TMI Tax Updates - e-Newsletter
March 2, 2016
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:
Validity of reopening of assessment - Although the AO may have entertained a suspicion that the Assessee’s income has escaped assessment, such suspicion could not form the basis of initiating proceedings u/s 147 of the Act. A reason to believe – not reason to suspect - is the precondition for exercise of jurisdiction u/s 147 of the Act - HC
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Income Tax:
Validity of reopening of assessment - Sanction for issue of notice - intimation u/s 143(1)(a) is not assessment. Therefore, the provision of Section 151(2) alone would apply to the present case. Therefore, consent under section 151(1) for issue of notice u/s 148 has rightly held to be not necessary - HC
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Income Tax:
Best judgment assessment - justification of estimation of seats - when learned counsel for the assessee-appellant has not been able to satisfy this court that the approach of the Tribunal is arbitrary or irrational, no advantage flows to the assessee-appellant from those pronouncements - HC
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Income Tax:
TDS U/s 194H - payment of bank guarantee, brokerage - The relation between the assessee and the bank is not principal and agent, the commission of bank guarantee is not covered by the explanation (i), therefore, no TDS is liable to be deducted - AT
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Income Tax:
Residential status - resident or nonresident of India - The application of article 16(1) of Indo-USA DTAA cannot be denied to assessee merely because the salary check was paid by an Indian entity and the undisputed fact that no service was rendered by assessee for the impugned period in India. - AT
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Customs:
Valuation of Ceramic tableware - damage in the goods in question were of different degree when compared with the goods which were auctioned earlier, where the damage was not to this much extent. Therefore, the value fetched during the auction as cum-value accepted - AT
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Customs:
Classification of import of Multimedia Speakers - The additional feature of FM radio in the speaker, in our opinion, would again not convert the huge speaker into a FM radio. Even going by the common parlance test, nobody would buy a huge speaker for the purpose of FM radio. - AT
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Bill:
Amendment of section 139. - It is also proposed to omit clause (aa) of the Explanation to subsection (9) of said section to provide that a return which is otherwise valid would not be treated defective merely because self assessment tax and interest payable in accordance with the provisions of section 140A, has not been paid on or before the date of furnishing of the return.
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Bill:
Amendment of section 139. - Belated Return and Revised Return - Reference to Section 142(1) removed e.g. Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier
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Bill:
Amendment of section 133C. - power to call for information by prescribed income tax authority - the information and documents so obtained by the prescribed income-tax authority may be processed and the outcome of such processing may be made available to the Assessing Officer for further necessary action, if any.
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Bill:
Amendment of section 124. - jurisdiction of Assessing Officers - in a case where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, no person shall be entitled to call in question the jurisdiction of an Assessing Officer after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.
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Bill:
Amendment of section 119. - instructions to subordinate authorities - It is proposed to make a reference to section 270A in the said clause (a) of sub-section (2) of section 119, so as to enable the Board to issue directions and instructions in respect of section 270A of the Income-tax Act, as well, regarding penalties.
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Bill:
Amendment of section 115UA. - any distributed income from a business trust received by a unit holder which is of the same nature as dividend referred to in sub-section (7) of section 115-O shall not be included in the total income of such unit holder.
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Bill:
Insertion of new Chapter XII-EB - Tax on accreted income-Interest payable for non-payment of tax by trust or institution - When trust or institution is deemed to be assessee in default - a trust or institution registered under section 12AA in any of certain eventualities mentioned in the proposed new section, as on the specified date, at the maximum marginal rate, in addition to the income-tax chargeable in respect of the total income. previous year shall be liable to tax on accreted income in the event
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Bill:
Insertion of new section 115TCA - Tax on income from securitisation trusts. - any income accruing or arising to, or received by, a person, being an investor of a securitisation trust, out of investments made in the securitisation trust, shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to, or received by, such person had the investments made by the securitisation trust been made directly by him.
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Bill:
Amendment of section 115TC. - securitisation trust to be assessee in default.- proposed to amend serious destination and terms
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Bill:
Amendment of section 115TA. - tax on distributed income to investors - nothing contained in this section shall apply in respect of any income distributed by the securitisation trust to its investors on or after the 1st day of June, 2016.
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Bill:
Amendment of section 115QA. - tax on distributed income to shareholders. - “distributed income” shall mean the consideration paid by the company on buy-back of shares as reduced by the amount, which was received by the company for issue of such shares, determined in the manner as may be prescribed.
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Bill:
Amendment of section 115-O. - DDT - no tax on distributed profits shall be chargeable in respect of the total income of a company being a unit of an International Financial Services Centre, deriving income solely in convertible foreign exchange, for any assessment year on any amount declared, distributed or paid by such company, by way of dividends (whether interim or otherwise) on or after the 1st April, 2017 out of its current income, either in the hands of the company or the person receiving such dividend
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Bill:
Amendment of section 115-O. - DDT - no tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company by way of dividends (whether interim or otherwise) to a business trust out of its current income on or after the specified date.
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Bill:
Insertion of new Chapter XII-BC- Foreign company said to be resident in India - where a foreign company is said to be resident in any previous year and such foreign company has not been resident in India in any of the preceding previous year, then, the provisions of the Income-tax Act relating to computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, special provisions relating to avoidance of tax and the collection and recovery shall apply with such exceptions, modifications and adaptations on fulfilment of such conditions as may be notified by the Central Government in this behalf.
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Bill:
Amendment of section 115JB. - MAT - in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange, the rate of tax under section 115JB shall be nine per cent.
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Bill:
Amendment of section 115JB. - Minimum Alternate Tax (MAT) shall not be applicable to a foreign company, w.e.f. 01.04.2001 if the foreign company does not have as a permanent establishment under relevant Double Taxation Avoidance Agreement (DTAA) or a place of business in India.
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Bill:
Amendment of section 115JB. - MAT - the book profit shall be increased by an amount or amounts of expenditure relatable to income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF.
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Bill:
Insertion of new section 115BBF - Tax on income from patent - where the total income of an eligible assessee includes any income by way of royalty in respect of a patent developed and registered in India, the income-tax payable shall be the aggregate of the amount of income-tax calculated on the income by way of royalty in respect of such patent, at the rate of ten per cent
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Bill:
Amendment of section 115BBE. - tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D - no deduction in respect of any expenditure or allowances in relation to income referred to in the aforesaid sections shall be allowable. - the set off of any loss shall also be not allowable in respect of income under the aforesaid sections.
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Bill:
Insertion of new section 115 BBDA-Tax on certain dividends received from domestic companies. - any income by way of dividend declared, distributed or paid by a domestic company, in excess of ten lakh rupees shall be chargeable to tax at the rate of ten per cent. in the case of an individual, Hindu undivided family or a firm who is a resident in India.
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Bill:
Insertion of new section 115BA - option to pay tax @25% instead of 30% - the income-tax payable in respect of the total income of a person being domestic company (in the business of manufacturing or production of any article or thing), for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017 shall, at the option of such person, be computed at the rate of twenty-five per cent subject to conditions.
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Bill:
Amendment of section 112. - tax on long-term capital gains - long-term capital gains arising from transfer of a capital asset being, shares of a company not being a company in which the public are substantially interested, shall also be chargeable to tax at the rate of ten per cent.
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Bill:
Amendment of section 92D. - TPA - maintenance and keeping of information and document by persons entering into an international transaction or specified domestic transaction. - the person being a constituent entity of an international group, referred to in section 286, shall also keep and maintain such information and document in respect of the international group as may be prescribed.
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Bill:
Amendment of section 92CA. - TPA - if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, then such remaining period shall be extended to sixty days.
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Bill:
Amendment of section 87A. - an individual resident, whose total income does not exceed five hundred thousand rupees (5 lacs), is eligible for rebate in income-tax equal to five thousand rupees.
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Bill:
Substitution of new section for section 80JJAA- Deduction in respect of employment of new employees. - Deduction under the proposed provisions will be available in respect of cost incurred on those employees whose total emoluments are less than or equal to twenty-five thousand rupees per month. No deduction, however, shall be allowed in respect of cost incurred on those employees for whom the entire contribution is paid by the Government under the Employees’ Pension Scheme notified in accordance with the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
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Bill:
Insertion of new section 80-IBA- Deductions in respect of profits and gains from housing projects - to provide 100% deduction of the profits and gains of an assessee developing and building housing projects, if the project is approved by the competent authority on or before the 31st March, 2019 subject to the conditions specified therein
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Bill:
Amendment of section 80-IB. - deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings - he said section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017.
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Bill:
Insertion of new section 80-IAC - provides 100% deduction of the profits and gains derived by an eligible start-up from a business involving innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property. The benefit of deduction of hundred per cent. of the profit derived from such business can be availed by an eligible start-ups for three consecutive assessment years out of five years, at the option of the assessee, subject to incorporation before 1st day of April, 2019.
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Bill:
Amendment of section 80-IAB. - deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone - this section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017.
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Bill:
Amendment of section 80-IA. - deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. - this section shall not apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017.
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Bill:
Amendment of section 80GG. - deductions in respect of rents paid. - It is proposed to increase the maximum amount of deduction allowable under the said section to five thousand rupees per month i.e. amount incresed from 24 thousand to 60 thousand per-annum.
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Bill:
Substitution of new section for section 80EE - Deduction in respect of interest on loan taken for residential house property. - a deduction for those who buy residential house property for the first time, in respect of interest on loan taken from any financial institution upto fifty thousand rupees subject to other conditions specified therein.
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Bill:
Amendment of section 80CCD. - deduction in respect of contribution to pension scheme of Central Government. - any amount received by the nominee, on the death of the assessee, under the pension scheme referred to in clause (a) of the said sub-section, is exempt from tax.
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Bill:
Amendment of section 80. - the loss under sub-section (2) of section 73A shall also be not allowed to be carried forward and set off if such loss has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139.
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Bill:
Amendment of section 56. - to provide exemption from tax in the hands of an individual or a Hindu undivided family, on receipt of shares as a consequence of demerger or amalgamation of a company.
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Bill:
Amendment of section 55. - the cost of improvement in relation to a capital asset, being goodwill of a business or a right to manufacture, produce or process any article or thing or right to carry on any business, shall be taken to be nil. - It is proposed to amend the said sub-clause (1) of clause (b) of sub-section (1) and clause (a) of sub-section (2) of the said section so as to include the right to carry on the profession also under its scope.
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Bill:
Amendment of section 54GB - capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be an eligible start-up subject to other specified conditions
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Bill:
Insertion of new section 54EE- Capital gain not to be charged on investment in units of a specified fund. - to provide exemption from capital gains tax if the capital gains proceeds are invested by an assessee in units of specified fund, as may be notified by the Central Government in this behalf.
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Bill:
Amendment of section 50C - stamp value - where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer - only where the amount of consideration referred to therein, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement of transfer.
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Bill:
Amendment of section 48 - mode of computation - in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full value of consideration under the said section.
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Bill:
Amendment of section 48 - mode of computation - indexation benefits to long-term capital gains arising on transfer of the said Sovereign Gold Bond extended
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Bill:
Amendment of section 47 - any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating plan of a mutual fund scheme, made in consideration of the allotment to him of a capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund shall not be considered as transfer for capital gain tax purposes.
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Bill:
Amendment of section 47 - exemption all be allowed in case of conversion into Limited Liability Partnership where total assets in books of accounts of the company does not exceed five crore rupees
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Bill:
Amendment of section 47 - any redemption of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by an assessee being an individual shall not be considered as transfer.
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Bill:
Insertion of new section 44ADA - Special provision for computing profits and gains of profession on presumptive basis. - a sum equal to fifty per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession” - where total gross receipts do not exceed fifty lakh rupees
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Bill:
Amendment of section 44AD. - computing profits and gains of business on presumptive basis - where an assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).
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Bill:
Amendment of section 44AB. - audit of accounts of certain persons carrying on business or profession - in the case of an assessee, who is covered under the new proposed section 44ADA, the audit of books of account is required if he claims that the profits and gains from the profession are lower than the profits and gains computed in accordance with the provisions of sub-section (1) of the proposed new section and if his income exceeds the maximum amount which is not chargeable to income-tax.
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Bill:
Amendment of section 44AA. - maintenance of accounts by certain persons carrying on profession or business. - every person carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax, keep and maintain such books of account and other documents for computing his total income in accordance with the provisions of this Act.
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Bill:
Amendment of section 43B. - any sum payable by the assessee to the Indian Railways for use of railway assets shall be allowed as deduction only, if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year.
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Bill:
Amendment of section 40. - No deduction of any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under Chapter VIII of the Finance Act, 2016, and such levy has not been deducted, or, after deduction, has not been paid on or before the due date specified u/s 139(1).
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Bill:
Amendment of section 36. - any provision for bad and doubtful debts made by a non-banking financial company shall be allowed a deduction of an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A).
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Bill:
Amendment of section 35CCD. - expenditure on skill development project - to reduce the deduction from one hundred fifty per cent. to one hundred per cent. from the assessment year beginning on or after the 1st day of April, 2021.
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Bill:
Amendment of section 35CCC. - expenditure on agricultural extension project - It is proposed to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent.
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Bill:
Amendment of section 35AD. - deduction under this section extended to an assessee engaged in developing, operating and maintaining or developing, operating and maintaining the infrastructure facility.
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Bill:
Amendment of section 35AD - deduction in respect of expenditure on specified business - 150% deduction in specified cases will not avilable w.e.f. 1.4.2018
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Bill:
Amendment of section 35AC - payment to approved association or institution, etc., on certain eligible social development project or a scheme not related to business. - deduction under this section shall not apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2018.
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Bill:
Insertion of new section 35ABA - any capital expenditure incurred and actually paid by an assessee on the acquisition of any right to use spectrum for telecommunication services shall be allowed as a deduction in equal instalments over the period starting from the year in which such payment has been made and ending in the year in which the useful life of spectrum comes to an end.
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Bill:
Amendment of section 35. - to reduce the said weighted deduction from one hundred seventy-five per cent. to one hundred fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from the financial year 2020- 2021 and subsequent years.
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Bill:
Amendment of section 32AC. - deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017.
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Bill:
Amendment of section 32. - Additional Depreciation shall also be allowed to the business of transmission of power.
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Service Tax:
Tour operator services - service was rendered using luxury bus which was having permit under the Motor Vehicle Act, 1988 and the said bus was not a stage carriage but a contract carriage. Thus, the respondent provided tour operator service - AT
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Service Tax:
Confirmation of demand for unspecified service tax amount with interest thereon - What is clear from the show-cause notice is that the show-cause notice speaks of non-filing of return from October 2003 and does not specify any amount to be paid by the assessee. - demand of service tax and interest set aside - AT
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Service Tax:
Refund of service tax - since the appellant had reversed the credit even before making application of refund and under the admitted fact that same was not utilized by them it is considered as if Cenvat credit not availed and therefore condition provided under clause 2(g) of the Notification No. 40/2012-ST stand complied with - AT
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Central Excise:
Adjustment of duty excess paid against the duty short-paid - assessee is entitled for adjustment of excess paid duty with the short-paid duty during the period of provisional assessments, upon finalization of the assessments - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (3) TMI 31
Validity of reopening of assessment - whether notices under Section 148 could be issued to the Assessee after the said company stood dissolved in terms of a scheme of amalgamation of the Assessee with the Petitioner approved under Section 391 and 394 of the Companies Act, 1956? - Held that:- It is well settled that the in a case of amalgamation, the amalgamating company would stand dissolved from the date on which the amalgamation/transfer takes effect. The contention that the impugned notices issued under Section 148 of the Act were invalid as having been issued to an Assessee that had ceased to exist, must be accepted. The impugned notices are, therefore, liable to be set aside on this ground alone. See Marshall Sons & Co. (India) Ltd. v. Income-tax Officer [1996 (11) TMI 6 - SUPREME Court] Having stated the above, we must also add that in our view, the impugned notices must also be set aside as the AO had no reason to believe that the income of the Assessee for the relevant assessment years had escaped assessment. Concededly, the AO had no tangible material in regard to any of the transactions pertaining to the relevant assessment years. Although the AO may have entertained a suspicion that the Assessee’s income has escaped assessment, such suspicion could not form the basis of initiating proceedings under Section 147 of the Act. A reason to believe – not reason to suspect - is the precondition for exercise of jurisdiction under Section 147 of the Act. - Decided in favour of assessee
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2016 (3) TMI 30
Eligibility for registration in terms of Section 12A - Held that:- The amount allegedly collected as capitation fee from four prospective students was actually collected as tuition fee on the basis of the valid agreements entered into by the Trust undertaking to return the same in case admission under the NRI quota could not be made available to the concerned students. The amount so collected represented only a portion of the tuition fees which the Government had permitted the recognized medical colleges to collect during the relevant academic year and the agreement specified that the amounts could be adjusted towards the tuition fees payable by the students under the NRI quota. It is further stated that even with regard to amounts collected from employees, the same were voluntary deposits made by employees and no action had been taken by any authority against the Trust, since there was no compulsion or illegality in the matter. Going by the provisions of Sections 12A and 12AA of the Income Tax Act, we hold that the grounds raised by the registering authority and upheld by the appellate authority for rejection of registration to the appellant Trust cannot be sustained. The authorities could have examined only the genuineness of the Trust and its activities. They did not have material to hold that the Trust was either not genuine or its activities were not what was professed in the deed of Trust. Resultantly, in the light of the above findings, the impugned order is set aside. The respondent Commissioner of Income Tax is directed to grant registration as requested by the appellant Trust in terms of Section 12A of the Act. - Decided in favour of assessee
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2016 (3) TMI 29
Non-compete fees - treatment to the receipt - taxation effect - Held that:- The finding of the Tribunal that the amount received by the Appellant was not in the nature of non-compete fees is not perverse as that amount of ₹ 3,80,48,100/claimed as non-compete fees was not a lumsum figure but an odd figure which was claimed to have been arrived after negotiations. In the result, the Appellant was called upon to give details of the components of ₹ 3,80,48,100/claimed as non-compete fees. The Appellant failed to furnish the details. Thus taking into account all the facts, it was fairly concluded that the payment of ₹ 3,80,48,100/claimed as non-compete fees was not in fact so. Further,held that the agreement dated 31st March, 2002 is a subterfuge to colour an amount received in lieu of salary as a non-compete fees so as not to pay tax on the same. In the circumstances, the payment of Rs,3,80,48,100/was held to be not non-compete fees and was brought to tax under the head 'salary' and in particular, under Section 17(3)(ii) of the Act - Decided in favour of the Revenue
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2016 (3) TMI 28
Rectification of mistake - Whether the income clearly exempted from ambit of Income Tax Act can constitute basis for claim of tax, interest, penalty, only on the ground that factum of non taxability of the sale proceeds, being outside the purview of capital gain as per notification of Central Government was not known to the assessee at the stage of filing return under section 139 of Income Tax Act? - Held that:- As rightly recorded by the Tribunal that if the return had been filed wrongly or any claim had been made wrongly or the assessee after filing the return under section 139(1) of the Act discovered any omission or any wrong statement therein, he could have furnished a revised return at any time before the expiry of one year from the end of the relevant assessment year or before completion of assessment whichever was earlier under section 139(5) of the Act. Alternatively, under Section 264 of the Act, the assessee could file a petition for revision within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it whichever was earlier. The assessee chose not to adopt any of the options for getting the revision of the claim. The Tribunal concurred with the findings recorded by the CIT(A) and the Assessing Officer in rejecting the assessee's rectification application because the mistake sought to be amended was not prima facie mistake. Secondly the assessee was submitting corroborating evidence with the rectification application which required investigation and verification and thus the same was outside the purview of the provisions of Section 154 of the Act. - Decided against assessee
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2016 (3) TMI 27
Capital gains - applicability of provisions of Section 50C - transfer u/s 2(47) - Determine the nature of the capital gains/loss on renunciation of right to subscribe for additional shares/debentures - Held that:- The provisions of section 50C are attracted to the sale of land in question made by the assessee Arrears of dividend received by dealer of shares after the purchase of shares alongwith such arrears is of capital nature and the same cannot be assessed to tax under section 10 or section 12 of the Income Tax Act, 1922. It was further held that a receipt which in law cannot be regarded as income cannot become so merely because the assessee erroneously credited it to the profit and loss account. In Navin Jindal's case (2010 (1) TMI 291 - SUPREME COURT), it was held that right to subscribe for additional offer of shares/debentures on rights basis comes into existence when the company decides to come out with the rights offer and therefore, in order to determine the nature of the capital gains/loss on renunciation of right to subscribe for additional shares/debentures, the crucial date is the date on which such right to subscribe for additional shares/debentures comes into existence and the date of transfer i.e. renunciation of such right. - Decided against the assessee
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2016 (3) TMI 26
Validity of reopening of assessment - Sanction for issue of notice - sanction had to be taken from Chief CIT or CIT instead of Additional CIT - Held that:- In the present case, the first notice under section 148 dated 22.2.1994 was served on the assessee on 7.3.1994 in response to which the assessee filed his return on 19.3.1996. The AO received information about the assessee having received commission income of ₹ 2 lacs from one CP Singh. The proceedings for reassessment commenced by the issue of the first notice could be completed only upto 31.3.1996 in view of the provisions of Section 153(2) prescribing time limit for completion of assessment or reassessment proceedings. As on 31.3.1996, the Assessing Officer could not proceed to assess or reassess assessee's income on the basis of the first return filed by the assessee on 19.3.1996. Therefore, it could not be said that any proceedings were pending before the Assessing Officer when the second notice was issued. The second notice issued under section 148 dated 17.3.1997 was therefore valid. As far as the objection of the assessee regarding absence of consent under section 151(1) proviso is concerned, it cannot be said that there was any assessment done in the case of the assessee pursuant to the first notice under section 148. Only an intimation under section 143(1)(a) was issued. The decisions referred to by the learned CIT(A) on this issue clearly support the view that intimation under section 143(1)(a) is not assessment. Therefore, the provision of Section 151(2) alone would apply to the present case. Therefore, consent under section 151(1) for issue of notice under section 148 has rightly held by the CIT(A) and ITAT to be not necessary Examining the issue on merits relating to taxability of only 50% in the hands of the assessee whatever be the nature of the money received by the assessee, the same was in the nature of income liable to tax. The CIT(A)'s direction to bring to tax this sum in the assessment year in which the assessee received these sums and also confirmed by ITAT was proper and calls for no interference - Decided against assessee
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2016 (3) TMI 25
Best judgment assessment - justification of estimation of seats - Held that:- Due to mechanical defect, accidents, over speed challan, and other traffic violations, the buses might not be plied throughout the year. Even otherwise, the tax had to be calculated on net income. The Assessing Officer and the CIT(A) had estimated the occupancy of seats to the extent of 24 and 19 per bus respectively. The Tribunal deemed it appropriate to estimate the occupancy of seats at 22 per bus to put an end to the litigation. It may be noticed that for best judgment assessment, some guess work had to be adopted which should be based on rational basis and it cannot be arbitrary. It could not be demonstrated by learned counsel for the assessee that the Tribunal had adopted any arbitrary or irrational approach in arriving at the conclusion. Moreover, the assessee had failed to furnish the requisite information compelling the Assessing Officer to take recourse to Section 144 of the Act in framing the Best Judgment assessment. A perusal of the chart that only an addition of ₹ 4,75,030/- has been made against the income of ₹ 1,10,940/- declared by the assessee. However, in view of the factual matrix noticed hereinabove and more particularly when learned counsel for the assessee-appellant has not been able to satisfy this court that the approach of the Tribunal is arbitrary or irrational, no advantage flows to the assessee-appellant from those pronouncements. - Decided against assessee
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2016 (3) TMI 24
Eligibility of deduction under section 10A for assessee’s STPI units in Mumbai and Pune - Held that:- Respectfully There being no saving clause or any amendment while omitting sub-section (9) of section 10A of the Act, the result is that it is to be read as having never been passed and had never existed on the statute. In this view of the matter, we reverse the order of the CIT(A) on this issue and direct the Assessing Officer to allow the assessee’s claim for deduction under section 10A of the Act for assessment year 2003-04. - Decided in favour of assessee
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2016 (3) TMI 23
Revision u/s 263 - Rate of tax on LTCG - AO while making the assessment has computed the LTCG without indexation - whether CIT erred in not accepting the LTCG by exercising script-wise indexation and without indexation whichever is beneficial to the appeal? - Held that:- We have considered various citations submitted by AR of the assessee wherein the DCIT vs. Savla Motor Agencies (P.) Ltd. [2013 (7) TMI 650 - ITAT MUMBAI] co-ordinate bench of this Tribunal has held that LTCG should be worked out transaction wise and tax should be charged at 10% or 20% (without indexation or with indexation) respectively whichever is beneficial to the assessee after considering the judgment of Mohanlal N. Shah [2008 (9) TMI 614 - ITAT MUMBAI ] which has also relied upon by the assessee. Hence, we do not find any illegality or infirmity order passed by AO which was considered as erroneous or prejudicial to the interest of Revenue by CIT. - Decided in favour of assessee Disallowance of depreciation - Held that:- CIT ignored the relevant point in the computation before coming to the premature calculation that the order of AO iserroneous, thus this ground is allowed in favour of assessee - Decided in favour of assessee Disallowance on account of amalgamation/demerger claimed u/s 35DD - Held that:- These addition were made by CIT either on the basis of mere estimation or by disallowing 50% of the disallowance claimed which is based on conjecture and surmises and the same are not sustainable in the eyes of law and are liable to the deleted, resultantly we do not find that order of AO was erroneous or prejudicial to the interest of revenue. - Decided in favour of assessee Treating STCG as a business income by CIT(A) - Held that:- copies of assessment order in respect of all AYs had been placed on record and we have noticed that the assessee was consistently allowed STCG in all three consecutive assessments years, hence, keeping in view the principle of consistency the assessee is entitled for similar relief in the year under consideration, hence this ground of appeal is also allowed in favour of the assessee. Resultantly we do not find that order of AO was erroneous or prejudicial to the interest of Revenue.- Decided in favour of assessee
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2016 (3) TMI 22
Revision u/s 263 - as per CIT(A) AO has not properly computed disallowance under section 14A while finalizing the assessment- Held that:- Commissioner was in error in holding that taking the total of assets on the basis of its value in the balance sheet has rendered the assessment order erroneous and prejudicial to the interest of the revenue. The view that the assets are required to be taken on the basis of value shown in the balance sheet, and not after reducing the liabilities, is an equally, if not more, convincing approach to the issue. Viewed in the light of Hon’ble Supreme Court’s judgment in the case of Malabar Industrial (2000 (2) TMI 10 - SUPREME Court ), thus the assets being taken on the value in the balance sheet, without adjusting the liabilities, is not such an error, error even if it is, which can lead to the assessment order being subjected to the revision proceedings under section 263. In view of the above analysis, as also bearing in mind entirety of the case, we are of the considered view that the learned Commissioner was indeed in error in exercising his revision powers under section 263 on the facts and in the circumstances of this case. As learned CIT(A) was in seisin of the same matter, i.e. disallowance under section 14A, in the appellate proceedings, learned Commissioner could not have invoked his revision powers on the issue before the CIT(A). The view adopted by the learned Assessing Officer was after due examination of the matter and a considered view after taking into account all the relevant factor and even if a different view, on the same set of facts, was possible, the possibility of another view in favour of the assessee did not render the assessment erroneous and prejudicial to the interest of revenue so as to trigger revision under section 263. In any event, even on merits, the stand of the Commissioner was incorrect and unsustainable in law. For all these reasons, we are not inclined to uphold the impugned order. Accordingly, the revision order stands quashed. - Decided in favour of assessee
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2016 (3) TMI 21
Addition on account of unaccounted stock - CIT(A) deleted the addition - Held that:- CIT(A) while deciding the issue in favour of the Assessee has noted that A.O has not disputed daily stock and daily production register which are maintained by the Assessee and that the manufacturing of finished goods being refined kapasia tel from the raw material being kapasia wash tel is a continuous process and for such process pipeline for both raw material and finished goods are interconnected with each other. He has further noted that A.O has accepted the plea of the Assessee regarding shortage of stock was worked out only because stock found during the course of search was counted at 8.00 P.M. which was compared with opening stock of raw material in the books without giving the effect of consumption made during the day up to 8.00 P.M. and if such adjustment is provided, no material shortage would be worked out. He has further noted that the shortage of stock and excess stock if considered together would result in excess of only 4131 kg. which can be considered to have been covered by the disclosure made by the Assessee. Before us, Revenue has not pointed out any fallacy in the findings of ld. CIT(A). In view of the these facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against revenue Addition on account of quality allowance - Held that:- We find that ld. CIT(A) while deciding the issue in favour of the Assessee has given a finding that the Assessee had claimed similar expenditure in A.Y. 07-08 which was allowed by the A.O. in the assessment order passed u/s. 153A of the Act and further the deterioration of finished goods had led to quality allowance that was given by the Assessee to its customers and such expenditure was supported by third party evidences and were duly recorded in the books of accounts and the expenditure claimed was only 0.46% of turnover and therefore the expenditure could not have been treated as unexplained expenditure. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A) nor could point out any fallacy in his findings - Decided against revenue Addition made on account of brokerage - Held that:- We find that ld. CIT(A) while granting the relief has given a finding that the claim of brokerage expenses is supported by third party evidences and the payment have been made after deduction of TDS from such brokerage expenses and the addition has been made simply on the basis of comparison of expenditure. He has further given a finding that none of the parties to whom Assessee has made payments were related party covered u/s. 40A (2b) of the Act and the A.O has not questioned the genuineness of entire expenditure. He has further given a finding that the entire explanation regarding higher brokerage payment in comparison to earlier years has been fully explained. Before us, Revenue could not controvert the findings of ld. CIT(A). - Decided against revenue Treatment of loss on shares - Held that:- We find that ld. CIT(A) while deciding the issue against the Assessee has given a finding that Assessee has treated the shares transaction as investments in F.Y. 06-07 & 07-08 and the Assessee by passing a journal entry on 31.03.2009 accounted for the notional loss of value of closing inventory of shares. Before us, Assessee could not controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against assessee
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2016 (3) TMI 20
Additional income as surrendered during the course of search u/s 132(4) - additions made on the basis of statement of Shri Balwant Singh - Held that:- There is no iota of evidence, which suggest that there is unaccounted / undisclosed income emerging out of the incriminating seized during the course of search. Thus, considering the entire factual matrix we find that the AO has not been able to demonstrate or give even an example of any document seized which has not been reflected in the books of accounts. The adverse inference drawn by the AO on the basis of the letterheads of different contractors found during the search is wrong and in fact contradictory. F We have considered the contents of statement under Section 132(4) of Sh. Balwant Singh. He has made disclosure of additional income on behalf of various companies of Ramprastha Group and other persons. In the substantive part of answer, Sh. Balwant Singh has stated that mostly the transactions are recorded in books of accounts and some parts are unaccounted. Ld. AR has argued that entire seized document was examined during post search and assessment proceeding and no incriminating material was found. Subsequent statements were recorded by the Investigation Wing as mentioned in the assessment order. However no question was asked in furtherance of the statement regarding the contents of the seized document. During original statement also subsequent details of work-inprogress, such as address, quantum of work done, accounted Work-in-progress and undisclosed work in progress were not asked for. The assessee companies during post search proceedings had twice informed the Investigation Wing that the surrender of work- in-progress has been made without pinpointing any seized material. No action was apparently taken even by the Assessing Officer, when effectively the statement got retracted. Thus we are of the considered opinion that the additions based on the statement of Shri Balwant Singh alone, cannot be sustained - Decided in favour of assessee Disallowance of Interest - Held that:- Apex Court in the case of SA Builders Ltd vs. CIT (2006 (12) TMI 82 - SUPREME COURT ) held as agrreing with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2001 (9) TMI 48 - DELHI High Court] that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. Respectfully following the ratio of the decision of the Hon’ble Apex Court, we hold that on the facts and circumstances of the case, the interest amount has been incorrectly disallowed - Decided in favour of assessee Disallowance u/s 40A - Held that:- All the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed. Accordingly, this ground of the Department is also dismissed.- Decided in favour of assessee
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2016 (3) TMI 19
NP rate determination - CIT(A) has calculated NP rate @ 6.28% on given facts and figures by the assessee against 5.16% shown in the year under consideration - Held that:- AR had not controverted the finding given by the ld CIT(A). The ld AR had not challenged the rejection of books of account, therefore, book result cannot be accepted as such. The past history also showed that the assessee had shown much more NP rate even on higher gross receipts. The assessee is a habitual for non-maintaining proper books of account including vouchers and stock register as per site wise and details of labour charges. Therefore, we uphold the order of the ld CIT(A). Accordingly, this ground of appeal is dismissed. In A.Y. 2011-12, the Assessing Officer had applied NP rate of 15% and the assessee had shown NP rate before depreciation, interest and salary @ 13.73%. The NP rate during the year after depreciation, interest and remuneration to partner is 3.4% whereas this rate was 5.28% in preceding year, therefore, there was a substantial decline in NP rate during the year. The AR has not explained this reason alongwith evidence. Moreover, in the present case as well as there is rejection of books of account and the assessee has failed to maintain proper books of account namely stock register, labour charges register, qualitative details and record of the invoices, therefore, on account of record has rightly been rejected by the authorities below, considering the facts and circumstances, in the interest of justice, we confirm lump sum addition of ₹ 12 lacs and assessee get relief of ₹ 7,46,289/-.- Decided partly in favour of assessee TDS U/s 194H not paid - payment of bank guarantee, brokerage - Held that:- The relation between the assessee and the bank is not principal and agent, the commission of bank guarantee is not covered by the explanation (i), therefore, no TDS is liable to be deducted. - Decided in favour of assessee
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2016 (3) TMI 18
Reopening of assessment - benefits U/s 10AA be disallowed - CIT(A)quashed the reopening orders - Held that:- It is undisputed fact that the ld Assessing Officer in first scrutiny assessment U/s 143(3) dated 10/12/2009 has considered all the purchases and sales of non-SEZ unit, SEZ unit and the fact of the Surat SEZ unit were also submitted by the assessee and considered by the Assessing Officer in his assessment. Thereafter on same facts and circumstances, he reopened the case U/s 147 even he did not have any tangible material with him on which he can form opinion on it. When in first scrutiny assessment, all the particulars of income had been disclosed by the assessee and all material fully and truly has been disclosed for the assessment. The Assessing Officer cannot review its own order on the basis of the same material and information. It is only change of opinion, which is not permitted under the law. The Hon'ble Supreme Court’s decision in the case of CIT Vs. Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) is squarely applicable. The ld DR had not controverted the finding given by the ld CIT(A) and the submissions made by the assessee before the lower authorities. Therefore, we uphold the order of the ld CIT(A). When the matter has been decided by this Bench on technical ground, we have not decided the revenue’s appeal on merit. - Decided against revenue
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2016 (3) TMI 17
Calculation of capital gain - entitlement to benefit of indexation - appreciated compounded cost of appreciation applied - selection of cost of acquisition - Held that:- Capital gain is required to be calculated in case of transfer of capital asset by calculating the cost of acquisition of the capital asset and for the purpose of calculating the cost of acquisition, the fair market value is required to be determined as would have been prevailed as on 01.04.1981 and thereafter the benefit of indexation is required to be given with a view to calculate the cost of acquisition. In the present case, the property was purchased by the assessee’s father on 27.09.1965 @ ₹ 55.88 per bigha and was sold by the assessee @ ₹ 5500/- per bigha. The assessee has calculated the fair market value as on 1.4.1981 @ ₹ 5500/- per bigha as claimed by the assessee on the basis of DLC rate with effect from 01.04.1993, whereas the AO has applied the rate of ₹ 4002.65 per bigha by giving the compounded appreciation of 30.6% on the original cost of acquisition. Cost inflation index has been duly applied by the AO on the initial cost of acquisition of capital assets. Since the initial cost of acquisition is available, in our view, the AO has rightly applied the appreciated compounded cost of appreciation @ 30.6% in accordance with provisions of law. In the light of above, the appeal of the assessee is dismissed and the order passed by the ld. CIT (A) is upheld. - Decided against assessee
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2016 (3) TMI 16
Penalty imposed U/s 271(1)(c) - assessee has made wrong claim of deduction U/s 10B on the interest income which is not an eligible income - Held that:- The assessee had furnished details of interest in return and in audit report, therefore, no particulars of income have been concealed. The matter is debatable on the deduction U/s 10B is allowable on interest income or not, as such, the assessee had claimed that these receipts are directly linked with the export business. However, the explanation of the assessee was not found bonafide to the Assessing Officer but the fact is that all particulars of income has been disclosed and assessee’s explanation is bonafide on facts and circumstances of the case. The issue is also debatable issue, no penalty U/s 271(1)(c) of the Act can be imposed. Hon’ble Delhi High Court in the case of CIT Vs. Nalwa Sons Investments Ltd. (2010 (8) TMI 40 - DELHI HIGH COURT ) has held that any addition in regular assessment and thereafter the case is assessed U/s 115JB and finally tax paid by the assessee on the basis of Section 115JB of the Act. The concealment on account of any regular assessment, does not lead to evade the tax at all. Therefore, penalty U/s 271(1)(c) is not justified. In this year also, the assessee has disclosed all the particulars of income in return alongwith audit report. The matter is whether interest income has direct nexus with the export business or not. Therefore, we uphold the order of the ld CIT(A) in both the assessment years. - Decided in favour of assessee
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2016 (3) TMI 15
Residential status - resident or nonresident of India - application of article 16(1) of Indo-USA DTAA denied - taxability of income - nationality - Held that:- As the facts emerge from record t the assessee’s residential status as nonresident has been accepted by the ld Assessing Officer, therefore, there is no justification on the part of the ld CIT(A) to hold that the assessee was a resident. It has not been disputed that the services in question was rendered by the assessee in US and taxed in the USA, which is evident from the relevant record filed on the paper book. The applicability of article 16(1) of Indo- USA DTAA depends on the country where services are rendered which in this case is undisputedly USA. The application of article 16(1) of Indo-USA DTAA cannot be denied to assessee merely because the salary check was paid by an Indian entity and the undisputed fact that no service was rendered by assessee for the impugned period in India. The Hon'ble Supreme Court in the case of Kedar Nath Jute Mnf. Co Ltd. Vs. CIT (Central) Kolkata [1971 (8) TMI 10 - SUPREME Court] has held that actual and legal nature of the transaction will decided the taxability and not mere book entries or assumptions. In view thereof, judgments in the case of CIT Vs. Nippon Limited (1998 (4) TMI 121 - CALCUTTA High Court), CIT Vs. Khambaty (1985 (10) TMI 91 - BOMBAY High Court) and Ranjit Kumar Bose Vs. ITO 18 ITD 230 (1986 (2) TMI 96 - ITAT CALCUTTA-C ), hold that the nonresident assessee is not liable for tax in India on the impugned amount. - Decided in favour of assessee
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2016 (3) TMI 14
Eligibility of deduction u/s 80P - Held that:- The assessee is Kakinada Co-operative Building Society engaged in the business of collecting the deposits, lending loans to its members for purchase of sites, buildings and construction of houses. When the assessee society receives the deposits from the members in the course of its business, if the deposits received is not necessary for immediate use of its business i.e. lend it to the members the same is deposited with the bank and interest income is earned. According to the A.O., the interest income earned by the assessee is an income from other sources and the same view has been confirmed by the CIT(A). After careful consideration of the orders of the authorities below and also considering the section 80P(2)(a)(i) of the Act, we find that the assessee has deposited some funds in the KCTB and DCCB and other banks when those funds are not necessary for the immediate business purpose. Therefore, they had deposited the money in a bank to earn the interest. The said interest income was attributable to the carrying of business of banking and therefore it was liable to be deducted in terms of section 80P(2)(a)(i) of the Act. The Hon’ble Karnataka High Court in case of Guttigedarara Credit Cooperative Society Ltd. Vs. ITO (2015 (7) TMI 874 - KARNATAKA HIGH COURT ) by following the decision of A.P. High Court in the case of CIT Vs. Andhra Pradesh State Co-operative Bank Ltd. (2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT ) has held that “interest earned on the deposits in the bank by the assessee cooperative society providing credit facility to its members would be quantified for deduction u/s 80P of the Act - Decided in favour of assessee
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Customs
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2016 (3) TMI 7
Valuation of Ceramic tableware as per Rule 4 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and the Interpretative Notes Schedule to the said Rule - Goods manufactured in SEZ meant for export were damaged by floods- Auction was conducted for realizing salvage value by issuing tender and inviting the bids in association with Insurance Company- Held that: Department has not been able to prove that how did the appellant not observe the right procedure, when the procedure adopted by the appellant was approved by the United Insurance Company Ltd., which was mentioned in the invoice also. No fault found when the goods were delivered to the final bidder at the price quoted by the said bidder and accepted by the auctioneer with the approval of the insurance company. It is not right to question this by the Customs and to say that there has to be value refixed as per Rule 6 of the Customs Valuation Rules, 1998 when there is no reasonable basis for this refixation of the said value. Also, damage in the goods in question were of different degree when compared with the goods which were auctioned earlier, where the damage was not to this much extent. Therefore, the value fetched during the auction as cum-value accepted. Decided in favour of appellant with consequential relief
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2016 (3) TMI 6
Imposition of penalty on CHA- Indulging with importers in undervaluation- Importers approached Settlement Commission directly for settlement of dispute and Settlement Commission allowed the settlement- Appellant only acting as CHA did not approached Settlement Commission because of no information- Held that: By relying on the decision taken by the Mumbai Tribunal in case of S.K. Colombowala 2007 (7)TMI 514 - CESTAT, MUMBAI, the case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file application before the Settlement Commission. Therefore, the appellant is not liable to pay penalty as the co-noticees have not been imposed any penalty by the Settlement Commission. - Decided in favour of the petitioner
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2016 (3) TMI 5
Classification of import of Multimedia Speakers - Appellant claimed the classification of the same as falling under Customs Tariff Heading 8518 22 00 while the Revenue’s contention is to classify it under Chapter Heading 8519 81 00 where speakers imported were having additional functions of USB Port with playback port and under 8527 99 19 where speakers imported were having the facility of FM Radio along with USB port playback - Held that:- the speaker is primarily a speaker and some additional feature or facility for use of USB playback will not convert the same into a product equivalent to the products covered by Heading 8519 which covers “Sound recording or reproducing apparatus. Similarly, Heading 8527 takes into its ambit the “Reception apparatus for radio-broadcasting, whether or not combined, in the same housing”. The additional feature of FM radio in the speaker, in our opinion, would again not convert the huge speaker into a FM radio. Even going by the common parlance test, nobody would buy a huge speaker for the purpose of FM radio. Also, the goods in question are speakers with added function, as such the main role of the item in question remains amplifying the sound received by it either from outside source or from inbuilt feature. As such, going by the Interpretative Rules and Section note 3 to Section XVI, the criteria for classifying the product is the principal and the main function it performs, which in the present case remains to be that of a speaker. We accordingly hold that the goods in question are properly classifiable under Chapter Heading 8518 22 00. We may also add that the invoices raised by the seller of the goods stand examined by it and the description stand given as “Multimedia Speaker”. This also reflects upon the fact that the goods in question, in common parlance are also traded as speakers. The appellants have also submitted an affidavit of the dealers, the invoices raised by them against the customers and the statement of Service Manager of the assessee. Examination of these documents shows that goods are primarily sold as speakers. Even the brochures placed on record indicate that the goods are being traded as speakers only and not as either FM radio or the sound reproduction system. This view is also strengthened by the decision of the Hon’ble Supreme Court in the case of Xerox India Ltd. vs. Commissioner of Customs, Mumbai: 2010 (11) TMI 20 - SUPREME COURT OF INDIA. Though the said decision did not deal with the items under consideration in the present appeal but the ratio of law laid down by the Hon’ble Supreme Court would be squarely applicable to the facts of the present case. It was held that the multifunctional printing machines having fax facility and screening facility would continue to fall under Heading 8471 of the Customs Tariff Act as “digital printers” only inasmuch as the predominant function of the machine in question was printing. - Decided in favor of assessee.
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2016 (3) TMI 4
Seeking cross-examination of the witnesses and inspection of records - Allegation of evasion of Export Duty and availment of Drawback and DFRC Duty Free Replacement Scheme in exporting consignments by misleading 'semi-finished leather' as 'finished leather' - Held that:- There is no reason for us to doubt that the authorities would not follow the mandatory procedure or will take no decision on the petitioners' request re: inspection of record and cross-examination of witnesses, while deciding the matter on merits. The petitioners may put in appearance without prejudice to the adjudication of their request for cross-examination or inspection of records, as sought by them. - The Prescribe Authority will deal with both the issues by way of a reasoned order. - Decided partly in favour of appellant.
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Corporate Laws
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2016 (3) TMI 1
Disbursement of an amount as directed to Official Liquidator - Held that:- The submission canvassed by learned advocate Mr. Yadav for the Official Liquidator seems to be genuine. When the dispute is pending before the Hon'ble Supreme Court with regard to incometax liability, at this stage, amount of ₹ 3,32,00,000/towards the future expenses and ₹ 3,03,637/towards misc. expenses (contingent) is required to be kept aside and the remaining amount of ₹ 3,22,55,000/is required to be disbursed amongst the creditors under Section 530 of the Companies Act as per the report of the Chartered Accountant and as per the table given in para 6 on internal page 16 of the report. The Official Liquidator is therefore permitted to disburse an amount of ₹ 3,22,55,000/as per the ratio fixed by the Chartered Accountant subject to filing an undertaking by the concerned creditors (secured/unsecured) to the effect that if any demand raised by the Official Liquidator, the same shall be returned back by them to the Official Liquidator at prevailing rate of interest.
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Service Tax
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2016 (3) TMI 13
Tour operator services - respondent had provided “Tour Operator” service to IFFCO is in-as-much-as, as per the contract entered with IFFCO, it transported the families and employees of IFFCO from one point to another at an agreed rate and in a luxury bus which had a permit issued under the Central Motor Vehicles Act, 1988 in relation to such vehicles. - Held that:- the definition of tour operators during the relevant period covered persons engaged in business of operating tours in a tourist vehicle having a permit under the Motor Vehicle Act, 1988. In the present case there is no doubt that the service was rendered using luxury bus which was having permit under the Motor Vehicle Act, 1988 and the said bus was not a stage carriage but a contract carriage. Thus, the respondent provided tour operator service. Indeed the issue is squarely covered against the respondent by CESTAT judgement in the case of Friends Tour & Travels Vs. CCE Noida [2014 (1) TMI 44 - CESTAT NEW DELHI] wherein it was held that the activity of providing buses to LG Electronics for dropping of staff was covered under definition of tour and the assessee was covered under the definition of tour operator and was liable to pay service tax under Section 65 (105) (n) read with Section 65 (115) ibid. - Decided in favor of revenue.
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2016 (3) TMI 12
GTA - reverse charge - export of goods - scope of exemption from payment of service tax in terms of Notification No.41/2007-ST - Held that:- if the exporter, who is also required to pay the service tax is the same person, then the exemption can be claimed by the said person himself. First paying service tax and immediately thereafter claiming refund of the same by the same person, i.e., exporter apart from creating a revenue-neutral situation, does not seem to be legislative intent. If the interpretation as given by the adjudicating authority is accepted, then the said proviso would become redundant and otiose inasmuch as the Revenues stand would be covered by the main clause of the Sl. No. 2(a) and there was no requirement to add the proviso. It is well settled law of interpretation that the interpretation which renders the provision of law otiose or redundant has to be avoided. As per the learned advocate, all the shipping bills for the period in question stand mentioned in the EXP2 and the adjudicating authority is also not disputing or denying the fact of export inasmuch as he has accepted the BRCs issued by the banks, thus establishing the fact of export. The adjudicating authority has not, in fact, examined the issue from the said angle and has also not examined the other documentary evidences available on record so as to establish the fact of export. We deem it fit to remand the said issue also to the Commissioner for fresh decision. - Decided in favor of assessee.
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2016 (3) TMI 11
Confirmation of demand for unspecified service tax amount with interest thereon - it was argued that the show-cause notice did not specify the amount of tax payable at all and therefore the original adjudicating authority could not have confirmed the demand for any amount or appropriate any amount. - levy of of penalty - Held that:- The show-cause notice simply stated that October 2003 onwards, the appellant had not filed the returns at all. more over the show-cause notice did not even specify the amount payable by the appellant. According to provisions of Section 73(1) of Finance Act, 1994, whenever any service tax has not been paid or short paid, a notice has to be issued requiring the assessee to show-cause as to why he should not pay the amount specified in the notice. What is clear from the show-cause notice is that the show-cause notice speaks of non-filing of return from October 2003 and does not specify any amount to be paid by the assessee. It is a statutory requirement that amount to be paid has to be indicated in the show-cause notice and in the adjudication proceedings, the adjudicating authority is required to determine the amount payable as per the provisions of Section 73(2) of Finance Act, 1994. Therefore I find that the submission of learned counsel that confirmation of the demand or confirmation of the amount paid and appropriation thereto is totally incorrect and not valid is correct. The confirmation of demand, appropriation of the amount paid towards demand and interest and penalties under Section 76 and 78 of Finance Act, 1994 cannot be sustained. The only penalty that can be sustained is the amount of ₹ 3000/- imposed under Section 77 for non-submission of the returns. - Decided in favor of assessee.
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2016 (3) TMI 10
Refund of service tax - Exemption on services provided to SEZ authorised operations - notification no. 40/2012 ST - 100% services are exported - Commissioner (Appeals) held that since the appellant have availed the Cenvat credit on specified services they have violated the condition provided under clause 2(g) of the Notification No. 40/2012-ST, therefore they are not entitled for the refund as provided under the said notification. - Held that:- since the appellant had reversed the credit even before making application of refund and under the admitted fact that same was not utilized by them it is considered as if Cenvat credit not availed and therefore condition provided under clause 2(g) of the Notification No. 40/2012-ST stand complied with. - However, interest from the date of taking credit till the date of reversal is applicable - Decided partly in favor of assessee.
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Central Excise
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2016 (3) TMI 9
Adjustment of duty excess paid against the duty short-paid - whether the duty excess paid by the assessee during the period of provisional assessment is required to be adjusted towards he duty short-paid by them, upon finalization of such provisional assessment? - Held that:- Reference can be made to latest decision in the case of Hindustan Zinc Ltd. vs. Commissioner of Central Excise, Jaipur: [2015 (11) TMI 953 - CESTAT NEW DELHI (LB)] wherein there was originally difference of opinion between the two Members of the Bench and the issue was decided by the third Member. It was held that the assessee is entitled for adjustment of excess paid duty with the short-paid duty during the period of provisional assessments, upon finalization of the assessments. Inasmuch as the issue is decided by the majority decision of the Tribunal in favour of the assessee
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2016 (3) TMI 8
Exemption in terms of Notification No. 14/92-Central Excise on protective covers/tarpaulins vide Serial No. 21 - non availment of credit on inputs is a precondition for availing exemption under Notification No. 30/2004-Central Excise dated 09.07.2004 - Held that:- We observe that the matter is no more res integra, in view of the decision of this Tribunal in the case of Shivalik Agro Poly Products Ltd. (1999 (9) TMI 215 - CEGAT, NEW DELHI ), which has been upheld by the Hon’ble Supreme Court (2005 (4) TMI 69 - SUPREME COURT OF INDIA). In the said case plastic granules were used as input in the manufacture of intermediate product, lay flat tubing which was further used in the manufacture of final product, protective covers/tarpaulins. The Tribunal held in that case that as duty has been paid on lay flat tubings, benefit of exemption in terms of Notification No. 14/92-Central Excise (which has a condition similar to the proviso to Notification No. 30/2004) is available in respect of protective covers/tarpaulins vide Serial No. 21. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (3) TMI 3
Condition of pre-deposit under section 62(5) of the PVAT - Whether unreasonable, arbitrary, discriminatory and ultra vires Articles 14 and 19(1)(g) of the Constitution of India? - Held that:- even when no express power has been conferred on the first appellate authority to pass an order of interim injunction/protection, in our opinion, by necessary implication and intendment in view of various pronouncements and legal proposition expounded above and in the interest of justice, it would essentially be held that the power to grant interim injunction/protection is embedded in Section 62(5) of the PVAT Act. Instead of rushing to the High Court under Article 226 of the Constitution of India, the grievance can be remedied at the stage of first appellate authority. - Matter remanded back.
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2016 (3) TMI 2
Demand of VAT with interest and penalty - evasion of tax - sale and purchase of the Iron Goods (MS Bar) - Punjab Value Added Tax Act, 2005 - Tribunal vide order dated 13.8.2015 (Annexure P-6) dismissed the appeal holding that the goods were actually purchased from M/s Satpal Manku Steel Industries without any invoice to evade tax. A false invoice had been shown regarding the transaction by sister concern whereas the goods were purchased from M/s Satpal Manku Steel Industries without any payment of tax and without invoice. - All the authorities have concurrently recorded that there was an attempt to evade the tax. - Decided against the appellant.
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Indian Laws
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2016 (3) TMI 32
Criminal proceedings initiated against the appellants under Sections 419 and 420 IPC - cheating - whether alleged acts of the appellants No. 2 and 3 were committed while acting in discharge of their official duties? - Held that:- As per the terms of the technology transfer agreement, ARCI has to conduct performance guarantee tests and in those tests when ARCI was unsuccessful in achieving the targeted specifications, ARCI cannot be said to have acted with dishonest intention to cheat the respondent. Appellants- ARCI is a structure of Scientists, Team Leader and Associate Director and it is the team leader who actually executes the project, the job of Associate Director and Director is to monitor/review progress of the project. Appellants No.2 and 3 who were the Associate Director and Director of ARCI respectively were only monitoring the progress of the project cannot be said to have committed the offence of cheating. In the facts of the present case, in our view, the allegations in the complaint do not constitute the offence alleged and continuation of the criminal proceeding is not just and proper and in the interest of the justice, the same is liable to be quashed. In the result, the impugned order is set aside and this appeal is allowed. The criminal proceedings against appellants No.1 to 3 in CC No. 840 of 2008 on the file of II Metropolitan Magistrate at Cyberabad, is quashed.
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