not selected by the TPO on the reason that it fails the export turnover filter and Financial Year 2008-09 was a year of peculiar economic circumstances for the company - Held that:- There is no need to include this company as comparable. We uphold the TPO’s observations on this and reject company as comparable to assessee’s activities. - Decided against assessee. Foreign tax credit denied - Assessee-company has rendered services to one of its group entities in Spain - The said AE deducted tax @20% on the payments made to assessee - Held that:- We were surprised with the observations of the DRP. The DRP seems to have ignored provisions of Section 90 of the IT Act. Not only that, Article 25 of the DTIA entered between India and Spain also comes into play. Since neither the Assessing Officer nor DRP considered the issue in the correct perspective, we are of the opinion that the matter should be re-examined by the Assessing Officer to give necessary credit to assessee. With these observations, the issue in this ground is restored to the file of Assessing Officer for fresh adjudication. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 308
Depreciation on intangible asset disallowed - Customer Base, Material Suppliers, Technical Manpower,Technology and Patents - assessee was engaged in the business of trading in two wheeler brake systems and components - Held that:- No merit in the plea of the Assessing Officer that the assets were not depreciable assets as the same were not subject to wear and tear due to diminish in value with use and efflux of time. In the case of intangible asset being commercial/business rights diminution in value or physical wear and tear is not an essential condition for admissibility for depreciation under section 32, if the assets used as a business tool for earning the income, was the proposition laid down by Mumbai Bench of the Tribunal in DCIT Vs. Weizmann Forex Ltd. (2012 (5) TMI 162 - ITAT MUMBAI). Following the same, we find no merit in the plea of Assessing Officer in denying the claim of depreciation under section 32(1)(ii) of the Act. Even otherwise, if the same are treated as goodwill of the business acquired by the assessee, then following the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Smifs Securities Limited (2012 (8) TMI 713 - SUPREME COURT), the alternate plea of the assessee is to be allowed vis-ŕ-vis the claim of depreciation on goodwill. Further, there is no merit in the observations of Assessing Officer that the Seller did not possess any intangible assets as the same were not reflected in its Balance Sheet. The assets acquired by assessee were self generated assets of Seller and hence no value reflected in its Balance Sheet. We find no merit in the observations of Assessing Officer in this regard and the same is dismissed. The next observation of Assessing Officer that no separate costs had been attributed to individual assets acquired by assessee have no relevance and the same is dismissed. Accordingly, we direct the Assessing Officer to allow depreciation on the WDV of intangible assets acquired in the preceding year and brought forward in the year under consideration. Thus, the Assessing Officer is directed to allow depreciation on intangible assets - Decided in favour of assessee.
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2015 (3) TMI 307
Validity of the assessment framed in pursuance of the notice issued u/s. 158BC - period of limitation - Held that:- In the present case the notice issued by the Assessing Officer u/s. 158BC(a) of the Act dated 30-11- 2000 did not give the minimum time of 15 days to the deceased assessee for filing his return of income for the Block Period, the said notice was notice in compliance with mandatory requirement of Sec. 158BC(a) of the Act and the assessment framed in consequence of the legally void notice u/s. 158BC r.w.s. 144 of the Income-tax Act vide order dated 22-08- 2002 is bad in law and we cancel the assessment order. - Decided in favour of assessee.
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2015 (3) TMI 306
User rights of software “OPUS” - assessability of consideration received - whether royalty under Article 12 of the Tax Treaty and therefore liable to tax in India at 10%? - India-Germany DTAA - Held that:- in order to qualify as royalty payment, within the meaning of Section 9(1) (vi) and particularly clause (v) of Explanation-II thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copy right of a literary, aliistic or scientific work. Section 2 (0) of the Copyright Act makes it clear that a computer programme is to be regarded as a 'literary work'. Thus, in order to treat the consideration paid by the cellular operator as royalty, it is to be established that the cellular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the presence case, this has not been established. It is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act,1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply contract. Distinction has to be made between the acquisition of a 'copyright right" and a "copyrighted article". The Assessing Officer has clearly stated that the copyright of software vests only with the CGI Group and therefore, even from that standpoint, there can be no divergence from the assessee’s point that what has been transacted in the license agreement is only the grant of user right in the copyrighted software and not the use of copyright itself. Thus respectfully following the decision of the Coordinate Bench of the Tribunal in assessee’s own case for assessment year 2005-06 [2012 (5) TMI 179 - ITAT PUNE] which is the basis for reopening the assessment for the impugned assessment year, we hold that the license charges earned by the assessee is not liable to be treated as Royalty. - Decided in favour of assessee
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2015 (3) TMI 305
Notional Interest charged on interest free security deposit given to various group companies - CIT(A) deleted the disallowances - Held that:- As per this lease deed, the appellant has given security deposit of ₹ 58,73,460/- as interest free security deposit which is clearly mentioned in the agreement. Since, all the deposits given are interest free, no notional interest can be charge on such deposits. Considering the facts in its totality and that during the year the assessee had received interest free security deposit of ₹ 12 crores and no interest was paid on such deposits, we are of the view that the learned CIT(A) has rightly deleted the addition - Decided in favour of assessee. Disallowance of diesel expenses - Held that:- The entries given by the Assessing Officer in the assessment order pertains to the expenses incurred on running of DG sets for a particular building and entry for the expenses made on a particular date. These entries nowhere suggest that these are not genuine expenses and not incurred for the business of the appellant. Further, Assessing Officer has not pointed out any defect in the correctness of diesel account maintained by the appellant. Therefore, the 2% disallowance out of entire expenditure of ₹ 76,82,51,447/- was not justified. - Decided in favour of assessee. Disallowance of maintenance and repairs expenses - Held that:- The expenses incurred on maintenance and repairs were wholly and exclusively for business purposes and were in the nature of current repairs, which are allowable as revenue expenditure. Hence, the treating of the expenses of ₹ 52,90,624/- as capital expenditure is not justified.- Decided in favour of assessee. Disallowance of hire charges paid for AC, Crain, DG Sets, Photocopy machine, tanker and taxi hire charges - no expenditure has been incurred in the previous year on the basis of hire charges - Held that:- The reason applied by the Assessing Officer for disallowance is not sustainable. The Assessing Officer has not brought any material on record to prove that the expenses were not genuine. The disallowance made without bringing any evidence on record contrary to the evidences submitted by the appellant was not justified. These expenses have been incurred for genuine business needs of the appellant. Hence, the disallowance made by the Assessing Officer on adhoc basis of ₹ 9,54,674/- is deleted. - Decided in favour of assessee. Disallowance of event expenses and consultancy expenses shown under the head ‘repair and maintenance' - Held that:- These expenses have been incurred on the various events organized by the appellant on the event name 'women in India cinema' for promoting business of the appellant. The appellant has given the name of the party to whom these payments were made alongwith the necessary evidences, therefore, disallowance of 25% expenses out of said expenses was not justified. - Decided in favour of assessee. Disallowance of legal and professional expenses - Held that:- These expenses have been paid to various Advocates, Retainer ship fees, salary and other legal and professional services obtained by the appellant. Therefore, it cannot be said that these expenses were not genuine. Further, the Assessing Officer has not made any enquiry and has not brought any material on record to prove that the expenses under this head were not genuine. Therefore, the adhoc disallowance made on the basis of conjectures and surmises cannot be sustained.- Decided in favour of assessee. Disallowance of interest paid on account of TDS - Held that:- The findings of the learned CIT(A) are that no payment relates to interest on delayed payment of TDS has been made and the interest payment actually relates to delayed payments of service tax and unclaimed bonus and salary. Hence, it is allowable as revenue expenditure, has not been rebutted by the revenue before us. We thus do not find reason to interfere with the first appellate order in this regard - Decided in favour of assessee. Disallowance of prior period expenses - the expenditure represents service tax paid on foreign services belatedly on clarity from the service taxation authorities - Held that:- .4 In the absence of rebuttal of the findings of the learned CIT(A) that the liability to pay the service tax was crystallized therefore, the same was rightly claimed during the year on the basis of crystallization of expenses by the Revenue before us, we are not inclined to interfere with the first appellate order. The same is upheld. - Decided in favour of assessee.
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2015 (3) TMI 304
Determination of ALP - international transaction carried out by the assessee with its AE - adjustment of ALP was deleted by the Tribunal - Held that:- Trading and manufacturing segment of the assessee are not distinct and are inter-related warranting combined transaction approach. TPO has arrived at the bifurcation of the manufacturing and trading segmental operating results. In view of our conclusions that the trading and manufacturing segments are interlinked and therefore a combined transaction approach has to be adopted, we combine the results so arrived at by the TPO. If the segmental results are combined, the operating revenue of the assessee would be 3767.91 crores and the operating profit would be ₹ 94.34 crores. Thus, the operating profit margin on sales would be 2.517. Even assuming that the adjustment on account of operational efficiency made by the TPO is to be accepted, then the combined margin after adjustment of the five comparables which is given in para-20 of this order, would be 7.10%. If the arithmetic mean of the five comparables as above is tested as against the operating profit margin on sales of the assessee at 2.517%, then the same would be within the (+)/(-) 5% range of the arithmetic mean and therefore no addition by way of adjustment to the ALP can be made. In this view of the matter, we are of the view that the addition sustained by the DRP deserves to be deleted and is hereby deleted - Decided in favour of assessee.
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Customs
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2015 (3) TMI 332
Confiscation of goods - Imposition of penaltyu/s 112(a)(b) and 114AA - Held that:- Inasmuch as the goods have been absolutely confiscated and they are in the custody of the department, that should constitute sufficient security for the Revenue. Therefore, following the ratio of the hon'ble apex Court's decision in the case of Bhavya Apparels Pvt. Ltd. vs. Union of India [2007 (9) TMI 274 - SUPREME COURT OF INDIA] invoking the provisions of Section 129E of the Customs Act, 1962 might not arise. Accordingly, we grant waiver from pre-deposit of the penalties imposed on the appellants and stay recovery thereof during the pendency of the appeals - Stay granted.
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2015 (3) TMI 331
Revocation of CHA License - Inclusion of charges for dismantling of imported plant to the assessable value - Whether the CHA License of the appellant has been correctly revoked by the adjudicating authority - Held that:- It has been categorically admitted by the importer M/s. BCL that they were not clear on the aspect of adding of certain elements to the assessable value and settled the issue by moving an application before the Settlement Commission. It is also observed from the records of the case that all the documents including insurance policies showing all elements of cost/expenses incurred were placed before the assessing officer at the time of filing of Bill of entry. There is thus no substance in the argument of the Revenue that appellant should have guided the M/s. BCL to add certain elements of cost to the assessable value. A CHA can not be expected to a better expert on customs valuation matter than the assessing officer. There is no evidence on record that appellant was aware of the fact that addition of certain elements of expenses incurred by the importer M/s. BCL were not includedand deliberately suppressed that information from the assessing officer. In the absence of any such documentary evidence, the order passed by the adjudicating authority is not justified. - Decided in favour of appellant.
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2015 (3) TMI 330
Waiver of pre deposit - Penalty under Section 114 (A) - Held that:- There has been a demand for short payment of duty against import of seven consignments. It is the claim of the appellant that the entire Customs duty had been paid by them to their CHA in relation to the said seven bills of entry but ultimately, the total duty has not been paid by the CHA to the Customs, resulting into short payment of duty. It is their submission that major portion of the customs duty has been paid by them through demand draft and balance amount were paid by their customers. The Ld. Advocate submits that the entire amount of duty has been paid by them to the CHA. The Ld. A.R. for the Revenue on the other hand submits that whatsoever reason might be that the Department has not received the duty of ₹ 8.85 Lakhs either from CHA or from the applicant against the said Bills of entry. It is the submission of the Ld. A.R. that since the duty has not been paid by the CHA, it has to be discharged by the importer. I find even though, the CHA has not filed any appeal before this forum, whether the entire amount of duty has been discharged or otherwise as claimed by the applicant, rests on appreciation of evidences. At this stage, keeping in view the facts and circumstances of the case, I find that it is appropriate to direct the appellant to deposit 10% of the duty involved in the present case within a period of eight weeks - Partial stay granted.
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2015 (3) TMI 329
Confiscation of goods - department alleged that the goods, namely, Garlic were not Dried Garlic and, therefore, subjected to import restriction as per the circular issued by DGFT on 17.9.1999. - Misdeclaration of goods - Held that:- Issue involved herein is covered by the ruling of the Hon'ble Supreme Court in the case of Suchitra Components Ltd. (2007 (1) TMI 4 - SUPREME COURT OF INDIA). Accordingly, respectfully following the same, I hold that Circular dated 17.9.1999 will not have retrospective effect. In absence of any prescribed moisture content, confiscation and penalties are set aside - Decided in favour of assessee.
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Corporate Laws
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2015 (3) TMI 328
Application for winding up - Part payment denied on the ground that material was of poor quality - Held that:- Part payments made by the company to the petitioner as contended by the petitioner has not been denied by the company. In paragraph 8 of the winding up petition the petitioner has furnished the particulars of the part payments made by the company. In its affidavit in opposition the company has not denied or disputed such particulars. It is, thus, established that the company did make payment of ₹ 4,82,565.60 to the petitioner. Had the company rejected the goods supplied by the petitioner, there could have been no question of making such part payment. The stand taken by the company in the reply to the statutory notice and in its affidavit in opposition is completely inconsistent with the company having made part payment to the petitioner. The defence sought to be raised by the company does not appear to be bona fide. It is merely an afterthought to avoid payment of the petitioner’s outstanding dues. In the premises, this company petition is admitted for a sum of ₹ 54,593.32 being the principal amount claimed by the petitioning creditor. The sum will carry interest at the rate of 12 per cent per annum from 19th September, 2013 being the date when the winding up petition appears to have been filed. However, the company is given an opportunity of paying the said principal amount along with the aforesaid interest by 15th November, 2014 if such payment is made, this order of admission of the winding up petition shall remain permanently stayed. There will be an unconditional stay of this order till 15th November, 2014. - Winding up application accepted conditionally.
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2015 (3) TMI 327
Restoration of the name of company - Statutory records not filed - Held that:- It is undertaken on behalf of the petitioner companies that statutory compliances shall be made and the requisite statutory records and accounts will be filed with the Registrar of Companies once the name of the company is restored.Accordingly, upon payment of costs of ₹ 50,000/- within a period of two weeks from today, the name of the petitioner Company shall stand restored.On receipt of the costs, the Registrar of Companies shall change the status of the company as “Active”. The petitioner shall thereafter make the necessary statutory compliances and file the statutory documents with the requisite fee and additional fee as applicable. - Decided in favour of appellant.
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2015 (3) TMI 326
Application for proposed Scheme of amalgamation - Observations of regional director related to compliance with RBI guidelines as regard to FEMA for foreign transactions duly addressed - Held that:- In view of the approval accorded by the Shareholders and Creditors (secured and Unsecured) of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. - Scheme of amalgamation approved.
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Service Tax
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2015 (3) TMI 348
Cenvat Credit - input services - outdoor catering services - Rule 2(l) of the Cenvat Credit Rules, 2004 - The Department was of the view that catering/canteen services were neither used in or in relation to the manufacture or clearance of final product nor it could be said to be an activity relating to business and proceed to disallow the cenvat credit. - Held that:- the issue as decided by the Tribunal and the various Courts clearly settled the issue that the Cenvat Credit has been properly availed in respect of outdoor catering services. The only other argument raised by the Revenue is that Notification No.3 of 2011 dated 01.03.2011, which excluded the services in the question by amendment dated 01.03.2011, is by way of substitution and therefore, it should take into effect in respect of the period in dispute also - Held that:- Such a plea, at the threshold, has to be rejected, since Rule 1b of the Rules clearly states that the said amendment shall come into force on 1st day of April 2011 - Decided against the revenue.
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2015 (3) TMI 347
Waiver of pre-deposit - Undue hardship - Whether the Tribunal was right in ordering the pre-deposit for entertaining the appeal of the appellant even after admitting that the whole demand was made by the Revenue based only on the Profit and Loss Account without discharging the onus case on the Revenue that the appellant had rendered the taxable service and obtained the value thereof and that too by overlooking the very same financial statement showing the value on which the tax was demanded as a Sundry Debt, meaning amounts yet to be realized? Held that:- he decision of the Supreme Court relied on by the learned counsel appearing for the assessee in the case of Benara Valves Ltd. Vs. CEX [2006 (11) TMI 6 - SUPREME COURT OF INDIA] does not, in any way, help the case of the assessee. If the assessee has produced any material to substantiate the plea of undue hardship, as stated in the decision of the Supreme Court stated supra, we would have certainly considered the plea for modification of the pre-deposit. In the absence of any material, we are unable to modify the order of the Tribunal on mere ipse dixit. - Order of tribunal upheld - Decided against the assessee.
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2015 (3) TMI 346
Cenvat Credit - Refund under Rule 5 - nexus and its correctness - Norms for determination of nexus - period of limitation u/s 11B - Notification No.05/2006-Central Excise (N.T.) - Whether refund under Rule 5 of CENVAT Credit Rules would be admissible when there was no notification issued prescribing safeguards, conditions and limitation to be fulfilled by issue of a notification by the Government. - Held that:- this issue is not required to be dealt with by us because Notification No. 5/2006-CE (NT) dated 14.03.2006 was retrospectively amended by the Government and instead of words 'used in' the words 'used for' were replaced. Therefore wherever the refund claims have been rejected on the ground that the notification provides the benefit of refund when the inputs have been used in providing the output services will have to be set aside and will have to be reexamined in the light of amendment carried out with retrospective effect by the Government in Finance Act 2010. - Matter remanded back. Place of removal which has been a subject matter of dispute in several cases - Held that:- the place of removal has to be considered as port/airport/land customs station. Therefore once place of removal is taken as port/airport/land customs station all the services utilized up to the stage would become eligible for refund under Rule 5 of the balance of CENVAT credit. Whether CENVAT credit can be refunded under Rule 5 when there was no notification prior to 14.03.2006. - Held that:- refunds cannot be rejected on the ground that earlier Notification No. 11/2002-Cus. (NT) dated 01.03.2002 did not allow refund of credit available in respect of input services but limited only to inputs in view of the fact that during that time the rule itself did not provide for refund of credit in respect of input services. Nexus between the input services and the output services. - Held that:- the matter should be remanded to enable the appellant to establish integral connection between the service and the business of manufacture of final product, it is nobody's case that there is no need to establish the relation between the input services and the business of manufacture. Foreign Inward Remittance Certificate. - Held that:- what is required to be established by an exporter is that in respect of invoices raised by him, consideration in foreign currency has been received. This is what is required to be established. It is definitely possible for the proper officer considering the refund claim to verify the documents produced and come to the conclusion whether foreign remittances in respect of exports made have been received or not. If there is difficulty, they can definitely seek clarification. If it is found that claimant is misleading the department, Investigations can be taken up. If there is misdeclaration or mala fide, proceedings can be initiated. Rejection of refund claim on the ground that output service is not taxable. - Held that:- Hon'ble High Court in Repro India Ltd. [2007 (12) TMI 209 - BOMBAY HIGH COURT] took a view that even if export is not made under Bond or Letter of Undertaking, refund is admissible. Subsequently, amendment was carried out but during the period prior to such amendment, the decision would be applicable in any of the cases before us if export has taken place prior to amendment. Therefore, decisions in cases where credit has been denied or refund has been denied on the ground that export is not made under Bond or Letter of Undertaking cannot be sustained. Relevant date for filing refund claim. - Held that:- Section 83 of the Finance Act, 1994 makes provisions of Section 11B applicable for the purpose of service tax matters also. When Section 11B is applicable to service tax matters, we have to replace words 'excisable goods' used under Section 118 as 'services'. Therefore, for the purpose of refund, in view of the specific provisions of Section 83 and notification under Rule 5, it is necessary to substitute service in place of goods. We are not able to agree with the submission that this cannot be done. Therefore, provisions of Section 11B for the purpose of limitation would be applicable. Method for calculation of relevant date. - Held that:- After considering the decision of Hon'ble High Court of Madras in the case of C.C.E. vs. GTN Engineering (I) Ltd [2011 (8) TMI 960 - MADRAS HIGH COURT] this Tribunal had taken a view that for the purpose of calculating limitation in respect of claim for refund of tax paid on input service, the relevant date should be the date on which the consideration has been received where the claimant is service provider and consideration paid where the claimant is service receiver. This decision was rendered in the case of Hyundai Motor India Engineering (P) Ltd. vs. C.C.E. Hyderabad [2014 (7) TMI 329 - CESTAT BANGALORE]. Therefore in our opinion, this decision can be followed.
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Central Excise
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2015 (3) TMI 340
Waiver of pre-deposit of duty, interest and penalties - benefit of Notification No. 23/2003-CE and 52/2003 Cus both dated 31.03.2003 - Held that:- Rule 17 clearly stated that for payment of duty on clearance of any goods the applicant being 100% EOU could utilize CENVAT Credit account. Therefore, prima facie the applicant has made out a case for waiver of the requirement of pre-deposit of Central Excise and Customs duty, interest and penalties. Accordingly, we grant waiver of the pre-deposit of the entire amounts adjudged in the impugned order and stay recovery thereof during the pendency of the appeals. - Stay granted.
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2015 (3) TMI 339
Waiver of pre deposit - Denial of CENVAT Credit - GTA service - Inclusion of freight charges in basic price - Held that:- Applicant produced Invoice copy No.S001448, dated 09.08.2011 raised on KSCSC, Ernakulam and in the body of the invoice, it has been mentioned as ‘Total assessable value including transport charges’. The Adjudicating authority also examined the Purchase Order No.9991, dated 19.07.2011 produced by the assessee, which includes the basic price [excluding VAT per quintal]. The Board Circular stipulates that the freight charges were an integral part of the price of the goods. The Adjudicating authority rejected the contention of the applicant on the ground that they have not produced the Tender copy. Prima facie, we find from the invoice and purchase order that the freight was included in the value. The applicant has made out a strong prima facie case for waiver of the pre-deposit of entire amount. Accordingly, pre-deposit of duty along with interest is waived till disposal of the appeal. - Stay granted.
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2015 (3) TMI 338
Denial of CENVAT Credit - GTA Service - Place of buyer - Place of removal - Held that:- Commissioner (Appeal) relied on Board Circular No.97/8/07-ST dated 23.08.2007 dealing with the claim of Cenvat credit on GTA service availed by the assessee in respect of delivery of the goods with the condition of FOR destination. Upon examination of certain conditions, he came to the conclusion that the goods were delivered at the place of buyer carrying ownership of the goods with the manufacturer till the place of the buyer. Thus, the goods were removed at the place of buyer, not elsewhere. To this conclusion, there is no rebuttable evidence brought out by the Revenue in its appeal - when the property of goods was all along lying with the assessee and that was divested only at the place of buyer, it cannot be said that place of removal was other than the place of the buyer, where delivery of the goods occurred. In such a situation the Circular binds the Department to allow the appropriate Cenvat credit. - Decided against Revenue.
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2015 (3) TMI 337
Waiver of pre deposit - Denial of CENVAT credit - name and address of their marketing office is not included in the ISD registration certificate at the time of filing for registration - Held that:- Prima facie, the issue relates to availment of credit based on the distribution of credit by the ISD distributor. Considering the decision of the Hon’ble High Court of Karnataka (2014 (5) TMI 640 - Karnataka High Court) and the decision of the Tribunal, prima facie, the case merits waiver of predeposit. Accordingly, I grant waiver of predeposit of dues and stay its recovery during the pendency of the appeal - Stay granted.
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2015 (3) TMI 336
CENVAT Credit - garden maintenance, outdoor catering service and maintenance and repair of factory - Held that:- garden is maintained as per statutory requirement of the Government of Karnataka; State Pollution Control Board has directed them to maintain the garden on 23/12/2010 and the water coming out of effluent water treatment plant was required to use for gardening purposes is correct. I also find that as submitted by the learned counsel, the claim for CENVAT credit is supported by the decision in the case of Brakes India Ltd. [2010 (1) TMI 301 - CESTAT, BANGALORE]. As regards outdoor catering service, the learned counsel submits that providing food to the employees was a statutory obligation and therefore the same is admissible and reliance on the decision in the case of Suzuki Powertrain India Ltd. [2010 (4) TMI 742 - CESTAT, NEW DELHI] is also appropriate. As regards maintenance service, the case of the appellant is that the services were used in relation to maintenance and repair of factory and office related to factory. She produced one of the invoices and ongoing through the invoice, I find that the claim of the learned counsel is correct. In view of the above, the appellant is able to make out a case on merits for eligibility of CENVAT credit - Decided in favour of assesse.
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2015 (3) TMI 335
Waiver of pre-deposit of duty - Removal of finished goods viz. Alluminium wires from their factory without payment of duty, against various kachha challans - Applicant had disputed that the quantity reflected in the kachha challans were raw material received by them from respective raw material suppliers, for the purpose of job-work which they carried out in their premises - Held that:- issues rest on evidences adduced by both sides. Also, at this stage we find that the earlier statements of the witnesses relied in the show cause notice, on cross-examination, did not conform to the earlier statements. However, also the statements of late Mr. Om Prakash Saraf and Debabrata Das are on record, whose retraction whether valid or otherwise needs to be scrutinized and examined. In these circumstances, considering the financial hardship expressed by the applicant at this stage, the offer made by the Sr. Advocate seems to be reasonable. Consequently, we direct the applicant to deposit ₹ 10.00 Lakh within eight weeks from today and on deposit of the said amount, the balance dues adjudged against M/s. Saraf Metal Works and total dues against Ms. Sumitra Saraf adjudged is waived and its recovery stayed during the pendency of the appeal. - Partial stay granted.
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2015 (3) TMI 334
Condonation of delay - Receipt of order by Manager - Assessee contends that impugned order was also sent to the Manager of the appellant company and he is not disputing the receipt or non-receipt of the same and as such is presumed to have been received the same. If that be so, there is reasonable presumption that appellant must have received the impugned order. As such he prays that inasmuch as there is huge delay, the appeal could not be maintained. - Held that:- High Court in the case of Amidev Agro Care Pvt. Ltd. vs. Union of India reported in [2012 (6) TMI 304 - BOMBAY HIGH COURT] has held that sending of order by speed post is not sufficient compliance to the provisions of Section 33 C(1)(a) of CEA, 1944 and the order is required to be sent by registered A.D. post. Admittedly, in the present case, the order was sent by Revenue by speed post and there is no conclusive evidence on record to show that the same stands received by the assessee. In such arena of dispute on receipt of impugned order, the ratio laid down by the Hon'ble Bombay High Court would apply. As such, we accept the appellant's contention that he came to know about passing of the order only when the Revenue approached them for recovery under the cover of their letter dated 28.3.2012. Thereafter, the appellant immediately procured the order and filed the appeal within time. - there is no mala fide on the part of the assessee, not to file appeal within time - Delay condoned.
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2015 (3) TMI 333
Valuation of goods - non-inclusion of insurance and freight charges and other essential ingredients in the assessable value - Held that:- Commissioner (Appeals) reproduced the Chartered Accountant’s Certificate dated 14.09.2004 and the worksheet details of duty liability. It was prepared on rectification of audited balance sheet. Revenue had not refuted the Chartered Accountant’s Certificate and worksheet with any material in the grounds of appeal. The Ld. AR submitted that the original authority proceeded on the basis of the figures given by the Respondents but the Commissioner (Appeals) proceeded on the basis of the figures given by the Chartered Accountant. We find that the Commissioner (Appeals) findings are on the basis of the figures given by the Chartered Accountant with worksheet, which were not refuted by the Revenue and cannot be discarded without any cogent material. In view of the above discussion, we do not find any reason to interfere with the impugned order - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (3) TMI 344
Benefit of exemption under Section 13B of the 1973 Act read with Rule 28A of the Rules - Held that:- It was not disputed that to avail benefit of exemption under Section 13B of the 1973 Act read with Rule 28A of the Rules, the assessee was required to ensure that the production continued during the period of exemption and was not stopped for a continuous period exceeding six months. The appellant had discontinued the business since January 1997 and had, thus, disentitled itself to retain the advantage of exemption already availed under the 1973 Act and the Rules. - findings recorded by the Tribunal which were not shown to be perverse or erroneous, no substantial question of law arises in this appeal for consideration. Accordingly, finding no merit in this appeal, the same is hereby dismissed. - Decided against assessee.
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2015 (3) TMI 343
Evasion of tax - Intention to defraud - Purchases made without knowledge of petitioner by the agent - Challenge to assessment order - Opportunity of hearing not granted - Violation of principle of natural justice - Held that:- Once the denial of purchases twelve in number were made by the revision petitioner in the background of alleging fraud, etc., against their agent, it was incumbent upon the assessing officer to gather further information from Mr. Madhu by examining him and also gather other details from M/s. Oriental Timbers, how the payments were made to Oriental Timbers whether by Mr. Madhu in cash or any bank channel referring to the source of revision petitioner being the payer of the amounts. In the absence of such information, we are of the opinion the concerned authorities have not acted based on the material placed before them totally ignoring the contentions raised by the revision petitioner. - as the very genesis for arriving at the conclusion by the assessing authority is defective, the consequential orders are of no value. Hence, all the three orders of assessing authority, first appellate authority and the Tribunal are set aside remitting back the matter to the assessing officer to consider the matter afresh, in the light of the above observations, after giving opportunity to the revision petitioner - Decided in favour of assessee.
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2015 (3) TMI 342
Validity of order of assessment - Bar of limitation - Non compliance with the statutory requirement of Section 42(2) of the OVAT Act - Held that:- There is no explanation for inordinate delay of 24 months caused in issuing the assessment order to the petitioner. Therefore, we have no hesitation to hold that the order of assessment under Annexure-1 was not made on the date it was purported to have been made. In order to bring the assessment within the period of limitation, the order of assessment bears the date 12.01.2007, whereas it has been passed much after that. If the notice issued is invalid for any reason, then the proceeding initiated in pursuance of such notice would be illegal and invalid. Section 42 (2) of the OVAT ACT is a mandatory provision not with regard to any procedural law, but with regard to a substantive right. Any infirmity or invalidity in the notice under Section 42(2) of the OVAT Act goes to the root of jurisdiction of the Assessing Authority. Issue of notice under Section 42(2) of the OVAT Act is a condition precedent to the validity of any assessment under Section 42 of the OVAT Act. Therefore, if the notice issued for assessment is invalid, the assessment would be bad in law. Hence, the notice for assessment of tax without allowing the minimum period of 30 days for production of the books of account and documents is invalid in law and consequentially, the order of assessment and demand notice passed/issued are not sustainable in law. In the instant case, notice for assessment of tax basing on the audit visit report was issued in Form VAT-306 dated 30.12.2006 requiring the petitioner to appear in person or through his authorized agent before the Assessing Officer on 12.01.2007 and produce or cause to be produced the books of account and documents for the period from 01.04.2005 to 31.07.2006. Thus, notice in Form VAT-306 shows that minimum time as provided under sub-section (2) of Section 42 of the OVAT Act has not been granted to the petitioner. Thus, it is a clear case of violation/infraction of mandatory provisions of Section 42(2) of the OVAT Act. Therefore, the notice for assessment of tax in pursuance of audit visit report is invalid. - order of assessment passed in pursuance of notice in Form VAT-306 issued in violation of requirement of Section 42(2) of the OVAT Act is bad in law. - Decided in favour of assessee.
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2015 (3) TMI 341
Whether the Assessee firm establishes that the transactions in question are re-sale and not a sale in Maharashtra, liable to be taxed - Held that:- If the transactions are nothing but sale of the goods in Maharashtra and the Revenue has been able to bring material to support its conclusion and ultimate order, then, we do not find any perversity or error of law in the order of the Tribunal. - Tribunal referred to the invoices and other materials placed on record. The invoices produced showed a declaration made under section 12A of the BST. That declaration indicated as to how a representation was made by the Assessee to the purchasers/buyers. That he need not pay tax and that is because the Assessee firm is registered in Maharashtra. That is why the Tribunal concluded that with the aid of the company, the Assessee was trying to wriggle out of this position. In that regard, the Tribunal referred to the relevant legal provision and tax liability. The Tribunal also concluded that the Assessee firm was aware of the fact that the re-assessment was carried out. The assessment was done with due and adequate notice and opportunity to the applicant and his wife. If the sale was within the State of Maharashtra, then, the Assessee firm was liable to pay tax within it because it procured or obtained the goods from outside Maharashtra. The Tribunal concluded that the same is not from principal to principal basis but between the principal to agent and in terms of section 16 of the Act. We do not find as to how such conclusions of the Tribunal could have given rise to any question of law for being answered by this Court. There was no denial of opportunity as contended, inasmuch as full opportunity was given to attend the proceedings at the first appellate stage and even at the second appellate stage. The Assessee was aware of the assessment proceedings, as notices in that regard were duly served and received. The Assessee forwarded documents and if he was in a position to do so and regularly, then, that would indicate that he was aware of what is required to be placed to substantiate and prove his version. Therefore it cannot be said to be a question of law. Every single question is a question of fact and when factual matters are being repeatedly raised, there is no requirement of forwarding the questions and for opinion and answer of this Court. In the Reference Applications we find that the questions at page 16 para 36 of the paper book are nothing but same factual matters. These are essentially matters of appreciation and appraisal of the evidence and materials already on record. If the four questions are nothing but seeking re-appraisal of the factual materials and based on which the concurrent findings have been rendered, then, we do not find any merit in any of these Applications. - Decided against appellant.
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Indian Laws
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2015 (3) TMI 325
Infringement of Trademark - Trademark application pending for disposal - Violation of common law rights - Punitive damages along with compensatory damages - Held that:- From the unchallenged testimony of the plaintiff, it can be concluded that the use of trademark “COLISPAS” being adopted and used by the plaintiff for the last more than 23 years in relation of the medicines and pharmaceutical preparations by the defendants for their products is bound to cause confusion and deception in the mind of the customers. No justification has been shown by the defendants No.1 & 2 for the use of similar trademark of the plaintiff for its medicinal products which has distinctive character and composition. The plaintiff‟s ex-parte evidence has established bona fide use of the trademark “COLISPAS” by them since long. The defendants No.1 & 2‟s use of the identical trademark “COLISPAS” without their approval for medicinal products amounts to infringement of the plaintiff‟s trademark “COLISPAS”. The rival marks are deceptively similar and are likely to cause confusion in the mind of unwary purchasers. The purchasers are not expected to be well-versed with the chemical compositions of the medicinal preparations. Adverse inference is to be drawn against the defendants who opted not to contest the suit and offer any plausible justification for user of the mark “COLISPAS”. Considering the facts of the present case, on the basis of the evidence placed on record, it has been established that the defendants indulged in passing off the goods with the mark “COLISPAS” to the public at large without taking permission from the plaintiff. Since, they have chosen not to appear, it may not be of any use to pass a decree of rendition of accounts. The plaintiff will nevertheless be entitled to the damages in the light of the judicial dicta observed in Times Incorporated [2005 (1) TMI 630 - DELHI HIGH COURT].The defendant No.3 has already settled the dispute with the plaintiff. No compensation / damages were claimed from him at that time. In the light of above discussion, I am of the view that the plaintiff has proved its case against the defendants No.1 & 2 and is entitled for the decree prayed for. Accordingly, the suit is decreed with costs in favour of the plaintiff and the defendants No.1 & 2 and their representatives are restrained from manufacturing, selling, trading and marketing medicinal and pharmaceutical products under the trademark “COLISPAS” or any other identical / similar mark. The plaintiff shall also be entitled to damages to the tune of ₹ 1 lac. -Decided in favour of appellant/ plaintiff.
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2015 (3) TMI 324
Application for Judgement on admission - Default in repayment of debt - Lack of jurisdiction - Held that:- The issue of lack of territorial jurisdiction of this court sought to be raised by the defendant also cannot be accepted.The suit was instituted with leave under Clause 12 of the Letters Patent, 1865. The defendant has made no application for revocation of such leave. From the averments in the petition I find that a substantial part of the cause of action of the plaintiff arose within the jurisdiction of this court. On that basis, leave under Clause 12 of the Letters Patent was granted. So long as such leave subsists, the defendant cannot be allowed to contend that this court lacks territorial jurisdiction to entertain and try the present suit. The receipt of ₹ 3,69,00,000/- has been admitted by the defendant. The defence against the plaintiff’s claim sought to be raised by the defendant is that such money was advanced by the plaintiff to the defendant against pledge of shares of and in the defendant company by a sister concern of the defendant company. No evidence of such pledge has been annexed to the pleading filed by the defendant. The plaintiff has categorically denied any such pledge. The case of defendant’s shares having been pledged with the plaintiff also lacks credibility as in paragraph 3(b) of the affidavit-in-opposition, the defendant states that share certificates were delivered to the plaintiff whereas in paragraph 6 at page 12 of the affidavit-in-opposition, the defendant craves leave to produce the copy of the Demat Slip along with relevant document of transfer of shares at the time of hearing. Shares of a company cannot be both in physical form as well as Demat form. Thus, the defendant’s case of pledge is inconsistent and cannot be accepted. For the reasons aforesaid, this application succeeds. There shall be a final judgment and decree for a sum of ₹ 3,69,00,000/- along with interest at the rate of 18% per annum from 1st September, 2013 till the date of filing of the suit. There will be a decree for interim interest and interest on judgment at the rate of 12% per annum from the date of filing of the suit till payment of the decreetal amount by the defendant.
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