TMI Tax Updates - e-Newsletter
March 19, 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:
Transfer pricing adjustment - arm‘s length pricing of international transactions - Advertising / Marketing and Promotion Expenses - international transaction - Domestic Law - Bunching of inter-connected and continuous transactions - De-bundling of interconnected transactions - nature of trade/volume discounts, rebates and commission paid to retailers/dealers - payment of royalty to an associated enterprise - HC
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Income Tax:
Revision u/s 263 - having put his signature in approval of the draft notice put up with the file and having issued the said show-cause notice dated February 3, 2014, the same is sufficient compliance by the said Commissioner in the facts and circumstances - HC
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Income Tax:
Penalty could have not been imposed as per Section 271(a)(c) of the Act without satisfying concealment or submission of inaccurate particulars of income on the part of the assessee. Such satisfaction must reflect in the order of assessment as the penalty as per the provision under consideration is not automatic - HC
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Income Tax:
Disallowance made u/s 40A(3) - AO noticed that the assessee’s sister concern named M/s Marico Ltd had incurred certain expenses on behalf of the assessee herein thus expenditure incurred through Journal entries does not fall in any of the exemptions provided under Rule 6DD - CIT(A) deleted the addition - matter requires reexamination - AT
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Income Tax:
Revision u/s 263 - Agriculture land - As such, there is no incriminating material in the possession of the Assessing Officer to hold that the land in question is capital asset within the meaning of section 2(14) - Revision u/s 263 annulled - AT
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Income Tax:
Disallowance of loss arising out of valuation of shares - AO could not bring anything on record, which suggests that the selling rate was lower than the market rate - in case the transaction have been treated as genuine in the hands of the seller, the same very transaction cannot be non-genuine in the hands of the purchaser - AT
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Income Tax:
The assessee in first round surrendered income, which was retracted later, cognizance of which has not been taken either by the AO or the CIT(A). The onus is fully upon the assessee to explain with evidence as to the reason why it is retracting from its earlier disclosure of undisclosed income - AT
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Central Excise:
Extended period of limitation - Suppression of facts - Manufacturing activity or not - Even as per the Department, there were certain doubts relating to excisability of the process of profile cutting - demand beyond the normal period of limitation set aside - SC
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Central Excise:
Valuation of goods - Inclusion of cost of cartons in the assessable value of the final product - test laid down in the aforesaid judgment in the case of Hindustan Safety Glass Works Ltd. [1985 (9) TMI 90 - SUPREME COURT OF INDIA] would not be applicable. - SC
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Central Excise:
Classification of goods - manufacture - printed trade advertising material - Process of manufacturing undertaken by the respondent i.e. printing is done by using thermocopied machine and therefore, it would fall under the head 49.01 - SC
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VAT:
Levy of penalty u/s 76(6) of the Rajasthan VAT Act, 2003 - The ACTO, Flying Squad, Bharatpur could at best have referred the matter to the regular assessing authority but could not himself travel beyond his jurisdiction to pontificate on the issue of the irregularity of an inter-state sale being made - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (3) TMI 580
Transfer pricing adjustment - arm‘s length pricing of international transactions - Whether the additions suggested by the TPO on account of Advertising/Marketing and Promotion Expenses was beyond jurisdiction and bad in law as no specific reference was made by the Assessing Officer, having regard to retrospective amendment to Section 92CA of the Income Tax Act, 1961 by Finance Act, 2012? - Held that:- The majority decision of the Tribunal in L.G. Electronics India Pvt Ltd. [2013 (6) TMI 217 - ITAT DELHI] has rightly drawn a distinction between sub-section (2B) and sub-section (2A) to Section 92CA of the Act. - In the present case, the claim of the assessee is that they had disclosed the international transaction in their report under Section 92E which included AMP expenses incurred by them. This aspect relates to merits, i.e. whether or not there was one composite, bundled or a packaged international transaction, but once for the said transaction a report in Form 92E was submitted, separate reference/approval was not required. Reference of the bundled transaction under sub-section (1) to Section 92CA is sufficient. Section 92CA has to be interpreted pragmatically. Therefore, once reference of a composite/bundled or packaged international transaction is made, it will be difficult for the assessee to contest applicability of sub-section (1) in cases of segregation or when the TPO invokes sub-section (2B) to Section 92CA of the Act. This flaw as it existed stands corrected with insertion of Sub-Section (2B) to Section 92CA with retrospective effect. It clarifies and ‘cures‘ the deficiency and shortcoming of the earlier provision. In view of insertion of sub section (2B) to Section 92CA of the Act, the decision of the Delhi High Court in the case of Commissioner of Income Tax versus Amadeus India Pvt. Ltd. [2011 (11) TMI 73 - DELHI HIGH COURT] and of the Gujarat High Court in Veer Gems versus Assistant Commissioner of Income Tax [2011 (10) TMI 262 - GUJARAT HIGH COURT] would no longer be applicable as the ratio of the said decisions reflects the position of the statute before enactment of Sub-Section (2B) with retrospective effect. - Decided in favour of the Revenue. Whether AMP Expenses incurred by the assessee in India can be treated and categorized as an international transaction under Section 92B? - Transaction and International Transaction; Difference between Section 37(1) and Chapter X of the Act - Held that:- The contention that AMP expenses are not international transactions has to be rejected. There seems to be an incongruity in the submission of the assessee on the said aspect for the simple reason that in most cases the assessed have submitted that the international transactions between them and the AE, resident abroad included the cost/value of the AMP expenses, which the assessee had incurred in India. When the assessed raise the aforesaid argument, they accept that the declared price of the international transaction included the said element or function of AMP expenses, for which they stand duly compensated in their margins or the arm‘s length price as computed. We also fail to understand the contention or argument that there is no international transaction, for the AMP expenses were incurred by the assessed in India. The question is not whether the assessed had incurred the AMP expenses in India. This is an undisputed position. The arm‘s length determination pertains to adequate compensation to the Indian AE for incurring and performing the functions by the domestic AE. The dispute pertains to adequacy of compensation for incurring and performing marketing and ‘non-routine‘ AMP expenses in India by the AE. The expenses incurred or the quantum of expenditure paid by the Indian assessee to third parties in India, for incurring the AMP expenses is not in dispute or under challenge. This is not a subject matter of arm‘s length pricing or determination. The fact that this expenditure was incurred and has to be allowed as deduction under Section 37(1) of the Act has not been challenged by the Revenue. Revenue in their written submission accepts and has rightly stated that the test of allowability of expenditure under Section 37(1) is whether the said expenditure is incurred wholly or exclusively for the business consideration. So long as the expenditure is for business consideration, the Assessing Officer cannot question the quantum or the wisdom of the assessee in incurring the expense. Issue of arm‘s length price, per se does not arise, when deduction under Section 37(1) is claimed. Expenditure and decision of the assessee, whether or not to incur the said expenditure; the quantum thereof, cannot be a subject matter of challenge or disallowance by the Assessing Officer, once it is accepted that the expenditure was wholly, i.e. the quantum of expenditure incurred was fully, and exclusively for business purpose. Whether under Chapter X of the Income Tax Act, 1961, a transfer pricing adjustment can be made by the Transfer Pricing Officer/ Assessing Officer in respect of expenditure treated as AMP Expenses and if so in which circumstances? - Held that:- Section 40A(2) clause (b) is a provision for computing arm‘s length price in case of two related parties as defined and applies even when the conditions stipulated in Section 37(1) of the Act are satisfied. The said provision relates to reasonability of the quantum. Similarly, Chapter X of the Act relates to arm‘s length pricing adjustment. Chapter X is not concerned with disallowance of expenditure but relates to determination of arm‘s length price/cost of an international transaction between the two AEs. It relates to income or receipts, and also expenses and interest but in a different context. Thus, Section 37(1) and Chapter X provisions pertain to different fields. As noticed above and subsequently, provisions of Chapter X are applicable to international transactions between two related enterprises. The purpose of determination of arm‘s length price is to find out the fair and true market value of the transaction and accordingly the adjustment, if required, is made. The said exercise has its own object and purpose. - Decided in favour of revenue. Transfer Pricing of International Transactions, Domestic Law, i.e. the Statutory Provisions of the Act, Section 92(3) of the Act and Bundled / Inter-Connected Transactions, TNM Method Enunciated, Brand and Brand Building, Bright Line Test, Aggregation or Disaggregation of Transactions and Set Off in Segregation of Bundled Transactions; whether Section 92(3) prohibits segregation, Economic Ownership - Held that:- The legal ratio accepted and applied by the Tribunal relying upon the majority decision in L.G. Electronics India Pvt. Ltd (2013 (6) TMI 217 - ITAT DELHI) is erroneous and unacceptable. For reasons set out above, we have passed an order of remand to the Tribunal to examine and ascertain facts and apply the ratio enunciated in this decision. For the purpose of clarity, we would like to enlist our findings:- In case of a distributor and marketing AE, the first step in transfer pricing is to ascertain and conduct detailed functional analysis, which would include AMP function/expenses. The second step mandates ascertainment of comparables or comparable analysis. This would have reference to the method adopted which matches the functions and obligations performed by the tested party including AMP expenses. A comparable is acceptable, if based upon comparison of conditions a controlled transaction is similar with the conditions in the transactions between independent enterprises. In other words, the economically relevant characteristics of the two transactions being compared must be sufficiently comparable. The assessed, i.e. the domestic AE must be compensated for the AMP expenses by the foreign AE. Such compensation may be included or subsumed in low purchase price or by not charging or charging lower royalty. Direct compensation can also be paid. The method selected and comparability analysis should be appropriated and reliable so as to include the AMP functions and costs. Where the Assessing Officer/TPO accepts the comparables adopted by the assessed, with or without making adjustments, as a bundled transaction, it would be illogical and improper to treat AMP expenses as a separate international transaction, for the simple reason that if the functions performed by the tested parties and the comparables match, with or without adjustments, AMP expenses are duly accounted for. It would be incongruous to accept the comparables and determine or accept the transfer price and still segregate AMP expenses as an international transaction. The Assessing Officer/TPO can reject a method selected by the assessed for several reasons including want of reliability in the factual matrix or lack / non-availability of comparables. (see Section 92C(3) of the Act).When the Assessing Officer/TPO rejects the method adopted by the assessed, he is entitled to select the most appropriate method, and undertake comparability analysis. Selection of the method and comparables should be as per the command and directive of the Act and Rules and justified by giving reasons. Distribution and marketing are inter-connected and intertwined functions. Bunching of inter-connected and continuous transactions is permissible, provided the said transactions can be evaluated and adequately compared on aggregate basis. This would depend on the method adopted and comparability analysis and the most reliable means of determining arm‘s length price. To assert and profess that brand building as equivalent or substantial attribute of advertisement and sale promotion would be largely incorrect. It represents a coordinated synergetic impact created by assortment largely representing reputation and quality. “Brand” has reference to a name, trademark or trade name and like ‘goodwill‘ is a value of attraction to customers arising from name and a reputation for skill, integrity, efficient business management or efficient service. Brand creation and value, therefore, depends upon a great number of facts relevant for a particular business. It reflects the reputation which the proprietor of the brand has gathered over a passage or period of time in the form of widespread popularity and universal approval and acceptance in the eyes of the customer. Brand value depends upon the nature and quality of goods and services sold or dealt with. Quality control being the most important element, which can mar or enhance the value. Parameters specified in paragraph 17.4 of the order dated 23rd January, 2013 in the case of L.G. Electronics India Pvt Ltd (supra) are not binding on the assessed or the Revenue. The ‘bright line test‘ has no statutory mandate and a broad-brush approach is not mandated or prescribed. We disagree with the Revenue and do not accept the overbearing and orotund submission that the exercise to separate ‘routine‘ and ‘non-routine‘ AMP or brand building exercise by applying ‘bright line test‘ of non-comparables should be sanctioned and in all cases, costs or compensation paid for AMP expenses would be ‘NIL‘, or at best would mean the amount or compensation expressly paid for AMP expenses. It would be conspicuously wrong and incorrect to treat the segregated transactional value as ‘NIL‘ when in fact the two AEs had treated the international transactions as a package or a single one and contribution is attributed to the aggregate package. Unhesitatingly, we add that in a specific case this criteria and even zero attribution could be possible, but facts should so reveal and require. To this extent, we would disagree with the majority decision in L.G. Electronics India Pvt. Ltd. (supra). This would be necessary when the arm‘s length price of the controlled transaction cannot be adequately or reliably determined without segmentation of AMP expenses. The Assessing Officer/TPO for good and sufficient reasons can de-bundle interconnected transactions, i.e. segregate distribution, marketing or AMP transactions. This may be necessary when bundled transactions cannot be adequately compared on aggregate basis.When segmentation or segregation of a bundled transaction is required, the question of set off and apportionment must be examined realistically and with a pragmatic approach. Transfer pricing is an income allocating exercise to prevent artificial shifting of net incomes of controlled taxpayers and to place them on parity with uncontrolled, unrelated taxpayers. The exercise undertaken should not result in over or double taxation. Thus, the Assessing Officer/TPO can segregate AMP expenses as an independent international transaction, but only after elucidating grounds and reasons for not accepting the bunching adopted by the assessed, and examining and giving benefit of set off. Section 92(3) does not bar or prohibit set off. CP Method is a recognised and accepted method under Indian transfer pricing regulation. It can be applied by the Assessing Officer/TPO in case AMP expenses are treated as a separate international transaction, provided CP Method is the most appropriate and reliable method. Adoption of CP Method and computation of cost and gross profit margin comparable must be justified.The object and purpose of Transfer Pricing adjustment is to ensure that the controlled taxpayers are given tax parity with uncontrolled taxpayers by determining their true taxable income. Costs or expenses incurred for services provided or in respect of property transferred, when made subject matter of arm‘s length price by applying CP Method, cannot be again factored or included as a part of inter-connected international transaction and subjected to arm‘s length pricing. Selling expenses - whether in the nature of trade/volume discounts, rebates and commission paid to retailers/dealers etc. cannot be included in the AMP Expenses? - Held that:- Costs or expenses incurred for services provided or in respect of property transferred, when made subject matter of arm‘s length price by applying CP Method, cannot be again factored or included as a part of inter-connected international transaction and subjected to arm‘s length pricing. This situation would possibly result in over, if not double taxation, contrary to the object and purpose of arm‘s length pricing, which is to tax the real income after correcting the negative impact, if any, of the controlled conditions. Therefore, if entire marketing and distribution expenses, or marketing or AMP expenses are bench marked under CP Method, then it would be injudicious and irrational to apply any other method to compute the arm‘s length price of a larger composite international transaction, of which the said costs and expenses form only a part. Logically, if the costs or expenses as a function are excluded or included in the cost while computing the arm‘s length price under the CP Method, the gross profit as a result of such transaction would be lower or higher. This situation would be different from subjecting the same international transaction to arm‘s length pricing by two different methods, which is permissible, in the manner stipulated in the first Proviso to Section 92C of the Act.In the present case, neither the assessed nor the Assessing Officer/TPO has adopted CUP Method for determination of arm‘s length price. TNM Method or RP Method has been adopted and accepted as the most appropriate method. TNM Method, as noticed above, obligates analysis of profit and loss account and the test is benchmarking of operating profits with the relevant PLI and comparison with reference to the comparable. Discount and incentives offered, reduce the operating profits and, therefore, the benchmarking exercise with comparables, reflects and accounts for the same. We have examined the impact and consequences of applying CP Method, by factoring and treating AMP expenses and trade discounts and incentives as an independent international transaction, when we continue to treat the said expenses as a component of a packaged international transaction, which is separately benchmarked. This would not lead us to accurate and reliable results. There is need and requirement to check over or double taxation. The prime lending rate cannot be the basis for computing mark-up under Rule 10B(1)(c) of the Rules, as the case set up by the Revenue pertains to mark-up on AMP expenses as an international transaction. Mark up as per sub-clause (ii) to Rule 10B(1)(c) would be comparable gross profit on the cost or expenses incurred as AMP. The mark-up has to be benchmarked with comparable uncontrolled transactions or transactions for providing similar service/product. The Revenue‘s stand in some cases applying the prime lending rate fixed by the Reserve Bank of India with a further mark-up, is mistaken and unfounded. Interest rate mark-up would apply to international transactions granting/ availing loans, advances, etc. - Decided in favour of the assessee. Transfer pricing adjustment made on account of payment of royalty to an associated enterprise - Held that:- On the question whether the royalty should have been paid or not, we are in agreement with the finding of the Tribunal that question of payment of royalty cannot be determined on the basis of profitability or earnings of the assessed, once it is accepted that know-how and technical information was provided. It is not alleged or the case of the Revenue that the technology or know-how was hopeless and useless. The finding of the Assessing Officer/TPO, that the assessee had not derived any commercial benefit as technology and know-how had not resulted in any substantial profit increase, has been rightly rejected as totally unsustainable. Profitability of the assessed could have been lower or varied due to various reasons and lower profitability in one or more years cannot lead to the conclusion that no benefits were derived or technology was unproductive. The justification given by the assessee for lower profits on account of bad debts, high rent, increase in legal cost stand highlighted and accepted by the Tribunal. Royalty payable for availing the right to use would depend upon corresponding price, which would have been paid by an independent or unrelated enterprise. This is judged by applying comparables. TPO has not rejected the quantum of royalty on the said principle. The reasoning given by the TPO is not only erroneous for the reasons stated above, but is also contrary to the Rules. Depending upon the method selected, net profit or gross profit of the assessed has to be compared with profit margins of related enterprise. The formula prescribed under the Rules does not accept the ratiocination adopted and applied by the TPO.The fact that royalty has been paid would be a relevant consideration and factum, when we consider arm‘s length price of the international transaction of distribution and marketing. Tax treatment of royalty payments being different, the royalty transaction, therefore, may be benchmarked separately. However, payment of royalty even if justified and appropriate on applying arm‘s length principle, can be a relevant factor when the question of compensation of the domestic AE for undertaking distribution and marketing functions arises for consideration. - Decided in favour of assessee.
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2015 (3) TMI 579
Entitlement to deduction under section 80-IB(10) - assessee is engaged in the business of construction of housing projects - return was not filed on or before the due date specified under section 139(1)by assessee - Held that:- Benefit can only be availed of by the assessee if he has filed his return on time. If he has not filed his return on time, the benefits cannot be claimed. The benefit, in the present case, can only be claimed in case of fulfilment of the pre-conditions laid down under section 80AC of the Income-tax Act. When the pre-conditions have not been fulfilled, the benefit cannot be claimed. - Decided in favour of revenue.
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2015 (3) TMI 578
Reopening of assessment - whether on re-opening of a case under Section 147, it is open to ITO to consider all other items and not to confine to the item on which re-assessment notice has been given? - Held that:- From the order dated 13.03.1975, whereby the Assessing Officer not only re-opened the case but made assessment in respect to various other items, other than the quantum of development rebate, we find that he has relied on Apex Court's decision in V. Jaganmohan Rao and Ors. vs. Commissioner of Income Tax and Excess Profits Tax, Andhra Pradesh, [1969 (7) TMI 4 - SUPREME Court] in order to hold that once assessment is re-opened, the previous assessment is set aside and whole assessment proceedings restart afresh. This view has also been confirmed by Tribunal while confirming re-assessment proceedings and opening of entire matter afresh. A judgment must be read as a whole and the observations from the judgment should be considered in the light of questions which were before the Court. The decision of Court takes it colour from the questions involved in the case in which it has rendered. While applying the decision to a later case, the Court must carefully try to ascertain the true principle laid down in the decision and not to pick out words from the decision, divorce from the context of question under consideration by Court. If the assessee cannot be allowed to convert the proceedings initiated under Section 147 as revisional or review, the same would also be not available to Revenue. Thus we do not find anything which may help Revenue - Decided in favour of assessee.
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2015 (3) TMI 577
Reopening of assessment - excessive and bogus claim of labour charges - Held that:- In this case, the labour charges paid by the Respondent for Assessment Year 2004-05 was subject matter of enquiry during the regular assessment proceedings. This enquiry was in the context of the fact that there were outstanding labour charges payable as was evidenced from the Respondent-Assessee's balance sheet filed along with return of income. A detailed enquiry was made into the labour charges and the same was responded by relating it to the quantum of work done. Thus, in the present facts, the Assessing Officer has considered the material available on record and formed an opinion holding that the labour charges have to be allowed. No further tangible material has been obtained in the following Assessment Year, warranting a reopening of assessment. Thus, the attempt to reopen the notice would be clear case of change of opinion as formed during the regular assessment proceedings and cannot be sustained. The contention urged by Revenue that as the Revenue's Appeal for the Assessment Year 200506 has been admitted, this appeal should also be admitted is not required to be considered. This is because, we find that the jurisdictional requirement of issuing the notice under Sections 147 and 148 of the Act is not satisfied. This is threshold issue and, therefore, the result of the Revenue's appeal for Assessment Year 2005-06 would not in any manner affect the requirement of jurisdictional satisfaction for issuing notice for reopening under Sections 147 and 148 of the Act. In view of the decision of this Court in NYK Line (India) Ltd. (2012 (2) TMI 283 - BOMBAY HIGH COURT ), no substantial questions of law arises for our consideration - Decided in favour of assessee.
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2015 (3) TMI 576
Computation of deduction under Section 80HHC - entire loss of Filati unit Should be set off against the profits of Seide unit before computing deduction under Section 80HHC and not only the loss which does not fall within the ambit of exclusion under Section 10B as held by tribunal - Held that:- Identical questions as contained in substantial questions of law arose for consideration before this Court in CIT & ACIT Versus M/s SASKEN COMMUNICATION TECHNOLOGIES LTD [2014 (1) TMI 1538 - KARNATAKA HIGH COURT]. However, the Court was considering Section 80HHE which is in paramateria to Section 80HHC. After considering the arguments and relevant provisions, the said question was answered in favour of the assessee Depreciation claim - Tribunal held that depreciation has to be allowed irrespective of the fact that the Assessee has not claimed depreciation in the Return of Income? - Tribunal held that depreciation is to be allowed in respect of the ASSESSMENT YEARS 2001-02 i.e., prior to insertion of/coming into force of Explanation 5 to 32 - Held that:- The Apex Court in Mahindra Mill’s case [2000 (3) TMI 3 - SUPREME Court] was not merely interpreting Section 34. It was interpreting Sections 28 to 43A and the scheme of the Act and has made it very clear that the assessee is not bound to claim depreciation nor the revenue can grant depreciation even without his asking. If claiming depreciation is not in the interest of the assessee, Income Tax Officer has an obligation to advise him suitably. At any rate, this was the law as on that date in view of the judgment of the Apex Court. That probably the reason why it became necessary to introduce the explanation 5. Explanation 5 makes it clear that for the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income. Though the words for removal of doubts has been interpreted, the said provision is clarificatory in nature. In the instant case, clarification becomes necessary because of the law laid down by the Apex Court and therefore from the day explanation is introduced, the area is covered by legislation, the Supreme Court judgment would have no application. Therefore Explanation 5 is necessarily to be read as prospective in nature. Admittedly, in the instant case, the explanation has no application to the Assessment year 2001-02 as the explanation was inserted with effect from 01.04.2002. Therefore, the view taken by the Tribunal is incorrect and requires to be interfered with. Decided favour of the assessee.
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2015 (3) TMI 575
Revision u/s 263 - petitioner had prayed for cancellation of the show-cause notice dated February 3, 2014, issued under section 263 - whether said Commissioner had neither called for, examined nor considered the assessment proceedings before putting his signature in approval of the draft notice which notice was then issued to the petitioner also under his signature? - Held that:- It appears from the records produced, during August, 2013, the DCIT, HQRS-2, Kolkata, writing on behalf of the said Commissioner to the Joint Commissioner of Income-tax, Range 4, 5 and 6, Kolkata, had requested that office to submit the list of cases in which review under section 263 of the 1961 Act had to be completed on or before March 31, 2014. It is, thereafter, 29 files, one of which relates to the appellant-petitioner, were received by the office of said Commissioner on January 29, 2014. Then a draft notice under section 263 of the 1961 Act was put up for signature of the said Commissioner. The said Commissioner had put his signature on the order sheet for putting up the draft notice under section 263 of the 1961 Act as well as issued the said show-cause notice as evident from annexure P2 to the writ petition appended to the application for stay. We hold that having put his signature in approval of the draft notice put up with the file and having issued the said show-cause notice dated February 3, 2014, the same is sufficient compliance by the said Commissioner in the facts and circumstances, discussed above. The Commissioner had complied with the provisions contained in section 263 of the 1961 Act in the matter of calling for, examining the records of the assessment proceedings to consider the necessity of issuing such show-cause notice. - Decided against assessee.
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2015 (3) TMI 574
Penalty under Section 271 (1)(c) - non declaration of any profit/ short term capital gain on the sale of Dal Mill by treating that as a long term capital gain - claim of the assessee was a debatable one and there was no specific finding that the assessee had submitted false or incorrect accounts - Held that:- In the case in hand, it is not in dispute that the assessee disclosed all details about its income including the fact about sale of Dal Mill with a consideration of ₹ 19,14,000/- A depreciation was claimed by it by treating the same as a depreciable asset. The written down value too was referred but the error crept in treating the transaction as long term capital gain. The assessee committed the error in present set of facts and that cannot be treated as concealment of particulars of its income or furnishing inaccurate particulars of income. The error could have been rectified by the Assessing Officer by making necessary additions and for that the assessee is under obligation to pay tax but penalty could have not been imposed as per Section 271(a)(c) of the Act without satisfying concealment or submission of inaccurate particulars of income on the part of the assessee. Such satisfaction must reflect in the order of assessment as the penalty as per the provision under consideration is not automatic. Such a penalty must not be imposed ipse dixit. We are of the considered opinion that in the case in hand the powers under Section 271 (a)(c) of the Act of 1961 were erroneously exercised. - Decided in favour of assessee.
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2015 (3) TMI 573
Convicting the petitioner under sections 276C and 277 - Held that:- Firstly, coming to the contention of the learned counsel for the petitioner in respect of non-getting a sanction before filing a complaint, a perusal of the complaint would clearly go to show that after getting proper sanction only, the complaint has been lodged against the petitioner herein and the same was taken cognizance by the learned magistrate concerned as narrated above. Hence, this contention of the learned counsel for the petitioner has got no force. Secondly, coming to the contention of the learned counsel for the petitioner to the effect that the Income-tax Department used to show some sort of privilege to some assessees like big personalities, a perusal of the judgment in Crl. A. No. 241 of 2001 which was produced by the learned special public prosecutor for the respondent would go to show that in similar circumstances as that of the present case, a case has been instituted against another Income-tax assessee and the trial court has convicted the accused accordingly and the appellate court only acquitted the accused on technicality. At this stage, it is represented by the learned special public prosecutor that after obtaining leave from this court, the offence has been compounded. Therefore, there is no merit in this revision
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2015 (3) TMI 572
Vadity of Notice under Section 143(2) - Petitioner filed its return on 14.9.2012. The end of the Financial Year would be 31.3.2013 - Held that:- The purported notice dated 10.09.2013 issued under Section 143(2) by the Assessing Officer at Bangalore was without jurisdiction inasmuch as the Assessing Officer at New Delhi had jurisdiction over the case. This fact was immediately pointed out by the assessee/petitioner by virtue of its letter dated 17.09.2013 where it had clearly indicated that it was regularly filing returns in Delhi and that the jurisdiction of the case was in Delhi. On this basis, it was requested that the said notice issued by the Bangalore office be withdrawn. Thereafter, the Income Tax Officer, Ward-6(1) (1), Bangalore wrote to the Income Tax Officer, Ward-24(3), New Delhi on the subject of transfer of scrutiny assessment records in the case of the petitioner. It is evident from the aforesaid letter that it is only the records of the case which were transferred and if the case itself had been transferred, the same would have to be directed under Section 127 of the said Act. No such order of transfer has been made and the above letter dated 16.12.2014 is indicative of the fact that the Bangalore Office of the Income Tax Department did not have jurisdiction in this case. - The first notice, therefore, which was issued by an Officer having jurisdiction was on 24.12.2014. This was issued clearly beyond the period of limitation which has been prescribed, i.e., beyond 30.09.2013 in this case. As such, the impugned notice dated 24.12.2014 issued under Section 143(2) of the said Act is barred by time. - Decided in favour of assessee.
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2015 (3) TMI 571
Genuineness of the gift - Tribunal deleted addition - revenue seeking another opportunity under Rule 46A - Held that:- Admittedly the Assessing Officer could not examine the donors but during the course of appellate proceedings, the Commissioner of Income Tax (Appeals) had called for a remand report from the Assessing Officer and, in these remand proceedings, all the donors were examined by the Inspector in which the donors admitted having given the gift to the son of the assessee. The Tribunal has found that there was no defect in the inquiry conducted by the Assessing Officer in the remand proceedings with regard to the genuineness of the financial position of the donors. Thus no reason to interfere in the order of the Tribunal. The contention of the appellant that the Assessing Officer was to be given an opportunity under Rule 46A of the Rules of 1962 is patently misplaced and not applicable, inasmuch as the first appellate authority had forwarded all the additional evidence to the Assessing Officer to examine the genuineness and submit a remand report. When the Assessing Officer has himself examined all the evidence, the question of giving another opportunity under Rule 46A of the Rules of 1962 does not arise. - Decided against revenue.
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2015 (3) TMI 570
Addition on account of interest expenses - CIT(A) deleted addition - Held that:- AO in the order has noted that Assessee was asked to furnish the cash flow statement and Ld. DR before us has also submitted that cash flow statement was not submitted by the assessee. Before us though Ld. AR has submitted that the cash flow statement was submitted but she could not point out the same from the paper book. We further find that CIT(A) while deleting the addition has passed on the burden of proving the nexus between the interest bearing funds and availability of interest free advances on the AO. We are of the view that AO can only prove the nexus provided the required information is made available to him. As seen in the present case, no material has been placed on record to demonstrate that the cash flow was submitted to the AO. Before us it was also submitted that the loans obtained from Bank was in the nature of pledge and therefore the funds could not have been diverted. We however find that Assessee has not placed the sanction letter of the bank from which the terms and conditions of the bank loan received by the assessee could be ascertained. In such a situation, we are of the view that the issue needs re-examination at the end of AO. We therefore remit the issue to the file of AO to re-examine the issue afresh - Decided in favour of revenue for staitiscal purposes. Addition on account of stamp duty for pledge agreement and processing fees charged by bank CIT(A) deleted addition - Held that:- CIT(A) while deleting the addition has noted that the expenses incurred towards pledge agreement with the bank was for borrowing working capital availed from bank and by incurring the expenditure no capital asset has come into existence. Before us no material has been placed on record by the Revenue to controvert the findings of CIT(A) and thus this ground of Revenue is dismissed. - Decided against revenue. Disallowance on account of repairs etc. - Held that:- CIT(A) deleted addition - Held that:- CIT(A) while deleting the addition has noted that simply on the basis of quantum of expenditure vis-à-vis the WDV of assets, the expenditure cannot be treated as capital expenses. He has further given a finding that the entire work of repairs and renovation was given on contract and therefore the addition at 40% towards labour charge payments was also unwarranted. Before us no material has been placed on record by the Revenue to controvert the findings of CIT(A) and thus this ground of Revenue is dismissed. - Decided against revenue. Addition on account of machinery reconditioning charges - CIT(A) deleted addition - Held that:- CIT(A) while deleting the addition has noted that for treating the expenses to be capital in nature, A.O merely relied on the fact that the expenditure incurred by the assessee was substantial as compared to the WDV of the assets. Ld. CIT(A) further held that the amount of expenditure alone does not alter the character of the expenditure. Before us no material has been placed on record by the Revenue to controvert the findings of CIT(A) - Decided against revenue. Disallowance of expenses u/s. 40(a)(ia) - CIT(A) deleted addition - payment to Soham Logistics Pvt Ltd comprises of payment towards Inland Transportation Charges, Ocean Freight, Terminal Handling Charges and Fees for Services rendered - Held that:- With respect to Inland transportation charges, we find that it is Assessee’s submission that Soham Logistic Pvt. Ltd., to whom the payments have been made has in turn have made the payment to the transporters and thus it is in the form of reimbursement and there is no mark up. On the other hand, we find that the A.O while disallowing the payment has noted that Soham Logistic Pvt. Ltd. has not given details of the payment received from the Assessee on which it has made the TDS and the same remained unverifiable. We further find that there are no details in support of the A.R’s contention that there is no mark up on Inland transportation charges and the payments made the assessee are in the form of mere reimbursements. We further find that there is no finding of CIT(A) about payments made the Assessee to be in the nature of reimbursement. We therefore feel that the issue needs to be re-examined at the end of A.O. We therefore remit the issue to the file of A.O to decide the issue afresh. With respect to Ocean freight provision of section 194C & 195 of deduction of TDS to the agents would not apply only when the agent is a shipping agent of non-resident ship-owner or charterer and not otherwise. In the present case, in view of no material on record to demonstrate that Soham Logistic Pvt Ltd was agent of non-resident shipowners, we find that A.O was justified in disallowing the expenditure on Ocean freight u/s. 40(a)(ia) of the Act. With respect to payment to Terminal handling charges it is Assessee’s submission that it has deducted the TDS but on the contrary it is A.O’s observation that TDS was deducted only of ₹ 91,789/-, and no evidence of deduction of TDS on other payments was furnished before A.O. We also find that CIT(A) has also not given a categorical finding about the deduction of TDS by Assessee on the other payments of Terminal Handling charges. In view of these facts, we are of the view that the matter needs to be reexamined at the end of A.O. We therefore set aside the ground with respect to the disallowance of Terminal handling charges to the file of A.O to verify the contention of the Assessee and thereafter decided the issue in accordance with law and after giving a reasonable opportunity of hearing to the Assessee. With respect to deduction of TDS on the fees for services rendered, it is assessee’s contention that the TDS has been deducted but on the other hand it is Revenue’s contention that on all the bills TDS has not been deducted and it is not the case of short deduction but the case is of no deduction of TDS. Before us no details of such expenses have been placed on record by both the parties so as to justify thier respective stands. We therefore feel that this issue of payment of TDS on account of services rendered also needs to be re-examined. We therefore set aside this portion of ground to the A.O to decide the issue in accordance with law and after giving a reasonable opportunity to the Assessee. The Assessee is also directed to furnish to all the necessary details called for by the A.O. - Decided partly in favour of revenue for statistical purposes Disallowance of seed purchases expenses - CIT(A) deleted addition - Held that:- Before us it is Assessee’s contention that the prices paid to the sister concerns were comparable to the price paid to outsiders and no undue advantage has been passed on to the sister concerns. CIT(A) while deleting the addition has given a finding that the transaction of purchase could not have been with an idea to avoid payment of taxes. Before us Revenue has not placed any material on record to controvert the submissions of the Assessee or the findings of CIT(A). In view of these facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. - Decided against revenue. Addition of milling expenses - CIT(A) deleted addition - Assessee has debited milling expenses of ₹ 13 lacs which was paid to Jyotindra Industries, a person specified u/s. 40(a)(2b) of the Act - Held that:- A.O while disallowing the expenses has noted that no evidence like challans for sending and receiving the goods have been submitted by the assessee. Before us also no material has been placed on record by the Assessee in the form of challans, transportation receipts bills etc to demonstrate that there was movements of goods between the premises of Assessee and Jyotindra Industries. From the copy of the audit report for year ending 31st March, 2009 of Jyotindra Industries placed at page 128 of the paper book, it is seen that Assessee is located at Sri Sarvodya Industries Compound, Disha Road Palanpur, Gujarat whereas the address of the Assessee is “Jyotindra Group Compound 4 km. Ahmedabad Highway S.H. 41 Palanpur and therefore during the course of hearing, the ld. A.R. was asked to as to whether the Assessee and Jyotindra Industries are located in the same compound to which no satisfactory reply was given by ld. A.R. Further the exceptional reasons which necessitated the payment has also not been placed before us. We further find that CIT(A) has also not given any finding on the issues raised by A.O. In view of the these facts, we are of the view that A.O was fully justified in making the disallowance, we therefore uphold the action of A.O. - Decided in favour of revenue. Disallowance out of Terminal handling charges - non deduction of TDS - Held that:- A.O while disallowing the expenditure has noted that Assessee did not furnish any details in support of its claim of deduction of TDS. We further find that CIT(A) has also noted that before him , the A.R of the Assessee have expressed his inability to furnish the necessary details or evidence. Before us also no details of the same has been furnished by the Assessee. We further find that the ratio of the decision relied upon by ld. A.R. are not applicable to the present case as in that case, it was not a case of non deduction of tax, was a different case of difference in rate of deduction of TDS (i.e. whether TDS to be deducted u/s 194C or 194I of the Act). In view of the aforesaid facts, we therefore find no reason to interfere with the order of CIT(A) - Decided against assessee. Disallowance of depreciation on BMW car treating it as a commercial vehicle - CIT(A) deleted addition - Held that:- It is an undisputed fact that Assessee had purchased a BMW car and has claimed depreciation @ 50% considering it to be commercial vehicle. The definition of “commercial vehicle has been given in Note 6 of the Appendix 1 which defines “commercial vehicle” as “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicles”, & “medium passenger motor vehicle” but does not include “maxicab”, “motor cab”, “tractor”, & “road rollers”. The definition of various types of vehicles specified herein above shall have the meanings respectively as assigned to them in S. 2 of Motor Vehicles Act, 1988. As per the definition of Motor Vehicle Act, heavy goods vehicle & heavy passenger motor vehicle among other things stipulates that a heavy vehicle would be one with the unladen weight which exceeds 12000 kg & the light motor vehicle vehicle’s apart from other things in the Act would be one whose weight does not exceed 7500 kgs. Before us no copy of the Registration certificate issued by Motor Vehicle Authorities has been placed on record to demonstrate as to the nature of the vehicle i.e. whether the vehicle is heavy motor vehicle or light motor vehicle being considered by them. Further there is no finding by the A.O or CIT(A) that it has been used for the purpose of business nor any material has been placed by the Assessee to demonstrate its use for the purpose of business. In view of the aforesaid facts, we are of the view that the matter needs reexamination at the end of AO. We therefore set aside the issue to the file of AO to decide the issue afresh in accordance with law and after giving a reasonable opportunity of hearing to Assessee - Decided in favour of revenue for statistical purposes. Deduction u/s 80IB disallowed - Held that:- While computing he deduction under 80IB, A.O has reduced the loss for A.Y. 08-09 and on the recalculated figure granted deduction and the action of A.O was upheld by CIT(A) by following the decision of Special Bench in the case of Goldmines Shares Pvt. Ltd. [2008 (4) TMI 405 - ITAT AHMEDABAD ] - As relying on Deloitte Consulting India P. Ltd vs. DCIT [2014 (1) TMI 438 - ITAT HYDERABAD] and Honda Siel Power Products Ltd vs. CIT [2007 (11) TMI 8 - Supreme Court of India] wherein held that a decision of Special Bench of the Tribunal on a particular issue is binding unless contrary decision of higher court is brought to its notice. - Decided against assessee.
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2015 (3) TMI 569
Advertisement and Sales Promotion - capital v/s revenue expenditure - submission of the assessee was that it was required to incur advertisement and sales promotion expenses continuously every year - CIT(A) held the expenditure incurred for brand building purpose - Held that:- he expenditure incurred in order to facilitate the business operation and not with the object of acquiring asset of enduring nature is allowable as revenue expenditure. In the instant case, we have already seen that the assessee has been incurring expenditure and sales promotion since AY 2004-05, meaning thereby, the assessee was required to incur those expenses every year in order to retain its position in the market. There should not be any dispute that the assessee is conducting its business in a competitive environment. Further, there is merit in the submission of Ld A.R that it is difficult to assess the period of benefit derived from advertisement and further it is also difficult to ascertain as to whether any “brand name” was created. Hence, we are of the view that the Ld CIT(A) was not correct in law in holding that the assessee has spent the expenditure on advertisement and sales promotion for brand building purpose. In our view, the assessee was right in law in claiming this expenditure as revenue expenditure. - Decided in favour of assessee. Unaccounted service income - AO noticed that the assessee has been consuming its own products (captive consumption) while providing services to its clients - assessee contented that the consumption of materials would depend upon the types of services offered, i.e, the product mix would depend upon the type of service, thus, captive consumption of materials cannot be at standard proportion of service income receipts - Held that:- there appears to be some merit in the contentions of the assessee. Normally the service receipts are determined on the basis of Fixed costs, variable costs and profit element. The material cost would fall in the category of variable costs. Accordingly, the cost of particular service would normally be determined at Fixed cost + Variable cost + Profit amount. Hence, comparison of the variable cost to the total service receipts, in our view, may not be right method of approaching issue. Further, when the assessee is offering 562 types of services and since there is a possibility that one unit of product shall be used to many clients, it would also be difficult to establish one to one correlation between the consumption and the service receipt. Hence the rejection of books of account and consequent estimate of income under these set of facts, in our view, is not justified. On the contrary, the claim of captive consumption needs to be examined on an overall basis, i.e., by making test checks. The assessee has claimed to have maintained quantity details of various products. Hence, on a test check basis, the said details can be verified and a decision can be taken. Hence, we are of the view that this issue needs to be restored to the file of the AO with the direction to examine the claim of captive consumption. - Decided in favour of assessee for statistical purposes. Eligibility to claim depreciation on the pre-operative expenses - CIT(A) allowed depreciation - Held that:- AO has wrongly disallowed depreciation without any valid reasons when it is establish that there is some expenditure which are preoperative expenses then same are to be amortized or it has to be capitalized in respective assets. AO has not proved beyond doubt as to how such expenses are not related to acquisition of such assets. There is no proper reasoning of the assessment order hence same can not be upheld. On the contrary, Ld. AR has rightly argued that such expenses are attributable to the cost of bringing the assets to its working condition for its use. See Challapalli Sugars Ltd. v. CIT (1974 (10) TMI 3 - SUPREME Court) - Decided in favour of assessee. Disallowance made u/s 40A(3) - AO noticed that the assessee’s sister concern named M/s Marico Ltd had incurred certain expenses on behalf of the assessee herein thus expenditure incurred through Journal entries does not fall in any of the exemptions provided under Rule 6DD of the IT Rules - CIT(A) directed the AO to delete the disallowance - Held that:- According to Ld CIT(A), the salary was given to the employees by direct credit to their bank accounts. However, the Ld CIT(A) did not refer to any material in support of this conclusion. He has further expressed the view that the payments made through Journal vouchers are not hit by the provisions of sec. 40A(3) of the Act. We are unable to accept the said view. When Marico Ltd was incurring expenses on behalf of the assessee, it is required to comply with the provisions of sec. 40A(3) of the Act. Otherwise, the assessee is required to show that the payments are covered by the exceptions given in Rule 6DD of IT Rules. Since the assessee has claimed that M/s Marico Ltd has incurred expenses through cheque payments wherever necessary, including the salary payment made to seconded employees, we are of the view this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer for fresh examination. - Decided in favour of revenue for statistical purposes.
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2015 (3) TMI 568
Compensation paid to prospective buyers for delay in completion of project - CIT(A) deleted the addition - Held that:- So far as it relates to ₹ 7,22,250/- for Compensation paid the relevant clauses which are reproduced earlier are found in the sale agreement. To fulfill obligation of those clauses the assessee has made payment to the buyers. Thus, the payment of this amount cannot be said to gratuitous in nature as held by AO and Ld. CIT(A) has rightly deleted the addition on the basis of documentary evidences and we find no infirmity in such deletion and we decline to interfere. - Decided in favour of assessee. Compounding fees to Bangalore Mahangarpalika - CIT(A) deleted the addition - Held that:- So far as it relates to disallowance of ₹ 1,46,910/- for compounding fees it is observed that in the letter written by BMP it has clearly been mentioned that is towards taxes and the contents of the said letter are reproduced in the earlier part of this order. Thus, this payment also cannot be said towards penalty or violation of any provision of the Act. It was in the nature of tax. Therefore, we see no infirmity in this deletion and we decline to interfere. - Decided in favour of assessee. Development charges paid to M/s. R.M. Trust - CIT(A) deleted the addition - Held that:- So far as it relates to disallowance of ₹ 55,94,000/- for development charges after going through the documentary evidence submitted by the assessee before AO as well as Ld. CIT(A), Ld. CIT(A) has granted relief as this amount was towards the development charges paid to R&M Trust and thus, for this deletion also, we are of the opinion that there is no infirmity in the order passed by Ld. CIT(A). We decline to interfere. - Decided in favour of assessee. Option money received - According to AO such money received by the assessee represented sale consideration against sale of properties and requires to be taxed as income - CIT(A) deleted the addition - Held that:- The amount received by the assessee was against the right of option given to the respective parties and even according to the findings of Ld. CIT(A) these amounts were not received by the assessee in the year under consideration. Out of five parties, three parties refunded back the amounts. Regarding balance two parties, they still did not opt for purchase of plots. In these circumstances, in absence of any contrary material, we do not find any fault in the relief given by Ld. CIT(A). - Decided in favour of assessee. Service charges to its sister concern - AO disallowed 50% of the expenditure under the provisions of section 40A(2)(b) - CIT(A) upheld the disallowance to the extent of 10% - Held that:- CIT(A) has passed a speaking order. As per submissions made before AO and Ld. CIT(A) no disallowance was made on similar expenses in A.Y. 1998-99 and for A.Y. 1999- 00 10% disallowance was made on the ground that assessee did not get its account audited. However, for the year under consideration there is no failure of the assessee for getting its accounts audited. In the circumstances of the case, we do not find any infirmity in the order passed by Ld. CIT(A) vide which he has held that 10% of the total expenditure was required to be disallowed and such decision of Ld. CIT(A) will be in accordance with action of AO adopted in A.Y. 1999- 2000. Therefore, we decline to interfere in the relief granted by Ld. CIT(A) and this ground is dismissed. - Decided in favour of assessee.
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2015 (3) TMI 567
Penalty order passed u/s 271(1)(c) - disallowance of ROC fees - Held that:- ROC fees is not allowable as expenditure. The position of law in this regard is very clear. Ld. AR also did not make any submission. Thus, it was a clear cut disallowable amount, which has been claimed as revenue expenditure. So the levy of concealment penalty to this extent is confirmed. - Decided against assessee. Trade mark and patent expenses - Held that:- On this issue also Ld. AR did not submit any arguments and levy of concealment penalty on this amount is also confirmed. - Decided against assessee. Excess depreciation claimed in the return - Held that:- As it can be seen from the observations of the AO, it is case of the assessee right from the beginning that such claim was inadvertently made. The fact regarding the assets were duly disclosed in the return and only rate of depreciation was wrongly claimed. The basis of claim made by the assessee is that it has been described under Companies Act. Keeping in view the smallness of the claim and disclosures of particulars of assets and rate of depreciation and also the returned income of ₹ 8.90 crores, we are of the opinion that this could be an inadvertent mistake for which the assessee should not be held liable for concealment penalty. We, therefore, delete the penalty. - Decided in favour of assessee. Disallowance under section 14A r.w.r. 8D - Held that:- In the year under consideration the assessee has made substantial investment and for making such investment decision have to be taken and it cannot be said that assessee did not incurred any expenditure to earn dividend income which is substantial. Therefore, there is no force in the claim of Ld. AR that assessee did not incur expenditure for earning the dividend income. It is a case where expenses incurred by the assessee to earn exempted income are incurred from joint expenditure and for such situation formula has been prescribed in Rule 8D. In the present case, since assessee did not make any disallowance and even could not substantiate its explanation that no expenditure was incurred for earning exempted income, therefore, we don’t see any force in the claim of the assessee that disallowance on account of expenditure cannot be made as per Rule 8D. However, so far as it relates to component of interest which is a sum of ₹ 9,403/-, we are of the opinion that same is not sustainable for the reason that assessee’s own funds are much more the funds deployed by the assessee in investment out of which the assessee has earned tax free income. Such claim would be supported by the decision of Hon’ble Jurisdictional High Court in the case of HDFC Bank (2014 (8) TMI 119 - BOMBAY HIGH COURT), wherein it has been held that in a case where the own funds of the assessee are sufficient to make investment in tax free securities and shares, then the presumption would be that investment made by the assessee in tax free shares and securities would be out of the own funds of the assessee. Therefore, disallowance to the extent of ₹ 9403/- is deleted. disallowance of ₹ 12,70,726/- is upheld. - Decided partly in favour of assessee. Depreciation on goodwill - Held that:- Since the issue is covered by the Hon’ble Supreme Court in the case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT), as accepted by either parties, the ground is allowed. Hence, the order of the Ld. CIT(A) is set aside on this issue and the AO is directed to allow the claim of depreciation on goodwill. - Decided in favour of assessee.
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2015 (3) TMI 566
Transfer pricing adjustment - selection of comparable - Held that:- Exensys Software Solutions Ltd.- there is an extra-ordinary event which resulted in high operating margin of that company and we, therefore, direct the AO to exclude this company from the list of comparables. In the above referred case of Intoto Sof tware India Pvt. Ltd., complete details were not placed on record, therefore, the matter was sent to AO for verif ication whereas in this case assessee has objected even before the AO/ CIT(A), therefore, there is no need to set aside the issue to the f ile of the AO for examination as was done in the case of Intoto Software (2013 (10) TMI 599 - ITAT HYDERABAD). We are, therefore, of the opinion that on the basis of facts placed on record, the case of Exensys Sof tware Solutions Ltd. cannot be taken as comparable. Similarly, the other cases, Bodhtree consulting Ltd, Four Soft Ltd, Infosys, Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) etc, are also to be excluded as they are considered and analysed in various cases relied on about functional ity and why the same are not comparable to the companies like assessee. Bodhtree consulting Ltd also fails RPT filter as contended. In view of this, we are not discussing above comparables in detail, but, suffice to say that assessee’s submissions are valid. The AO is directed to exclude the above comparables and re-work out the arm’s length margin accordingly. As far as Flextronics Software Limited is concerned, we find that in case of Intoto Software India Pvt. Ltd., (2013 (10) TMI 599 - ITAT HYDERABAD) the co-ordinate Bench of this Tribunal having found it to be functionally different as it is into product development has directed excluding it for comparability analysis. Respectfully following the decision of the coordinate bench of this Tribunal in case of M/s Intoto Software India Pvt.Ltd. (supra) we also direct the Assessing Officer/ TPO to exclude this company. Risk adjustment/working capital adjustment - Held that:- Since TPO himself has concluded that risk adjustment to the extent of 0.85% can be allowed, we direct him to allow the risk adjustment to that extent. It may be pertinent to mention here that in case of assessee in the subsequent AY i.e. AY 2007-08, considering similar risk profile, the Tribunal has allowed risk adjustment of 1%. Keeping in view the aforesaid facts, we direct Assessing Officer/TPO to allow risk adjustment at 0.85% while computing ALP. In view of the aforesaid, Assessing Officer/TPO is directed to compute ALP afresh in terms with direction given hereinbefore and thereafter treat the shortfall, if any, as the adjustment to be made to ALP.
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2015 (3) TMI 565
Revision u/s 263 - unaccounted income from agricultural land - Held that:- In this case the AO issued notice to the assessee under section 143(3) on 6.8.2009 and notice under section 142(1) notice on 27/7/2010. The assessee participated in the assessment proceedings. To various enquiries of the AO the assessee furnished information to the satisfaction of the AO specifically vide assessee’s counsel dated 27/7/2010. The assessee furnished full details of income derived at ₹ 53,23,339/- from agricultural land located at Mondvane Village and it was stated to the AO that the said amount of ₹ 53,23,339/- received as compensation on acquisition of rights of use from the owner of the land was exempt in view of agricultural land under section 10(1) read with section 2(1A) and section 2(14) of the I.T. Act. After considering the reply of the assessee and material brought on record the AO came to the conclusion that the impugned receipt is not taxable and treated as exempt from tax. For this view of the AO, CIT cannot find fault and he cannot impose his view on AO when the AO has taken one possible view. More so, when a transfer of land in similar area was considered, by Co-ordinate Bench of this Tribunal in the case of ITO vs. Amrutilal B. Shah [2013 (12) TMI 1102 - ITAT MUMBAI] wherein held that the definition of capital asset provided in section 2(14)(iii) is not met. There is no notification issued by the Central Government in this regard calling the same being a capital asset. Under these circumstances, the land in question is rightly held by the assessee as agricultural land. It is borne out from the records of the Revenue Department that the lands in question are described by the District Collector, Jamnagar as agricultural lands as evident from the extraction given above. As such, there is no incriminating material in the possession of the Assessing Officer to hold that the land in question is capital asset within the meaning of section 2(14) of the Act. Regarding the onus related issues, we find that the same keep changing depending on the information furnished by the assessee and also gathered by the Revenue from time to time. Thus we annul the order passed by ld. CIT u/s. 263 - Decided in favor of assessee.
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2015 (3) TMI 564
TDS on commission and interest expenses - assessee failed to pay the tax on or before the last day of the previous year - Tribunal deleted addition to held that the amendment to the provisions of Sec.40(a)(ia) whereby it was laid down that if the tax deducted at source is paid on or before the due date for filing the return of income u/s.139(1) no disallowance can be made u/s.40(a)(ia) is retrospective in operation and operates from 1.4.2005 though it is said to be retrospective only from 1.4.2010 - Held that:- Tax deducted at source by the Assessee which have admittedly been paid on or before the due date for filing the return of income for AY 07-08, have to be considered as having been paid within time and therefore the provisions of Sec.40(a)(ia) of the Act cannot be invoked to disallow the payments. As laid down in COMMISSIONER OF INCOME TAX, KOL-XI, KOL Versus VIRGIN CREATIONS [2011 (11) TMI 348 - CALCUTTA HIGH COURT] Amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from 1.4.2005. Consequently, any payment of tax deducted at source during previous years relevant to and from AY 05-06 can be made to the Government on or before the due date for filing return of income u/s.139(1) of the Act. If payments are made as aforesaid, then no deduction u/s.40(a)(ia) of the Act can be made. Admittedly in the present case, the Assessee had deposited the tax deducted at source on or before the due date for filing return of income u/s.139(1) of the Act and therefore the impugned disallowance deserves to be deleted. - Decided in favour of assessee.
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2015 (3) TMI 563
Disallowance of loss arising out of valuation of shares - AO has raised the issue that BIFC did not have the adequate number of shares in their stock as on the date sale - CIT(A) deleting the disallowance - Held that:- the facts are contrary to the findings of the AO, as would appear from the copy of account enclosed herewith, that the said BFIC had the required number of shares in their stock and in response to the query of the AO, an explanation was filed vide letter dated 30.11.2011 (copy is enclosed in assessee's paper book). Further, the AO also made enquiry u/s. 133(6) from the seller BIFC, who also replied and admitted the factum of the sale of share. Therefore simply because the shares amount transferred to the Demat account of the assessee or that the payments were made in the subsequent year, the transaction cannot be taken to be not genuine. The AO noted that the transaction is bogus and further the purchase was inflated. However, there is no basis for the same but it is only the presumptions of the AO. Moreover, as informed during the course of this appeal hearing before us by Ld. Counsel that after completion of the assessment of the assessee, scrutiny assessment of the seller was taken up and in such scrutiny assessment, the sale of the have been treated to be genuine. This fact was also not examined by the AO from the assessment records of the seller, as the PAN was given. We are of the view that in case the transaction have been treated as genuine in the hands of the seller, the same very transaction cannot be non-genuine in the hands of the purchaser. On identical issue taken up by Hon'ble Gujarat High Court in the case of Prudent Finance (P.) Ltd. [2014 (5) TMI 10 - GUJARAT HIGH COURT] we are of the view that the transaction to unrelated parties i.e. off market transaction, there was no evidence in the present case also which suggests that the shares were artificially sold at a lower rate than the prevailing market rate. Even the AO could not bring anything on record, which suggests that the selling rate was lower than the market rate. Respectfully following Hon'ble Gujarat High Court, we confirm the order of CIT(A) and the issue of revenue's appeal is dismissed. - Decided in favour of assessee.
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2015 (3) TMI 562
Reopening of assessment - validity of notice - non serving on notice challenged - Held that:- It is clear from the records that there is no evidence for the notice u/s. 148 of the Act dated 19.9.05 having been dispatched. There is no evidence, admittedly, for the said notice having been served on the assessee as well. It is also clear from the notice dated 19.9.05 that the AO originally started writing the address given in the return of income, but for the reasons best known to him, had struck off the said address and has addressed the notice to '310, Raheja Arcade, 1/1, Koramangala Industrial Layout, Bangalore'. These circumstances throw suspicion on whether notice u/s. 148 was issued at all to the assessee. From the evidence available on the record, we are of the view that revenue has failed to establish the issue of notice u/s. 148 of the Act as well as its service on the assessee. - Decided in favour of assessee.
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2015 (3) TMI 561
Addition on account of unaccounted parking charges received from twin bungalow holder - CIT(A) confirmed addition - Held that:- For the year under appeal, the assessee points out that the difference was only in respect of the TB No.14 sold to one Shri P.K. Patil wherein, in the original Annexure A prepared during the course of survey, the undisclosed income was taken at ₹ 3 lakhs whereas on reconciliation it transpires that in fact, the difference was ₹ 75,000/-. Consequently, a sum of ₹ 2,25,000/- was not offered as additional income vis-à-vis the said twin bungalows. The additional income was offered by the assessee after the details in respect of the various properties sold by the assessee were tabulated by the survey team on the basis of documents found from the possession of the assessee, which reflected the difference between actual sale consideration and the agreement value. However, by way of retraction statement, the assessee claims that it had verified the impounded documents and papers and no parking charges were received from row houses and twin bungalow holders. The undisclosed and unaccounted income in the hands of the assessee was tabulated by the survey team on the basis of the impounded documents. The claim of the assessee before the survey team was that it had received certain charges against the properties sold by it which were not disclosed in the return of income. Consequently, the tabulation of additional income in the hands of the assessee and basis for such tabulation of such undisclosed income was the documents found from the possession of the assessee. The assessee in first round surrendered income, which was retracted by the assessee by the retraction statement filed before the Assessing Officer, cognizance of which has not been taken either by the Assessing Officer or the CIT(A). The onus is fully upon the assessee to explain with evidence as to the reason why it is retracting from its earlier disclosure of undisclosed income. In the interest of justice, we deem it fit to restore this issue to the file of Assessing Officer for adjudication afresh in accordance with law after allowing reasonable opportunity of hearing to the assessee - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (3) TMI 589
Penalty u/s 114(1) - Smuggling of Indian currency - Knowledge of smuggling - Held that:- Considering the fact from the investigation it has not come out whether the appellant was having the knowledge of the Indian currency being smuggled in the baggage in question, therefore immunity from higher penalty is required to be given to the appellant. In these circumstances, I reduce the penalty from ₹ 5,00,000/- to ₹ 1,00,000 - Decided partly in favour of assesse.
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2015 (3) TMI 588
Waiver of pre deposit - Benefit of exemption in terms of Notification No. 21/2002-Cus dated 1.3.2002 - import of Crude Palm Oil (CPO) of Edible Grade - Held that:- It was submitted that nowhere, the Notification prescribed that if the acid value is more than 10, the product should be considered as non-edible grade. It was also submitted that having sent the samples for testing at Revenue laboratory, the department was bound to follow the report of the Revenue laboratory and in any case it was also submitted that according to precedent decision, the report of the CRCL is to be preferred to any other report. We find that this submission of the appellant is supported by the decision of the Tribunal in the case of appellant themselves as reported at [2013 (11) TMI 393 - CESTAT BANGALORE]. Further, it is also noted that Hon’ble High Court of Gujarat in the case of Cargill India Pvt. Ltd. Vs UOI [2013 (6) TMI 40 - GUJARAT HIGH COURT] had taken the same view which has been followed by the Tribunal. Under these circumstances we find that appellant has made out a prima facie case for waiver and accordingly the requirement of predeposit is waived and stay against recovery granted during the pendency of appeal. - Stay granted.
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2015 (3) TMI 587
Rectification of Mistake - Notification 112/2005 dated 28.05.2005 - Held that:- impugned order passed by the learned Commissioner on 18.03.2008, has been set aside on the ground that the learned Commissioner was having lack of jurisdiction to adjudicate the impugned show-cause notice as the same was assigned to Shri. K.K.Srivastava, Commissioner of Customs (Adj.). It is further recorded in the order that the appointment of Shri K.K. Srivastava, Commissioner of Customs (Adjudication) was withdrawn on 27.08.2009 which means that when this matter was adjudicated by the Commissioner of Customs (Import), Nhava Sheva, he was not having the jurisdiction to adjudicate the case. Therefore, we do not find any merit in the application filed by the Revenue - Decided against Revenue.
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2015 (3) TMI 586
Waiver of predeposit of duty - Undervaluation of goods - Held that:- It is found on e-mails of applicant to foreign supplier recovered from the seized hard disc, statements etc. that the applicant had been making arrangements for transfer of funds to the manufacturer of goods. The documents were examined through Government Examiner of Questioned Documents (GEQD) who was cross-examined. It appears that the applicant failed to refute any of the evidences. It is also noted that the applicant admitted undervaluation of 3 Bills of Entry and the value of which was mostly same in the other Bills of Entry. - applicant failed to make out a prima facie case for waiver of entire amount of duty along with interest and penalty. - Partial stay granted.
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Corporate Laws
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2015 (3) TMI 585
Application for Winding up - Grounds for winding up - Held that:- Adverting attention to the contention of Mr. Bose now, which has been referred to earlier, it cannot be gainsaid that His Lordship did not have the benefit of looking into the contents of the letter dated April 2, 2010, for, neither was the same disclosed in the company petition nor had the affidavit in- opposition of the company surfaced when His Lordship was in seisin of the company petition at the pre-advertisement stage. If at all the said letter did not reflect the actual state of affairs, nothing prevented the petitioning creditor from challenging its contents by sending an adequate response. The orders of admission and winding up had been obtained by the petitioning creditor keeping His Lordship in the dark about the existence of such a letter which, in the further opinion of this bench, clinches the issue for the company and against the petitioning creditor insofar as the merits of the company petition are concerned. The decisions cited by Ms. Bhutoria, learned advocate for the company reported in [2009 (11) TMI 508 - HIGH COURT OF BOMBAY] E-City Media P. Ltd. , [2001 (3) TMI 922 - HIGH COURT OF KARNATAKA] Greenhills Exports (P) Ltd. are authorities for the proposition that a case based on a claim for unascertained damages cannot be equated with debt and that a petition for winding up of a company is not maintainable where the amount claimed is not a debt but damages. In the circumstances, the proper course is to relegate the petitioning creditor to a suit. Having regard to disclosure of the letter dated April 2, 2010, it is held that the company has not created an illusion of a defence but a bona fide dispute requiring detailed investigation into the facts; a dispute, which cannot be adjudicated in a summary proceeding of the present nature.In the result, the company petition is permanently stayed.
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2015 (3) TMI 584
Winding up petition - Non payment of legally recoverable dues by the company - Recovery matter disputed before civil court - Held that:- The winding up petition should be allowed when the debt is crystallized clear and undisputable and not when the dispute is bona fide and requires to be adjudicated before the Civil Court. The defence of the Company should be in good faith and one of substance and every possibility to sustain in law.The Apex Court in case of Pradeshiya Industrial [[1994 (2) TMI 267 - SUPREME COURT OF INDIA]] interpreted the expression “unable to pay its debts” in commercial sense to mean that the existing liabilities of the Companies is more than its assets. It is undisputed that the transaction between the parties continued for several years. The agreement provides the deposit of money in the bank account after deduction of the commission, taxes and other expenses. It is not an allegation of the petitioning creditor that the Company has violated any of the terms and conditions embedded in the agreements. The termination came because of the change in the policy and it cannot be said at this stage that the remedy of the Company is not available in seeking the damages for illegal and wrongful termination. The Company has approached the Bombay High Court by filing the civil suit for recovery of money on account of damages though there has been some admission on the part of the Company for such an amount payable to the petitioner but the same has been adjusted against the claim made in the said suit. The adjustment of an amount when the claim made is much more, is not impermissible under the law. It does not invite the Company Court to pass an order for winding up of the Company as the liability is admitted. The same views were confirmed in case of Smt. Vijayalakshmi [1999 (3) TMI 477 - HIGH COURT OF ANDHRA PRADESH]. Therefore, the plea of adjustment is not unrecognized in law provided the amount for which it is adjusted is legally sustainable and/or recoverable. It is essentially a question of evidence and the winding up petition should not be allowed as the liabilities are admitted. Furthermore, the petitioning-creditor have made a counter-claim including the amount admittedly adjusted against the claim made in the suit which cannot be said to be unreal, undisputable and moonshine. The Company has raised a bona fide defence and the parties have already approached the Bombay High Court making claim and counter-claim and, therefore, this Court does not find that it is such an open and shut case where the Company appears to be commercially insolvent and there is no reasonable cause or excuse to pay its debts. The Company petition shall remain permanently stayed. - Winding up petition dismissed.
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2015 (3) TMI 583
Permission of filing arbitration proceedings when company in liquidation - Objection statement by Official Liquidator - Held that:- Even assuming for a moment that leave is granted to raise the arbitration proceedings and if an award is passed in favour of the applicant, even then the applicant cannot be granted leave to execute such award independent of the liquidation proceedings. The applicant can only lodge its claim with the Official Liquidator based on the award that may be passed in their favour. If this aspect of the matter is kept in view, certainly, the contention putforth on behalf of the Official Liquidator that the expenses of the arbitration proceedings should not be burdened on the company in liquidation merits consideration. Therefore, instead of granting leave to proceed with the arbitration, I am of the opinion, it would be appropriate to permit the applicant to lodge its claim before the Official Liquidator. - Decided against the appellant.
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Service Tax
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2015 (3) TMI 599
Denial of refund claim - Bar of limitation - Unutilized CENVAT Credit - appellant has not filed hard copy of the refund claim filed (electronically) - Held that:- Appellant has been filed refund claim electronically in time. As this refund claim was filed electronically within time limit prescribed as per Section 11B of the Act and as held by this Tribunal in the case of NCS Pearson India Pvt Ltd. [2015 (3) TMI 439 - CESTAT NEW DELHI], I hold that date of filing of refund claim electronically should be considered as date of filing of refund claim. I find that the in the Impugned order refund claim has not been considered on merits. Therefore, impugned order is set aside and matter remanded to the adjudicating authority to consider the refund claim on merits being filed within time - Decided in favour of assessee.
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2015 (3) TMI 598
Renting of immovable property - renting of immovable property to various State Government offices previously held to be not taxable - Held that:- AR, at this stage, has not been able to show us that the earlier order of Commissioner (Appeals) was appealed against by the Revenue or the same was accepted. As such, we deem it fit, at this stage itself, to set aside the impugned order itself and remand the matter to the original adjudicating authority for fresh decision after considering the definition of ‘renting of immovable property' as also the observance made by the Commissioner(Appeals) in his above referred decision. The fact of the said order having attained finality or otherwise would also be examined by the lower authorities. The appellant's claim of applicability of the Finance Act, 2012 in respect of penalty would also be examined. - Decided in favour of assessee.
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2015 (3) TMI 597
Restoration of appeal - Appeal dismissed for non compliance with pre deposit order - Held that:- The Notification No.45/2010-ST provides exemption to all taxable services relating to transmission and distribution of electricity by a person to another person during the relevant period covered by the proceedings. It is not limited only to taxable service of transmission by the transmission company as observed by the learned original adjudicating authority. Prima facie , I find that appellant is eligible for the benefit of Notification and therefore the appeal could have been heard without insisting on pre-deposit. Accordingly, the impugned order is set aside and the matter is remanded to the Commissioner (A) with a request to hear the appeal without insisting on any pre-deposit. - Decided in favour of assessee.
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2015 (3) TMI 596
Waiver of pre deposit - Commissioning, Installation and Erection Services - Held that:- For consideration of the stay application, the ld. counsel for the appellants submits that the service tax has been demanded on the entire amount of services provided by the appellant, in fact the cost of the material supplied is required to be deducted. If the same is taken into consideration, the demand of service tax shall come down drastically. He further submits that all the services provided by the appellants in relation to railways were w.e.f . 01.06.2007. The services provided to Railways are exempted from levy of service tax. If the rate of service tax is considered as 12.36%, the demand against M/s. Saulja Radio Stores shall come down to ₹ 5.62 lakh and in the case of M/s. Nisha Engineering Works it will come down to ₹ 3.14 lakhs. - Partial stay granted.
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2015 (3) TMI 581
Imposition of penalties u/s 77(1)(c) - Whether the appellant had cooperated with the authorities for the purpose of audit by submitting documents or not - Held that:- It is noted from the records that on 23-07-2009 the audit team of the Commissioner of Central Excise and Customs, Vadodara -1 addressed a letter to the appellant for producing/submitting assessee’s profile. The Said letter was unattended to and on 7-9-2009, the office of the Commissioner of Central Excise & Customs, Vadodara-1 sent a reminder to the appellant. It is the claim of the Revenue that the appellant wilfully did not submit the documents while the appellant produces before us an acknowledged copy of the letter dated 20-09-2009 received by the audit section on 22-09-2009 wherein they have attached the required set of documents. It is to be noted that factually, subsequent to such letter having been given to the department, audit has been taken place and final audit report has also been given to the appellant. - there is no reason to sustain penalty imposed by the adjudicating authority and upheld by the first appellate authority on the appellant for non-cooperation - Decided in favour of assessee.
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Central Excise
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2015 (3) TMI 592
Extended period of limitation - Suppression of facts - Manufacturing activity or not - Assessee is engaged in the business of cutting larger steel plates into smaller size and shapes as required by the customers - appellant, under the belief that the aforesaid process does not amount to manufacture did not get himself registered - Held that:- Even as per the Department, there were certain doubts relating to excisability of the process of profile cutting - if the appellant also had nurtured this belief that the process carried out by him does not amount to manufacture and did not pay the excise duty, we can safely infer that this conduct of the appellant was a bona fide conduct and cannot be treated as contumacious or willful suppression. Thus, we are of the opinion that on the facts of this case, proviso to Section 11A(1) of the Act would not be attracted. Once that is held, it is obvious that the period of limitation for serving show cause notice shall be six months. In the present case, the show cause notice covered the period from October, 1991, to September, 1996 and the show cause notice was given on 01.11.1996. In the said show cause notice when only a period of six months could be covered from the date of show cause notice, it will go back to period from May, 1996 onwards. - imposition of penalty upon the appellant is unwarranted. - Decided partly in favour of assessee.
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2015 (3) TMI 591
Valuation of goods - Inclusion of cost of cartons in the assessable value of the final product - Held that:- The Collector of Central Excise (Appeals) has categorically stated in his order that these containers were placed in paper cartons of various sizes for transportation "from the factory gate" for sale to individual customers or as stock transfers. Therefore, on the facts of this case, we find that the test laid down in the aforesaid judgment in the case of Hindustan Safety Glass Works Ltd. [1985 (9) TMI 90 - SUPREME COURT OF INDIA] would not be applicable. Even otherwise, the amount involved is only ₹ 1,22,740 - no merit in this case - Decided against Revenue.
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2015 (3) TMI 590
Classification of goods - manufacture - printed trade advertising material - Classification under heading 49.01 or heading 94.05 - Held that:- Process of manufacturing undertaken by the respondent i.e. printing is done by using thermocopied machine and therefore, it would fall under the head 49.01. By no stretch of imagination, such goods can be classified under the head 94.05 as no lamps and lighting fittings or search lights or spotlights are used by the respondent for the purpose of illuminated signs or illuminated name plates and sign boards. We, therefore, agree with the finding of the Tribunal. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (3) TMI 595
Validity of Tribunal's order - Refusal to review - Tribunal dismissed the appeal by holding that an appeal against an order of review is not maintainable - Held that:- A perusal of the order dismissing the writ petition reveals that order passed by the Tribunal, dismissing the appeal, filed to challenge order passed by the JETC, was affirmed by holding that the petitioner is unable to show sufficient cause for condonation of delay, thereby shutting out any further challenge to the assessment order. The mere fact that the order records that any observation in the order shall not affect the decision of the appeal on merits in the pending review cannot be construed as an affirmation of the maintainability of the appeal against the order dismissing the review petition. The petitioner's contention that the order passed in the writ petition should be read as directing the Tribunal to decide the appeal against the order of review on merits, disregards the fact that challenge to the original order passed by the JETC and the Tribunal having attained finality with dismissal of the writ petition, the filing of any appeal against dismissal of the review petition by the JETC was meaningless. It was in this context that the appeal filed by the petitioner was not maintainable before the Tribunal. - Decided against assessee.
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2015 (3) TMI 594
Validity of order confirming the turn over proposed in the Pre-Revision notice - violation of principle of natural justice - opportunity of hearing not given - Held that:- The averments of the parties and a glance of the impugned order clearly shows that personal hearing has not given by the authority and hence, the impugned order is liable to be quashed. Accordingly, the same is quashed and the matter is remitted to the Authority concerned, who shall hear the petitioner and pass appropriate orders on merits and in accordance with law. - Decided in favour of assessee.
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2015 (3) TMI 593
Levy of penalty on the respondent-assessee under Section 76(6) of the Rajasthan VAT Act, 2003 - Evasion of tax - Malafide intention - Held that:- As the goods in transit were accompanied by all requisite documents under Section 76(2)(b) of the Act of 2003, the mere incident of the documents not being as the Assistant Commercial Taxes Officer, Flying Squad, Bharatpur thought they ought to have been, was not an occasion for levy of penalty. The question of nature of transaction is a matter to be considered in the regular assessment proceeding and where the nature of transaction was improper in law such transaction could have been discarded and requisite tax levied in regular assessment proceedings. Admittedly, the goods in transit were tax paid and even otherwise the respondent-assessee could have made the transfer of goods by way of stock transaction without paying any tax whatsoever. The ACTO, Flying Squad, Bharatpur could at best have referred the matter to the regular assessing authority but could not himself travel beyond his jurisdiction to pontificate on the issue of the irregularity of an inter-state sale being made by the respondent-assessee's Alwar office to its Morena office. This was beyond his jurisdiction. The overall context of the factual situation obtaining on the record of the case is indicative of a complete absence of any intent to evade the tax. - Decided against Revenue.
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Indian Laws
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2015 (3) TMI 582
Guilty of Professional misconduct - Clause (7) of Part I and Clause (1) of Part II of Second Schedule to the Chartered Accountants Act, 1949 - Name removal from the register of members - Held that:- We are satisfied that the prescribed procedure has been followed in the conduct of the complaint of professional misconduct against the respondent no.1. We, on perusal of the material placed before us, are also satisfied with the reasoning aforesaid recorded by the Disciplinary Committee of the petitioner institute for holding the respondent No.1 guilty as aforesaid. We also find the punishment recommended by the petitioner Council to be proportionate to the misconduct of which the respondent No.1 has been found guilty of. Though the jurisdiction of this Court under Section 21(6) of the Act is wide, without any restriction but in our opinion, the findings of the members of the Disciplinary Committee of the petitioner and the views of the petitioner Council are entitled to great weight in light of the fact that they are the experts with regard to the matters pertaining to profession of chartered accountants and know the intricacies of the profession on account of their personal experience. Moreover, the said bodies have been created to maintain a high standard of conduct and discipline amongst the members of the petitioner institute. Thus, unless gross violation or disregard of the provisions of the Act or the Regulations made thereunder or of the principles of natural justice and fairness is to be found, this Court would be slow to interfere with the finding of such professional bodies. We accordingly accept the recommendation of the petitioner institute and remove the respondent No.1 from the membership of the petitioner institute for a period of six months effective from this date.
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