TMI Tax Updates - e-Newsletter
March 24, 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:
Eligibility of exemption u/s Sec.10(23C)(vi) - the petitioner had multiple objectives and therefore, did not exist solely for educational purpose - assessee does not qualify under Section 10(23C)(vi) - HC
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Income Tax:
TDS on the enhanced amount compensation - TDS is only liable to be deducted on the enhanced amount and not on interest. - HC
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Income Tax:
Disallowance u/s 43B rw.s. 37(1) - the liability to pay the premium to BMC on transfer of lease-hold rights of the land owned by the BMC in favour of purchaser/assignees was an un-ascertained liability being a contingent liability during the impugned assessment year as the said premium per-se both as a statutory and as well as being a contractual liability were subject matter of legal dispute and challenge before the Hon’ble Bombay High Court - AT
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Income Tax:
Sale of software as part of machinery - amount of sales consideration received by the assessee on account of sale of machine along with it operating software would not constitute “Royalty” within the meaning of article 12(3) of the Indo-Israel DTAA. - AT
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Income Tax:
MAT - the profit on sale of the land has to be treated as agricultural income. Therefore, if any such income is credited to the Profit & Loss account, the same has to be reduced from the book profit while computing income u/s 115JB - AT
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Income Tax:
The capital gains computed upto the date of conversion of land into stock-in-trade has to be set off against the business loss computed on sale of the stock-in-trade - AT
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Customs:
Refund claim of SAD paid - unjust enrichment - In the revised balance sheet the amount of refund claim is indicated as "amount receivable" which indicates that the appellant had paid the entire amount from their pocket on which refund is claimed - Refund allowed - AT
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Customs:
Validity of show cause notice - Issued with pre-judged mind - When the first respondent had issued the show cause notices with pre-judged mind, there is no purpose in issuing show cause notices at all. - HC
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Indian Laws:
Having invoked a constitutional remedy before the High Court under Article 226 of the Constitution of India, the petitioner cannot, under Law, file another petition under Article 32 of the Constitution of India on identical set of facts for identical reliefs. - SC
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Indian Laws:
Offence punishable under section 138 and 142 of the Negotiable Instruments Act, 1881 - Whatever defence has been taken by the accused respondents as pointed out by the learned counsel appearing for the respondents before us, cannot be a ground for quashing a criminal prosecution. - SC
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Central Excise:
Remission of Central Excise duty - they had not given any specific intimation to the Dept. the time and date of the proposed destruction. Removal of goods from Bonded Store Room without permission, and destruction of same in the absence of supervision/permission are clearly not in accordance with the provisions. - Demand confirmed - AT
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Central Excise:
Manufacture - complete food tray as served to the passengers on board the aircraft - Out of Food preparations as contained in the food tray served to the passengers on board, admittedly, the appellants did prepare dal, roti, rice, curry etc. and supplied the same in trays and bowls covered with aluminium foil. However, these are not the items on which Central Excise duty is sought to be demanded. - AT
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VAT:
Collected of cheque at the time of inspection - no dealer would be coerced by the officers of the DT&T to make payment of any amount either towards alleged tax dues or otherwise either by cheque or cash at the time of a survey or inspection or any other proceeding including proceedings under Section 60 of the DVAT Act, the department is doing so which is very disappointing. - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (3) TMI 761
Cancellation of PAN - two PANs issued for same society - PAN 'AAETS5043H' has been marked as 'FAKE' - whether the error in the spelling of the name of the Society in the application filed by Mr. Navneet Kumar for a PAN card (that has now been termed as 'FAKE') was innocent or deliberate?- Held that:- The fact of the matter is that there cannot be two PAN Cards for one entity. Since there is already a PAN Card issued in the name of the Society way back in 1997 there cannot be another PAN Card issued to it in 2004. Therefore, sending the matter back to Respondent No. 1 for a fresh decision will serve no purpose. The real dispute is which of the two factions of the Society should be recognised as being competent and authorised to operate the said PAN Card? That will obviously depend on the orders that may be passed in the pending suit. From that point of view, the action of Respondent No.1 cannot be said to be illegal or invalid for cancellation of PAN - Decided against assessee.
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2016 (3) TMI 760
Eligibility of exemption u/s Sec.10(23C)(vi) - Held that:- It is not in dispute that Clause-4 of the Memorandum and Articles of Association was deleted on 02.06.2014 and the effect of deletion of the said Clause will come into force only prospectively and it cannot be retrospective. As per Section 2(15) of the Act "Charitable purpose" means "charitable purpose includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wild life) and preservation of monuments or places or objects of artistic or historic interest] and the advancement of any other object of general public utility". Clause-4 of the objectives shall not come within the meaning of charitable purpose as defined under Section 2(15) of the Act. Therefore, the finding of the respondent that the 4th objective cannot be considered as being related to promotion of education as contained in Section 10(23C)(vi) of the Act is just and proper. It relates to development of Society as narrated in the said objective and hence, for the assessment year 2014-15, the petitioner had multiple objectives and therefore, did not exist solely for educational purpose. As already stated, the amendment made in the Memorandum and Articles of Association can only be prospective and in that case, it shall apply only for the assessment year 2015-16 and cannot be considered for the assessment year 2014-15. Considering all these aspects, the respondent had rightly rejected the Form-56 D filed by the petitioner finding that the assessee does not qualify under Section 10(23C)(vi) of the Act for the assessment year 2014-15. - Decided against assessee
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2016 (3) TMI 759
Validity of reopening of assessment - reasons in support of the impugned notice as furnished to the Petitioner were different from the reasons for which the sanction was received from the Joint Commissioner of Income - Held that:- The impugned order disposing of the objections of the Petitioner are set aside. The Assessing Officer would furnish to the Petitioner the reasons in support of the impugned notice which had been sanctioned by the Joint Commissioner of Income Tax on 31st March 2015 within a period of two weeks from today. On receipt of the sanctioned reasons in support of the impugned notice, the Respondents would, if they so desire, file their objections within one week of it being served upon them. If objections as above are filed, the Assessing Officer shall dispose of the objections within a further period of 3 weeks. In the event the Assessing Officer rejects the objections, he will not proceed with / commence reassessment proceedings for a period of four weeks from the date of the service of the order rejecting of the objections. The assessment proceedings in the case of the petitioner for Assessment Year 2008-09 are stayed for a period of twelve weeks from today
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2016 (3) TMI 758
Addition on Long Term Capital Gain on account of sale of share - ITAT deleted the addition - Held that:- We find that both Commissioner of Income Tax (Appeals) as well as the Tribunal have rendered a finding of fact that the consideration of ₹ 750/- and ₹ 936/- per share received on the sale of the shares by the respondent-assessee was in fact the full consideration which have been disclosed to the revenue. It is not the case of the revenue that the amount disclosed by the respondent assessee was less than what has been received by them or what had accrued on sale of its shares. The revenue has not in any manner shown that the consideration disclosed by the respondent-assessee to the revenue is not the correct consideration received by them and that the same should be replaced. Moreover, wherever the Parliament thought it fit that the consideration on a transfer of a capital asset has to be ascertained on the basis of market value of the asset transferred specific provision has been made in the Act. To illustrate Section 50C of the Act provides for stamp value duty in case of transfer of land or buildings. Similarly, Section 45(2) and 45(4) of the Act in cases of conversion of the investment into stock in trade or transfer of shares on dissolution of a firm to its partners respectively has to be at market value. In this case computation of capital gain is governed by Section 48 of the Act and it only refers to full value of consideration received. The reliance upon the decision of the Apex Court by the Tribunal was therefore appropriate. In the above view, as there are concurrent finding of fact rendered by the Commissioner of Income Tax (Appeals) and by the Tribunal that the consideration disclosed on sale of shares by the respondent-assessee was infact the only consideration received/accrued to it, no occasion to substitute the same can arise. No substantial question of law. - Decided against revenue
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2016 (3) TMI 757
Warrant of authorization under section 132-A (1) - seeking release of such assets from police - application for release of money before Magistrate/Session Court under provisions of Cr.P.C. - Held that:- Section 132 (5) has specifically been omitted w.e.f. 1.6.2002 but it was existing when proceedings of case in hand were initiated, hence its subsequent omission would not be affected. On a reading section 132-A (1) (c), 2 and 3 read with section 132(5) of Act 1961, I clearly of opinion, if any assets has been seized by Police Officer, same can be requisitioned by Authorized Person under section 132A and when amount is remitted and delivered to Authorized Person of Income Tax department, it would be deemed to be a seizure of assets under sub-section (1) of Section 132A by Requisitioned Officer and will be governed by other provisions of Act 1961. At the time when application was filed by opposite party-1 and 2 before Magistrate, Competent authority has already requisitioned assets under section 132A from Police officials, who had thereafter delivered the same to competent authority of Income Tax department. So there was no occasion to seek release of such assets from police and that too without impleading Income Tax Department. Money so seized can be released by competent authority under provisions of Act 1961 Thus no application for release of money before Magistrate/Session Court under provisions of Cr.P.C. was maintainable.
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2016 (3) TMI 756
Retrospectivity of amendment to the provisions of section 40(a)(ia) of the Act, by the Finance Act, 2010 - w.e.f. 01.04.2005 - Held that:- As decided in CIT Vs. Shri Santosh Kumar Shetty [2015 (8) TMI 232 - KARNATAKA HIGH COURT ] this question came up for consideration before the Gujarat High Court in the case of Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] after referring to the judgments of Allied Motors (P.) Ltd. Vs. CIT [1997 (3) TMI 9 - SUPREME Court] and CIT Vs. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT ] in giving retrospective operation to the said amendment notwithstanding that the parliament has expressly stated that it comes into effect from 01.04.2010. The said amendment is curative in nature. The tribunal committed an error in holding it as prospective. The substantial questions of law is answered in favour of the assessee and against the revenue.
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2016 (3) TMI 755
Disallowance u/s 14A - whether Section 14A of the Act would have no application to disallow interest expenditure on fund borrowed in respect of the tax free returns on the securities? - Held that:- The impugned order of the Tribunal has an observation therein that there is no such thing as estoppel in law and by virtue of that gives itself a licence to decide the issue before it ignoring the binding precedent in the petitioner's own case in HDFC Bank Ltd(2014 (8) TMI 119 - BOMBAY HIGH COURT )wherein held the investment made by the Assessee would be out of the interest-free funds available with the Assessee - the Tribunal had erred in dismissing the Appeal Once there is a binding decision of this Court, the same continues to be binding on all authorities within the State till such time as it stayed and / or set aside by the Apex Court or this very Court takes a different view on an identical factual matrix or larger bench of this Court takes a view different from the one already taken. The decision of a coordinate bench would continue to be binding till it is corrected by a higher Court. This principle laid down in respect of a coordinate Court would apply with greater force on subordinate Courts and Tribunals. We are also conscious of the fact that we are not final and our orders are subject to appeals to the Supreme Court. However, for the purposes of certainty, fairness and uniformity of law, all authorities within the State are bound to follow the orders passed by us in all like matters, which by itself implies that if there are some distinguishing features in the matter before the Tribunal and, therefore, unlike, then the Tribunal is free to decide on the basis of the facts put before it. However till such time as the decision of this court stands it is not open to the Tribunal or any other Authority in the State of Maharashtra to disregard it while considering a like issue. In case we are wrong, the aggrieved party can certainly take it up to the Supreme Court and have it set aside and / or corrected or where the same issue arises in a subsequent case the issue may be reurged before the Court to impress upon it that the decision rendered earlier, requires reconsideration. It is not open to the Tribunal to sit in appeal from the orders of this Court and not follow it. In case the doctrine of precedent is not strictly followed there would complete confusion and uncertainty. The victim of such arbitrary action would be the Rule of law of which we as the Indian State are so justifiably proud. It is in the above circumstances that we are of the view that we have to exercise our powers under Article 227 of the Constitution of India. This is in view of the manner in which the impugned order of the Tribunal has chosen to disregard and/or circumvent the binding decision of this Court in respect of the same assessee for an earlier assessment year. This is a clear case of judicial indiscipline and creating confusion in respect of issues which stand settled by the decision of this Court. It is in the above view, that we set aside the impugned order of the Tribunal dated 23rd September, 2015 in its entirety and restore the issue to the Tribunal to decide it afresh on its own merits and in accordance with law. However the Tribunal would scrupulously follow the decisions rendered by this Court wherein a view a has been taken on identical issues arising before it. It is not open to the Tribunal to disregard the binding decisions of this Court, the grounds indicated in the impugned order which are not at all sustainable. Unless the Tribunal follows this discipline, it would result in uncertainty of the law and confusion among the tax paying public as to what are their obligations under the Act. Besides opening the gates for arbitrary action in the administration of law, as each authority would then decide disregarding the binding precedents leading to complete chaos and anarchy in the administration of law.
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2016 (3) TMI 754
TDS on the enhanced amount compensation - whether the character and nature of the land was not agricultural? - Held that:- The finding arrived at by the trial court is not justifiable and against the revenue record. As per jamabandi Annexure P-1 the nature of the land is Chahi Nehri (agricultural). There is no reflection that the property was gair mumkin. The executing court has misread the jamabandi and more so, in view of the ratio decidendi culled out in Jagmal Singh and another Vs. State of Haryana and another [2016 (3) TMI 733 - PUNJAB & HARYANA HIGH COURT] read as the TDS is only liable to be deducted on the enhanced amount and not on interest. Keeping in view the aforementioned facts, the matter is required to be re-appraised. The impugned order is set aside. The matter is remitted back to the executing court to decide the matter afresh, keeping in view the aforementioned observations.
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2016 (3) TMI 753
Deduction u/Sec. 80-IB - DEPB/duty draw back benefits - Held that:- On perusal of Sec. 80-IB, in our view, it postulates that the deduction u/Sec. 80-IB is available to the eligible industrial undertaking where the gross total income of the eligible assessee includes any “profits and gains derived from any eligible business” referred to in the section (emphasis supplied). What has to be seen is “derived from” and not “attributable to”. The expression “derived from” is restrictive as against “attributable to”, which is wider. There should be immediate nexus and not distant nexus. In our view DEPB/duty draw back benefits do not form part of net profit of undertaking as they are not derived from the eligible business but are incentives under a particular scheme. - Decided against assessee Trading addition - AO applied a certain percentage while making trading addition rejecting books of accounts u/Sec. 145(3) and applied the GP Rate of 20% on the total turnover as disclosed by the assessee. The CIT(A) on a further appeal by the assessee applied a GP Rate of 15% - Held that:- Tribunal, taking into consideration the judgment rendered by this Court in the case of CIT Vs. Gotan Lime Khaniz Udyog (2001 (7) TMI 19 - RAJASTHAN High Court ) has held that the books of accounts have been maintained in proper manner and deleted the addition and in our view, we find no perversity in the order of the Tribunal in deleting the tradition addition as even otherwise it is a finding of fact based on the material on record and there can be no hard and fast rule of increasing the GP Rate over the years. - Decided in favour of the assessee. Disallowance of duty draw back consultancy charges - While the AO held that it is capital expenditure in nature and it has enduring effect, however, both i.e. the CIT(A) as well as the Tribunal came to the conclusion that it is revenue in nature - Held that:- The finding of the Tribunal that it is not in the nature of enduring effect, is just and proper, the finding of fact recorded by both the appellate authorities is that the consultancy charges have to be paid on account of duty draw back received by the assessee which is to the extent of 1% or 1.5% and this has been paid on year to year basis. When this is a finding of fact recorded by the appellate authorities that these are the consultancy charges on account of receipt of duty draw back and is being paid on annual basis, in our view, it is certainly not in the nature of capital expenditure and has rightly been held to be expenditure, revenue in nature and thus allowable. Thus, both the questions are answered against the revenue and in favour of the assessee.
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2016 (3) TMI 752
Disallowance u/s 43B - premium on transfer of lease-hold rights of land owned by BMC - Held that:- premium on transfer of lease-hold right is not collected under any provisions of any law in force in India, we hold that said premium on transfer of lease-hold rights of land owned by BMC is not a ‘fee’ as defined u/s 43B(a) of the Act and is not hit by Section 43B(a) of the Act and the same cannot be disallowed for non- compliance of provisions of Section 43B of the Act We hold that the liability to pay the premium to BMC on transfer of lease-hold rights of the land owned by the BMC in favour of purchaser/assignees was an un-ascertained liability being a contingent liability during the impugned assessment year as the said premium per-se both as a statutory and as well as being a contractual liability were subject matter of legal dispute and challenge before the Hon’ble Bombay High Court of which the assessee was fully aware . The assessee was also not making payment to BMC knowingly fully well that it is an unascertained and contingent liability as the matter as to legality and validity of the said premium both as statutory and contractual liability were under challenge and legal dispute being sub-judice with the Hon’ble Bombay High Court, when the assessee filed his return of income in October 2007 with the Revenue claiming the said expenditure of ₹ 12,00,000/- as deduction u/s 37(1) of the Act in the computation of income filed along with return of income with the Revenue. Thus, in our considered view, the said expenses of ₹ 12,00,000/- claimed by the assessee as an expenditure in the return of income filed with Revenue is not deductible as revenue expenditure u/s 37(1) of the Act, while computing income of the assessee being disputed , un-ascertained liability and contingent liability which was subject to challenge and dispute before the Hon’ble Bombay High Court both with respect and regard to being classified as statutory as well as contractual liability at the time of filing of return of income with the Revenue by the assessee in October 2007 . Thus, based on our above discussion and reasoning, the grounds of the appeal raised by the assessee are rejected and are dismissed TDS u/s 194C - Labour charges paid by invoking the provisions of section 40(a)(ia) - non deduction of tds - Held that:- The assessee has taken a plea that the assessee being individual there was no liability to deduct the tax at source u/s 194C of the Act as per the then prevailing section 194C of the Act as the assessee is builder and developer and appoints contractor to work for it. The assessee has also submitted that Section 194C was amended w.e.f. 01-06-2007 whereby individuals who are under ambit of tax-audit u/s 44AB of the Act as stipulated vide amendments in the Section itself were also brought into the mischief of Section 194C(1) of the Act w.e.f 01-06-2007 but the impugned assessment year being 2007-08, there was no liability on the assessee to deduct tax at source on these payment . The CIT(A) has not adjudicated this plea of the assessee raised for the first time by the assessee before the CIT(A) that provisions of Section 194C of the Act was not applicable on the assessee being an individual as being builder and developer himself and not a contractor . In our considered view, the matter needs to be set aside and restored to the file of the A.O. for determination of issue de-novo , after verification of the facts as to whether the payments made by the assessee to the said parties were made by the assessee in the capacity of the builder and developer and not as contractor to come out of mischief of the un-amended Section 194C of the Act as was existing in the statute during the assessment year 2007-08 - Decided in favour of assessee for statistical purposes.
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2016 (3) TMI 751
Sale of software as part of machinery - alleging the same to be income in the nature of “Royalty” within the meaning of section 9(1)(vi) - Held that:- It is clear that if customer makes requisite copies to enable it to use the software for exclusively its own purposes or makes back-up copies purely as a temporary protection against loss, in order only to utilize the computer programme for the purpose for which it was supplied, then section 52 of the Act clearly states that it shall not amount to infringement of the copyright. Thus, in the facts of this case which we have discussed in detail above, neither there was any transfer of copyright or any rights therein nor there was any situation giving rise to any type of infringement of copyright by the customers of the assessee. Thus, in our considered view account of sales consideration received by the assessee on account of sale of machine along with it operating software would not constitute “Royalty” within the meaning of article 12(3) of the Indo-Israel DTAA. We shall like to clarify and reiterate at the cost of repetition that we have not examined the effect of subsequent amendment to section 9(1)(vi) of the Act and also whether the amount received for use of software would be “Royalty” in terms thereof for the reason that the assessee is covered by tax treaty the provisions of which are more beneficial and also for the reason that in this case transaction under consideration was predominantly and essentially of the character of sale and purchase of machine and not that of software. Thus, in view of the discussion above, it is held that the amount received by the assessee was not liable to tax as “Royalty” and therefore addition made by the Assessing Officer is directed to be deleted. - Decided in favour of assessee
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2016 (3) TMI 750
Addition u/s 68 - ingenuity of gift - gifts from parents - Held that:- As the mother was not keeping well, she could not be produced before the A.O. Nevertheless, the assessee had vide letter dt. 5.7.2011 requested the A.O. to depute a Departmental Officer to the residence, so that the statement of Smt.Chandervati could be recorded. This was not done. Thus, to make an addition on the ground that she was not produced is wrong. Smt. Chandervati Devi filed various documents to substantiate the sources from where she had given a gift to her son. The A.O. has not conducted any independent investigation nor brought any evidence on record, to lead us to a conclusion that the evidence produced by the assessee is not reliable. Smt.Chandervati Devi had filed a return of income for the A.Y. 2008-09. There is no basis to doubt the will written by Smt.Ramkali who is the mother of Smt.Chandravati Devi. Registration of will is not mandatory. The will was notarised will and has two witnesses. If the A.O. chose to dispute the will, he could have examined the witnesses. He failed to do. The affidavits from various persons filed by the assessee have wrongly been dismissed as fabrications. No inquiry was made by the A.O. nor was any material gathered to come to such a conclusion. The evidence was dismissed based on surmises and conjectures. Hence for all these reasons, we are of the considered opinion that the gift of ₹ 15 lakhs given by the assessee’s mother Smt.Chandravati Devi is a genuine gift and cannot be added u/s 68 of the Act. Coming to the gift received from the father Shri Prem Dutt Sharma, we find that he has been examined on oath and he has confirmed the same. The source of funds were explained as amount received from Sh.Ram Kumar Sharma on the execution of an agreement to sell. Mr.Ram Kumar Sharma confirmed this agreement on oath. The AO has not an iota of evidence to disbelieve these evidences or these statements recorded of oath. The A.O. rejected the evidence filed by the assessee based on surmises and conjectures. If the source of funds cannot be proved by the father or by Mr.Ram Kumar Sharma, the course of action should have been to make an addition in their hands. Sh.Sharma has filed his return of income for the A.Y. 2008-09. Thus in our view, the assessee discharged the burden of proof that lay on him and had proved the genuineness of these gifts. - Decided in fovour of assessee
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2016 (3) TMI 749
Revision u/s 263 - CIT found that unabsorbed depreciation was not allowable to be carried forward for a period more than 8 years - Held that:- As decided in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT ] held Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. Thus any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No. 14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y 1997-98 upto the A.Y 2001-002 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. In this view of the matter, we find that the order passed by Assessing Officer is not only erroneous but also prejudicial to the interest of revenue. Accordingly, we reverse the order of Ld. CIT passed u/s. 263 - Decided in favour of assessee.
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2016 (3) TMI 748
Revision u/s 263 - excessive deduction provided to the assessee u/s 10AA - Held that:- The total turnover/ export turnover and profit arising from the undertaking located at SEZ shall alone be considered for the working of the deduction under section 10AA(7) of the Act. The total turnover of the assessee shall not be taken into account while working out the deduction under section 10AA of the Act. Thus it is amply clear that the assessee has correctly claimed the deduction under section 10AA of the Act. Therefore the order of the AO is not erroneous and prejudicial to the interest of the Revenue. Accordingly the order of the ld. CIT cannot be held to be sustainable in law and the same is accordingly set aside. - Decided in favour of assessee
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2016 (3) TMI 747
Revision u/s 263 - CIT(A) directing the assessing officer to carry out enquiry and investigation on the line suggested in the order u/s. 263 and compute the total income accordingly - Held that:- Regarding the issue of survey folder it was the duty the AO to consider the information gathered during the time of survey. Now the question arises whether the information at therein was relevant or not. It was also observed that the order of the ld. CIT is also silent whether the order is erroneous and prejudicial to the interest of Revenue of the revenue. The ld. CIT failed to bring anything concrete on record that the order of the AO is erroneous and prejudicial to the interest of Revenue. We find that the ld. CIT treated the order erroneous on premise regarding the issue of survey. As relying in the decision of CIT v. Sunbeam Auto Ltd. (2009 (9) TMI 633 - Delhi High Court ) and CIT v. Anil Kumar Sharma [2010 (2) TMI 75 - DELHI HIGH COURT] held that the fact as to whether the AO has applied his mind or not need not necessarily be determined from what has been stated in the assessment order alone, it has to be examined as to whether any inquiry was at all conducted by the AO. There exists a difference between lack of inquiry and inadequate inquiry. If there were any inquiry, even inadequate that would not give an occasion to exercise jurisdiction u/s 263 of the Act. In view of above facts and circumstances and the decision of Hon’ble Delhi High Court above cited case law and from the facts and in the light of various judicial pronouncements the order of the ld. CIT cannot be held to be sustainable in law and the same is accordingly set aside. - Decided in favour of assessee
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2016 (3) TMI 746
Entitlement to the exemption under section 11 - Violation of provisions of section 13(1)(c) and 13(2)(a)/(b)/(g) - Held that:- Having held that the Poddar Trust comes within the list of prohibited persons under section 13(3), now we are left to examine the transaction which has taken place between the assessee and the said M/s. Poddar Trust. The AO, after examination has found that the assessee has given a loan of ₹ 42,69,615/- to PMTI College, a unit of M/s. Poddar Trust which is a prohibited person within the meaning of section 13(3) of the Act. In our view, the fact of giving the loan by the assessee trust to M/s. Poddar Trust does not violate section 13(1)(d) read with section 11(5) of IT Act, 1961, as the said loan is neither an investment nor a deposit and the said amount has been given to M/s. Poddar Trust which is also a registered trust having the similar objects under the Act of 1961. The said trust has, in fact, returned back the money to the assessee trust in the subsequent assessment year and, therefore, the AO has not disallowed the exemption. In view thereof, though M/s. Poddar Trust is a prohibited person within the meaning of section 13(3) of the Act, however, the transaction of ₹ 42,69,615/- does not fall within the provisions of section 13(1)(d) read with section 11(5) of the Act. In view thereof, the assessee is entitled to the exemption under section 11 of the Act. - Decided in favour of assessee
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2016 (3) TMI 745
Additions towards trade creditors u/s 68 - assessee has not proved the genuineness of the transactions - Held that:- On perusal of the records, we find that when ITI caused enquiries, the creditors have denied any business transaction with the assessee. Therefore, the basic requirement of genuineness of the transaction is absent. Though, the assessee claims that he has furnished confirmation letters before the A.O. as well as CIT(A), no such findings were recorded in the orders of the lower authorities. Even before us, the assessee failed to furnish evidences in the form of confirmation letters for having confirmed the creditors. Merely stating that he has filed confirmation letters would not sufficient compliance of the provisions of section 68 of the Act. The A.O. categorically stated that the creditors have denied the transaction with the assessee. Therefore, it is abundantly clear that the assessee has not proved the genuineness of the transactions. Once, the assessee failed to prove the initial burden casts upon him, by furnishing identity, genuineness of the transaction and credit worthiness of the creditors, the addition made by the A.O. u/s 68 of the Act should sustain. Therefore, we are of the opinion that the A.O. has rightly made the additions. The CIT(A), after considering the explanation of the assessee, upheld the A.O. order. We do not find any error or infirmity in the order of the CIT(A). - Decided against assessee Additions towards adhoc disallowance of expenditure - Held that:- The A.O. made 15% disallowance of expenditure under the head freight charges, loading charges and coolie charges. The A.O. was of the opinion that the assessee could not furnished bills & vouchers in support of the expenditure claimed under these heads. The CIT(A) after considering the explanations furnished by the assessee restricted the additions to ₹ 30,000/-. The fact remains same even before us. The assessee has not filed any evidence to counter the findings of the facts recorded by the CIT(A). Therefore, we are of the opinion that the CIT(A) has rightly restricted the additions to ₹ 30,000/- and we do not see any reason to interfere in the order of CIT(A). - Decided against assessee
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2016 (3) TMI 744
Profit on sale of the land - claim of the assessee for exemption as agricultural income rejected - Held that:- The fact that the land is classified as agricultural land is not in dispute. It is also not in dispute that the assessee has returned agricultural income year after year. The adangal extract clearly shows that the land in question was subjected to agricultural operation. Therefore, it was obvious that the land is an agricultural land. Therefore, the profit arising out of such land has to be treated as agricultural income as found by the Apex Court in Singhai Rakesh Kumar (2000 (11) TMI 2 - SUPREME Court) and All India Tea and Trading Co. Ltd. (1996 (3) TMI 4 - SUPREME Court ) which was followed by the decision of Cochin Bench of this Tribunal in Nilgiri Tea Estates Ltd. (2012 (2) TMI 553 - ITAT COCHIN ). The CBDT has also subsequently clarified that the profit on sale of the land has to be treated as agricultural income and will not constitute “revenue” within the meaning of Section 2(1A)(a) of the Act. In view of the above, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the profit on sale of the land has to be classified as agricultural income. - Decided in favour of assessee Computation of profit u/s 115JB - Minimum alternate tax (MAT) - Only contention of the assessee is while computing book profit under Section 115JB the agricultural income cannot form part of book profit - Held that:- Computation of total income of previous year of any person, agricultural income shall not be included therein. In this case also, it is an admitted fact that the land in question is an agricultural land and the assessee was carrying on agricultural operation. Therefore, as discussed earlier, the profit on sale of the land has to be treated as agricultural income. Therefore, if any such income is credited to the Profit & Loss account, the same has to be reduced from the book profit while computing income under Section 115JB of the Act. Therefore, this Tribunal is unable to uphold the order of the CIT(Appeals) on this issue. By following the order of Cochin Bench of this Tribunal in Harrisons Malayalam Ltd. (2009 (5) TMI 124 - ITAT COCHIN ), the orders of the lower authorities are set aside. The Assessing Officer is directed to reduce the profit on sale of agricultural land from the book profit for the purpose of computing income under Section 115JB of the Act. - Decided in favour of assessee
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2016 (3) TMI 743
Deduction u/s 80IA - whether it is not a case of works contract - Held that:- In the case before us, the entire power plant was established by M/s Kanishk Steel Industries Ltd. The assessee was given the licence to operate and generate electricity by an agreement dated 26.4.2008. The consideration of the agreement is supply of 9 million units of power generated in every financial year. If the production of electricity is less than 9 million units in any financial year then the assessee shall compensate to M/s Kanishk Steel Industries Ltd. by an amount equal to the value of such shortfall of electricity on the basis of the rate on which Tamilnadu Electricity Board supplies electricity. Even though there is no express agreement in respect of the electricity generated over and above 9 million units in every financial year, there is no obligation on the part of the assessee to supply the same to M/s Kanishk Steel Industries Ltd. In other words, the assessee may use the electricity generated over and above 9 million units in any financial year in accordance with its discretion. The agreement for licence does not provide for payment of any commission to the assessee by M/s Kanishk Steel Industries Ltd. In those facts and circumstances, this Tribunal is of the considered opinion that it is not a case of works contract as contended by the ld. DR. It is a simple case of a licence to operate the power plant set up by M/s Kanishk Steel Industries Ltd. Since the income of the assessee includes profits and gains derived from generation of power, this Tribunal is of the considered opinion that in view of the judgment of Madras High Court in the case of M/s K.A Infrastructure Pvt. Ltd. (2011 (10) TMI 641 - MADRAS HIGH COURT), the assessee is eligible for deduction u/s 80IA of the Act - Decided in favour of assessee.
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2016 (3) TMI 742
Assessment of capital gains on sale of 5.075 Acres of land - Held that:- The property in question was given as security to M/s Globus Realtors Pvt. Ltd. for advancing loan to the sister concern M/s Essorpe Holdings Pvt. Ltd. Therefore, it is obvious that to promote the business of sister concern, M/s Essorpe Holdings Pvt. Ltd, the assessee gave the land in question as security. While giving the security, the assessee has also executed power of attorney in favour Shri V. Sivakumar, Managing Director of M/s Globus Realtors Pvt. Ltd. When the sister concern could not repay the loan amount, the property which was given as security was sold by Shri V. Sivakumar and the sale consideration was adjusted for repayment of the loan by M/s Essorpe Holdings Pvt. Ltd. In those circumstances, this Tribunal is of the considered opinion that since the land was given as security for commercial expediency to sister concern, there was a business loss arising in the course of business. Since no amount was realized and the assessee-company suffered a loss for giving security to the sister concern, the same has to be allowed as business loss while computing the taxable income. In view of the above, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to compute the capital gains u/s 45(2) of the Act on sale of land upto the date of conversion as stock-in-trade. The profit on sale of land as stock-in-trade has to be computed as business loss since the assessee has not received any money on sale of the land. Therefore, the capital gains computed upto the date of conversion of land into stock-in-trade has to be set off against the business loss computed on sale of the stock-in-trade. - Decided in favour of assessee
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2016 (3) TMI 741
Reopening of assessment - deemed dividend u/s 2(22) - Held that:- Prima facie going by the ld. Counsel's contention on merits, we find that the Assessee had no accumulated profits up till 31.3.2005 which is evident from the balance-sheet. Only the current year's reserves and surplus is ₹ 65,36,884/- which is on account of net loss carried to the balance-sheet. The Hon'ble Supreme Court in the case of CIT vs. V. Damodaran (1979 (10) TMI 5 - SUPREME Court) after considering the various decisions has interpreted that "accumulated profit" cannot be construed to include current profits and there is a distinction between "accumulated profits" and "current profits". If the Assessee did not had any accumulated profits brought forward from the earlier years, then, the provision of deemed dividend cannot be invoked on the current year's profit. This is a settled position of law. Here, in this case, once there is no accumulated profits brought forward from the earlier years, then, the provision of deemed dividend u/s 2(22)(e) of the Act cannot be invoked for taxing the reserves and surplus or the profits of the current year. Accordingly, the addition made by the AO cannot be sustained at the threshold. - Decided in favour of assessee.
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2016 (3) TMI 740
Deduction under section 10B - - STPI unit - Held that:- Admittedly, the assessee before us is 100% EOU unit and has been set up under the STPI Scheme and has requisite approval from STPI. However, for availing deduction under section 10B of the Act, the assessee should be 100% EOU set up as specified under Explanation 2(iv) below section 10B of the Act, which defines 100% EOU as an undertaking so approved by the Board appointed in this behalf by the Central Government under section 14 of the Industries Development and Regulation Act, 1951. The assessee admittedly is not so registered or approved by the Development Commissioner, which are ratified by Board of approval. In view of the ratio laid down by the Hon'ble Delhi High Court in CIT Vs. Regency Creations Ltd. (2012 (9) TMI 627 - DELHI HIGH COURT) we hold that the assessee is not entitled to the said claim of deduction under section 10B - Decided against assessee Alternate plea of the assessee in respect of allowability of deduction under section 10A of the Act in place of section 10B - Held that:- The issue before us is identical to the issue before the Tribunal in Clarion Technologies (P.) Ltd. Vs. DCIT (2014 (11) TMI 141 - ITAT PUNE) and following the same parity of reasoning, we deem it fit to remand the issue back to the file of Assessing Officer to verify the claim of the assessee for deduction under section 10A of the Act in accordance with law. - Decided in favour of assessee for statistical purposes.
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Customs
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2016 (3) TMI 774
Imposition of penalty - Section 114 (i) of the Customs Act, 1962 - Aiding and abetting the fraudulent export - Held that:- separate proceedings were initiated against the same appellant arising out of the same set of facts and circumstances resulting in imposition of a separate penalty of ₹ 2 crores upon him. The appeal filed by the appellant against an earlier order, which relate to same set of investigations, was considered by the Tribunal. Inasmuch as the earlier appeal of the same appellant and the present appeal arise out of the same investigations including the same exporters and the same statements, the penalty imposed upon the appellant is set aside. Also as the appellant was a resident of Dubai, the Customs Act is not applicable against a person residing outside India followed by the Tribunal in a judgement in the matter of Shafeeq PK v. CC, Cochin [2015 (9) TMI 1257 - CESTAT BANGALORE]. Therefore, the relief has been granted to the assessee on this ground also and the penalty is set aside. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 773
Refund claim of SAD paid - unjust enrichment - Goods imported for consumption but subsequently sold on charging sales tax, service tax and VAT - Rejected only on the ground that the balance sheets which were submitted initially along with the refund claims did not show the “amount as receivable” while subsequent revised balance sheets indicate the said amount as “amount receivable” Held that:- the balance sheets which were revised and filed with the Income Tax authorities and additional income tax was also paid on such balance sheet needs to be considered in this case as an evidence in support of non-passing of the incidence of duty. In the revised balance sheet the amount of refund claim is indicated as "amount receivable" which indicates that the appellant had paid the entire amount from their pocket on which refund is claimed. Therefore, the refund claim is allowed by applying the judgment of Hon'ble High Court of Madras in the case of CCE Chennai vs. Sarlee Household & Bodycare India Pvt. Ltd. [2007 (6) TMI 55 - HIGH COURT, MADRAS]. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 772
Writ petition - Movement of gold smuggled allegedly Writ petition - Seeking to define the territorial limits of the jurisdiction of Commissionerates or Commissioners - Seizure of smuggled gold - Held that:- the two persons were travelling by Howrah-CST Duronto Express. That was a train scheduled to arrive at Mumbai and both passengers alleged to be involved in transporting the goods were travelling by this train. When this train reached Igatpuri station, that a watch was kept on their movement. That is how these two persons got down when the train just passed Shahad station. The officers followed them and arrested them with the alleged contraband. The seizure was effected and all that has taken place within the Thane district. It also reveals that the persons arrested and travelling by train were produced before the Additional Chief Metropolitan Magistrate, Mumbai. Therefore, the Commissionerate at Mumbai/Thane has to adjudicate the matter. - Decided in favour of petitioner
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2016 (3) TMI 771
Writ petition - Validity of order - Passed in violation of natural justice - Suspension of CHA licence by invoking provisions of Regulation 20(2) of the Customs House Agent - Enquiry conducted without issuing any show cause notice under section 22(1) ibid and an opportunity of personal hearing - Held that:- there is clear violation of principles of natural justice. Therefore, the petitioner should be given relief in the writ petition filed under Article 226 of the Constitution of India and the Tribunal's order is set aside. - Matter remanded back
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2016 (3) TMI 770
Writ petition - Validity of show cause notice - Issued with pre-judged mind - Held that:- by following the judgment of Hon'ble Supreme Court in the case of Oryx Fisheris Private Limited v. Union of India [2010 (10) TMI 660 - SUPREME COURT OF INDIA], being a quasi-judicial authority, while, acting in exercise of its statutory power, must act fairly and must act with an open mind, while initiating show cause proceeding. When the first respondent had issued the show cause notices with pre-judged mind, there is no purpose in issuing show cause notices at all. The first respondent should have taken utmost care to manifestly keep an open mind, as they have to act fairly in adjudging the guilt of the petitioners and especially when he has a power to take punitive steps against the petitioners after giving them a show cause notice. Therefore, the show cause notice in question liable to be set aside. - Decided in favour of appellant
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Corporate Laws
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2016 (3) TMI 765
Interplay between section 15A, as amended in the year 2002, and Section 15J of the SEBI Act - whether the expression “namely” fixes the discretion which can be exercised only in the circumstances mentioned in the three clauses set out in Section 15J, or whether it would also take into account other relevant circumstances, having particular regard to the fact that it is a penalty provision that the Court is construing? - Held that:- The familiar expression “notwithstanding anything contained” does not appear in the amended Section 15A. This being the case, it is a little difficult to appreciate as to how one can construe Section 15A, as amended, in isolation, without regard to Section 15J. In fact, the facts of the present case would go to show that where there is allegedly only a technical default, and the three parameters of Section 15J would allegedly be satisfied by the appellants, namely, that no disproportionate or unfair advantage has been made as a result of the default; no loss has been caused to an investor or group of investors as a result of the default; and there is in fact, no repetitive nature of default, no penalty at all ought to be imposed. What has been done by the appellants here is to fail to adhere to Regulation 13, as alleged in the show cause notice, which failure has occurred on three days and consequently, has allegedly not been repeated by the appellants anytime thereafter. If we were to read Section 15A, as amended in 2002, in the manner suggested by the Division Bench of this Court, it may lead to anomalous results in that the effect of continuing failure to adhere to statutory regulations alleged to have been continued well beyond the period of three days, and which continues till this day, has ₹ 1 lakh per day as the minimum mandatory penalty under the provisions, which would culminate in the appellants herein having to pay ₹ 1 crore in each of the three appeals. We do not think that this could have been the intention of the Parliament in enacting Section 15A, as amended in 2002. We also feel that on the assumption that paragraph 5 of the judgment is correct, it would be very difficult for Section 15A to be construed as a reasonable provision, as it would then arbitrarily and disproportionately invade the appellants' fundamental rights. This being the case, on both the conclusions reached by this Court in paragraphs 4 and 5, as stated by us hereinabove, these matters deserve consideration at the hands of a larger Bench. The Registry is, accordingly, directed to place the papers of these appeals before Hon'ble the Chief Justice of India for placing these matters before a larger Bench.
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2016 (3) TMI 764
Registration as CIS under the CIS Regulations - Regulations framed by SEBI - whether SEBI is justified in turning down a request made by the Appellant by way of a Miscellaneous Application before this Tribunal seeking registration as CIS under the CIS Regulations, without prejudice to its right to contend that the schemes operated by it are not covered under CIS? - Held that:- We direct the appellants to make a without prejudice application seeking registration in respect of the refundable schemes in question preferably within one week from today and further direct SEBI to grant provisional registration to the Appellants as per the procedure prescribed under the CIS Regulations so that interest of investors / customers do not suffer, especially when it is found by SEBI that the business carried on by the appellants prima facie to be in accordance with law except that the said business is carried on without seeking registration from SEBI. Depending on the investigation report, SEBI may consider grant of final registration to the Appellants in accordance with law in due course of time. Needless to say that SEBI shall make an endeavor to complete the pending investigation expeditiously against the appellants so that the prima facie view of SEBI regarding the business activities of the appellants attains finality before hand in one way or the other. For all the aforesaid reasons, while upholding the prima facie view of SEBI that the business carried on by the appellants constituted CIS, we set aside the directions given by SEBI in the impugned orders dated June 3, 2015 and August 24, 2015 and direct the Appellants to make an application for registration with SEBI in respect of the refundable schemes covered by the CIS Regulations, and further direct SEBI to grant provisional certificate of registration as provided under the CIS Regulations forthwith, and eventually on receipt of final investigation report, if found appropriate, grant final registration as per law, so that the schemes being operated by the Appellants are henceforth regulated so that the investors’ interests are effectively and properly protected by SEBI. Till the date of granting provisional registration, the Appellants may continue to receive subscription amount from the investors under the existing schemes. However, the accounts / records of the amounts collected thereunder, shall be maintained in a separate account and appellants shall not launch any new scheme except in accordance with law. The appellants shall also not alienate or create any encumbrance or third party rights on any of their properties except for repayment to the customers / investors.
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Service Tax
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2016 (3) TMI 786
Eligibility for exemption or refund claim for July 2008 to September 2008 - Notification No. 41/2007-ST dated 06/10/2007 - Manufacture & export of carton yarn - Paid Service tax on various services received by them and used for export of goods manufactured by them - Held that:- services on which refund is claimed are in the nature of Port Services and any procedural infirmity in documentation should not be held against a substantial benefit, if otherwise eligible, to the appellant. Therefore, after relying on various decided cases the appellant is eligible for refund claim. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 785
Rectification of mistake - Taxability - Cleaning Services - Held that:- nothing is brought on record to show that cleaning services rendered by the appellant are not taxable. Therefore, there is no error apparent on face of the record. - Application dismissed
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2016 (3) TMI 784
Rectification of mistake - Taxability - Cleaning Services - Held that:- nothing is brought on record to show that cleaning services rendered by the appellant are not taxable. Therefore, there is no error apparent on face of the record. - Application dismissed
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2016 (3) TMI 783
Liability of Service tax prior to 1.6.2007 - Works Contract - Held that:- it is now settled by the Supreme Court in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT] that works contract was not liable to service tax prior to 1.6.2007. It is also settled by the CESTAT judgment in the case of Bhayana Builders (P) Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], that in the case of free supply of some goods by the service recipient abatement under Notification like 15/2004-ST is admissible even if the value of such goods is not included in the assessable value. Therefore, no service tax is leviable.
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2016 (3) TMI 782
Imposition of penalty - Section 76, 77 & 78 of the Finance Act, 1994 - Renting of immovable property - Service tax along with interest deposited before issuance of show cause notice - Held that:- as per various decisions of the Tribunal and in terms of the provisions of Section 80(2) of the Finance Act, 1994., the penalty is not imposable. - Decided in favour of appellant
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2016 (3) TMI 781
Imposition of penalty - Section 78A of the Finance Act, 1994 - Held that:- this Section cannot be invoked for any aberrations by the assessee prior to 10.05.2013 as it was brought into statute with effect from 10.05.2013. Therefore, penalty is not imposable. - Decided in favour of appellant
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Central Excise
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2016 (3) TMI 780
Cenvat credit of input services - denial of claim as its cost is included in the cost of production, on the ground that the same was availed outside the factory premises - utilization of credit on reverse charge mechanism - Held that:- Explanation to Rule 3 (4) of Cenvat Credit Rules, 2004 amended in 2012 imposed a bar on utilization of credit on reverse charge mechanism and the period involved in the present appeal is prior to the amendment. In the instant case, the goods cleared from the appellant’s premises were sent to M/s. Wuxi Sumisho Hi-Tech Logistics Company Limited, China and from there it is re-packed and sent to the ultimate buyers. M/s. Wuxi Sumisho Hi-Tech Logistics Company Limited is not the buyer. They procure orders from the potential buyers and asks the appellant to send the goods to them for onward supply to the ultimate buyers. Even after the goods are supplied to the buyers, M/s. Wuxi Sumisho Hi-Tech Logistics Company Limited does the maintenance job of the products sent by the appellant. Both the parties entered in to a contract and the warehouse of the commission agent viz., M/s. Wuxi Sumisho Hi-Tech Logistics Company Limited, China is the place of removal in the instant case. In such cases, the credit of the service tax paid up for such services would be admissible. In the case of CCE, Vapi Vs. Nilkamal Crates & Bins (2010 (2) TMI 232 - CESTAT, AHMEDABAD ), co-ordinate Bench of this Tribunal held that commission agent service is to help in promotion of business activity and thus credit is admissible on input services used in relation to it. Thus the appellant is entitled to the benefit of Cenvat credit availed on BAS service used in relation to its business activity in a foreign land. Since, the demand is set aside, the impugned penalty is also not sustainable. - Decided in favour of assesee
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2016 (3) TMI 779
Remission of Central Excise duty - Held that:- We find that the Dept. had written to the appellant on 19.12.2005 to furnish certain particulars. The appellant had not replied to the same till 13.1.2006 when they requested the permission to remove goods from the Bonded Store Room for destruction. It is observed that the goods have already been destroyed by the appellant on 11.1.2006 ie., before the said letter. It is also observed that in their letter dtd 30th Dec., they had not given any specific intimation to the Dept. the time and date of the proposed destruction. Removal of goods from Bonded Store Room without permission, and destruction of same in the absence of supervision/permission are clearly not in accordance with the provisions. In the case of M/s Sun Pharmaceuticals vs CCE, Vapi [2014 (2) TMI 1007 - CESTAT AHMEDABAD ] relied upon by the Appellants, the issue was remission of duty of the goods, which were destroyed in flood. In the case of BIOPAC INDIA CORPN LTD vs CCE, Vapi (2007 (11) TMI 213 - CESTAT AHMEDABAD ) the issue was finished and semi finished goods destroyed in fire. The other relied upon case law by the appellants is the decision of the Hon'ble High Court of Madhya Pradesh in the case of Godrej Food Ltd vs Union of India [1994 (4) TMI 84 - HIGH COURT OF MADHYA PRADESH AT INDORE ]. In the said case, assessee had furnished information sought by the Dept on the next day and thereafter on not receiving any further communication from the Dept. for a long time, destroyed the goods. The facts of these cases are different from the facts of the instant case and therefore they are not applicable herein. As the remission of duty application is rejected, consequent demand of duly is upheld. - Decided against assessee
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2016 (3) TMI 778
Denial of CENVAT credit on capital goods - Held that:- It is noticed that almost in all cases, the Commissioner has not given any reasons for arriving at the conclusion. He has simply given final conclusion stating that how the same were entitled or not entitled to the capital goods CENVAT Credit. A perusal of the list of the items on which the credit has been denied includes items which have been described as spares in the excise invoice. The items on which credit have been denied are consumables include industrial fans, centrifugal fans, tube assembly, coupling, auto parts etc. It is seen that the impugned order does not give any reasoned findings but is based on presumptions and assumptions. Accordingly, we are constrained to set aside the impugned order and remit the matter once again to the Commissioner to give reasoned findings to arrive at decision. Meanwhile, we find that both sides have cited numerous case law which is relevant for the purpose of reaching the conclusion, the Commissioner will give an opportunity to the appellant to present their case before taking a final decision. - Matter remanded back.
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2016 (3) TMI 777
Manufacture - complete food tray as served to the passengers on board the aircraft - edible preparations bearing the brand-name - sustainability of demand for extended period and penal action against the appellant - Held that:- Out of Food preparations as contained in the food tray served to the passengers on board, admittedly, the appellants did prepare dal, roti, rice, curry etc. and supplied the same in trays and bowls covered with aluminium foil. However, these are not the items on which Central Excise duty is sought to be demanded. The Central Excise duty was said to be demanded on the full value of the final complete food tray as served to the passengers on board the aircraft. There is nothing in the impugned order which will substantiate and support the claim of the Revenue on the taxability of such complete food tray on whole value. As such we find that the demand is not sustainable on this ground. Regarding the brand-name, we find that the Original Authority found that the appellants are supplying food preparations with brand-name to the airlines. Admitted facts are that the food prepared by the appellants is supplied without brand-name. In separate tray is the cutlery pouch which contains the label with logo and name of the appellant. The same is supplied separately. These are put together by the airline staff and served to the passengers. In any case since the Department has not established the sustainability of the demand on the ground of manufacture, this aspect on brand name is not further examined by us There is no supporting evidence to allege fraud, suppression with intend to evade payment of duty on the part of the appellants. In a similar matter, where appellants were one of the parties in appeal, the Tribunal in the final order [2015 (10) TMI 2400 - CESTAT MUMBAI] held that the appellants are providing in catering service to various airlines is very well known fact. In fact catering to the airline is their main business, and no such similarly placed caterer was paying excise duty on such meals. The Tribunal accordingly, held that it is difficult to say that there was suppression of fact or wilful misstatement of facts or intention to evade payment of duty. We find in the present case on a similar situation the demand after many years of the impugned period is not sustainable in view of the facts and circumstances of the case. As such, we find the impugned order is not sustainable both on the question of manufacture and on time bar. - Decided in favour of assessee
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2016 (3) TMI 776
Determination of capacity of the appellant unit at 6.4 MT - Held that:- In view of the admitted fact that the furnace of capacity 3.0 MT was lying out of working condition and/or uninstalled, the learned Commissioner is in error taking the capacity of the same on the premises that as the furnaces was available in the factory premises, the same has to be considered for determining annual capacity. According to the rules only the furnace which is installed and put to use is required to be considered for determining the annual capacity. Thus we set aside the impugned order to the extent the annual capacity of production is determined at 6.4 MT and we re-determine the same at 3.4 MT for the period 1998-99. Accordingly the appellant will be liable to pay the duty, if any, unpaid on the capacity as is determined by this Tribunal. We also set aside the amount of penalty determined and fixed vide order dated 19.4.2006 determined by the Assistant Commissioner in terms of the impugned order. As we have decided the appeal on merits, we do not decide the points of law arising pursuant to amendment vide Finance Act, 2001. - Decided in favour of assessee
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2016 (3) TMI 775
Disallowance of Cenvat Credit on bright bars used as inputs for manufacture of motor vehicles parts - Held that:- Interestingly, although the Apex Court in its judgment dated 20.09.1994 in CCE, Chandigarh Vs. Vee Kayan Industries (1994 (9) TMI 97 - SUPREME COURT OF INDIA ) had held that the processing of round bars into Bright bars would not amount to manufacture, the Department by Trade Notice No. 18/2003 dated 14/08/2003 had clarified that the process of making bright bars from wire rods amounts to manufacture. Duty was being collected upon bright bars and credit was being availed on such goods. A further trade notice dated 16/06/2004 was issued in clarification to trade notice No. 18/2003. It is discussed by the Commissioner (Appeals) that the issue was contentious and involved interpretation and therefore protective demands were issued during that time. It is seen that the cases were kept pending in the call books after issuance of show cause notice. Thereafter the matter has been adjudicated and order passed. This goes to show that the Department itself was under much confusion as to whether excise duty is to be collected or not on bright bars. See decision in Light Lift Industries vs. CCE, Delhi-IV-2010 (2009 (11) TMI 796 - CESTAT NEW DELHI) wherein it has been held that the credit is admissible on bright bars. Further, when inputs is received by the appellant and used in or in relation to manufacture of final product and payment of duty is evidenced by the invoices, credit cannot be denied. The question whether the input is the result of a process of manufacture is irrelevant. What is relevant is whether duty has been paid or not on such input. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (3) TMI 768
Return of cheque of 12 lacs collected at the time of inspection - Difference in VAT paid and to be paid - Held that:- the Court is not satisfied with the wording of the circular F. No. 7(3)/L&J/Circular/2016/270 dated 11th March 2016. It still leaves it open to VAT Authorities to collect tax either through the e-payment mode or the physical offline mode at the time of conducting a survey or an inspection of the business premises of a dealer. It is noted that despite the order of this court in the several cases that no dealer would be coerced by the officers of the DT&T to make payment of any amount either towards alleged tax dues or otherwise either by cheque or cash at the time of a survey or inspection or any other proceeding including proceedings under Section 60 of the DVAT Act, the department is doing so which is very disappointing. The Court expected a categorical instruction to be issued by the Commissioner, Trade & Taxes (CTT). Therefore, the directions are again issued to the CTT to comply by himself and would not be delegate this task to any other officer including any Special Commissioner who may be otherwise authorised to do so. - Petition disposed of
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2016 (3) TMI 767
Imposition of penalty under H.P. General Sales Tax Act, 1968 - Violation of the provisions of Section 22(4) of the Act - Truck loaded with 240 quintals of steel (Saria) intercepted and found not having bills and other documents and even the ST XXVI-A form had not been filled on the inter-State Barrier - Held that:- The records reveal that during inspection carried out on 1.5.1995 it was found that goods without bill or form ST XXVI-A were being carried in two trucks and neither the driver nor the petitioner could satisfy the authority regarding the same being tax paid goods. It is also borne out from the record that the respondent authorities had infact decided to detain the goods in terms of Section 26(6), but it was on account of the petitioner’s persuasion that he was a local trader that the goods instead of being detained were ordered to be released to him on ‘sapurdari’. Prior to doing so, statement of the driver as also Sh.Ved Parkash were duly recorded by the concerned officer. Thus, it is more than established that the procedure, as envisaged under Section 22(6) & (7) of the Act, has been duly followed. Also, petitioner has failed to produce the bills or any other document before this court whereby it could be inferred that he had paid the requisite tax. Having failed to do so, the decisions rendered by the authorities below have not to be interfered with. - Decided against the petitioner
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Indian Laws
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2016 (3) TMI 769
Seeking modification of sentence order - Recovery of charas - Non-joining of independent witnesses - ASI Bijender Singh at the time of raid asked 4-5 passersby to join the raiding party but none agreed and went away after giving their reasonable excuses - Held that:- the case of the prosecution cannot be thrown away simply because no public witness has been joined at the time of recovery of Charas. This view finds support from the observation made by Supreme Court in P.P.Beeran vs. State of Kerala [2001 (1) TMI 972 - SUPREME COURT] where Supreme Court observed that the testimony of the police officials cannot be rejected on the ground that police official was the sole witness of the recovery of Ganja and the public witness who was examined, turned hostile. Also the conviction can be based on the sole testimony of a sub-Inspector if other circumstances existed to corroborate his testimony. Presumption of honesty is as much available to a police officer which is available to any other official witness. There is no presumption that police officials are liars. The effect of non-joining of independent witness is only that the court has to view the submission of the police or other witnesses with caution and circumspection and the veracity of the same has to be decided before placing reliance upon them for arriving at any conclusion regarding the guilt of the accused. In this case, efforts were made by the police officials to join independent witnesses but, none agreed to join the proceedings but that ipso facto is not a ground to discard the testimony of police officials who stood the test of cross-examination and nothing material could be elicited to discredit their testimony. Seeking modification of sentence order - Recovery of charas - Non-compliance of Section 42 of NDPS Act - Held that:- Section 42 is applicable only when the secret information pertains to concealment of any narcotic drug or psychotropic substance in any building, conveyance or any enclosed place and when seizure has taken place at a public place. If a search is made in a public place, the officer taking the search is not required to comply with sub-Section (1) and (2) of Section 42 of the Act. Therefore, the provisions of Section 42 of the Act were not legally required to be complied with referred inDirectorate of Revenue and Anr. vs. Mohd. Nisar Holia [2007 (12) TMI 413 - SUPREME COURT OF INDIA], State, NCT of Delhi vs. Malvinder Singh [2007 (6) TMI 505 - SUPREME COURT] and Mohan Lal vs. State of Rajasthan [2015 (4) TMI 688 - SUPREME COURT]. The contention of Public Prosecutor that, there seems to be a typographical error in the cross-examination of this witness is not correct as it was recorded that the report was received in the office at about 1.30 pm because voluminous evidence is available on record to prove that the secret information itself was received at 3.45 pm, therefore, there was no question of sending the information to ACP at 1.30 pm. Under the circumstances, it was rightly observed by learned Special Judge that despite the fact that the provisions of Section 42 of NDPS Act were not legally required to be complied within this case but there is substantial compliance of the same. Seeking modification of sentence order - Recovery of charas - Competency of ASI Bijender Singh to carry out search being an Assistant sub-inspector - Held taht:- as per single bench judgment of this court in the case of Kamal Thakur vs. The State (Delhi Administration) [1994 (11) TMI 431 - DELHI HIGH COURT], Head Constable being superior in rank to Constable is competent to investigate. Therefore, as Bijender Singh was Additional sub-Inspector in Delhi Police was competent to carry out the search and seizure. Seeking modification of sentence order - Recovery of charas - Delay of 15 days in sending the parcels to FSL as such, possibility of tampering with the case property - Held that:- pullandas of the samples as well as remaining case property were sealed at the spot itself and seal of BS was affixed thereon. Thereafter, Head Constable Sanjeev Kumar took the sealed pullandas alongwith FSL form and copy of the seizure memo and handed over the same to SHO who affixed his seals of RK on the parcels as well as form FSL. All the sealed pullandas alongwith documents were deposited by Lallu Ram in the Malkhana vide entry No.1881 of Register No.19. Lallu Ram has specifically deposed about the seals of BS and RK found affixed on these pullandas and the form FSL. FSL result also goes to show that the above description of the seal were found to be mentioned and that the seals affixed on the sample pullandas were found to be in intact condition and it tallied with the specimen seals as per the forwarding letter. Moreover, nothing has come on record from which it can be presumed that the sealed pullandas of the samples or the remaining case property were tampered with at any stage. Therefore, mere delay in sending the samples to FSL does not cast any dent on prosecution case. Seeking modification of sentence order - Recovery of charas - Case property deposited in the night but submitted the same in the next morning hours - Held that:- as per storeroom register, the case property was deposited on 14.07.2010 at 11.55 am. This submission, which initially seemed to be attractive, was dispelled by learned Public Prosecutor for the State by submitting that the deposit was made vide DD No. 39A, therefore, the original DD No.39A was summoned which clearly reflects that the deposit was made by Inspector Ramesh Kalsan at 11.55 pm. That being so, there is nothing on record to show that the case property was at any point of time tampered with till it reached FSL. Therefore, mere delay in sending the samples to FSL does not cast any dent on prosecution case. Seeking modification of sentence order - Recovery of charas - Non-compliance of Section 50 of the NDPS Act - Original notice under Section 50 of the Act does not bear signatures of the accused - Held that:- it has come in evidence that before taking search of the accused he was apprised of the legal right to be searched before a Magistrate or a Gazetted Officer and thereupon a notice under Section 50 NDPS Act Ex.P5 was duly served upon him. Mere fact that this notice does not bear his signatures does not raise any suspicion in regard to serving of this notice because the carbon copy of the notice bears his signatures regarding receipt of the notice and thereafter since he claimed himself to be illiterate his reply was written by ASI Bijender Singh and bears signatures of accused at point X. Seeking modification of sentence order - Recovery of charas - One sample out of two taken sent to FSL - Held that:- two samples were taken out but only one of the parcel was sent to FSL does not make the prosecution case suspicious because out of the entire case property, two samples were taken. That being so, even if only one parcel is sent to the FSL and as stated by learned Public Prosecutor for the State that second sample was taken as a precautionary measure that if for some reason the FSL require another sample, the same could have been sent to FSL, deserves credence. Therefore, the appellant has been convicted and sentenced to the minimum sentence period under the Act and the impugned order is not to be interfered with. - Decided against the appellant
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2016 (3) TMI 763
Maintainability of appeal - constitutionality of sections 2, 12 and 15(a) of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 notified on 3rd of January, 2013 and the said Act to have brought into force as well on 15th January, 2013 - Held that:- The petitioner having filed a writ petition before the High Court under Article 226 of the Constitution of India, the writ petition having been admitted by the Court, the High Court having granted an inter im order which has worked itself out and the petition is still pending before the High Court, filing a writ petition under Article 32 of the Constitution of India before this Court is nothing but an abuse of process of the Court, if not misuse. Having invoked a constitutional remedy before the High Court under Article 226 of the Constitution of India, the petitioner cannot, under Law, file another petition under Article 32 of the Constitution of India on identical set of facts for identical reliefs. Writ petition is dismissed with costs of ₹ 1,00,000/- (rupee one lakh only) to be deposited with the Supreme Court Legal Services committee within four weeks.
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2016 (3) TMI 762
Cheque bounce case - offence punishable under section 138 and 142 of the Negotiable Instruments Act, 1881 - Held that:- section 118(g) contains a mandate that until the contrary is proved the holder of a negotiable instrument shall be presumed to be a holder in due course. Thus, there is no escape for the court from drawing such presumption - Whatever defence has been taken by the accused respondents as pointed out by the learned counsel appearing for the respondents before us, cannot be a ground for quashing a criminal prosecution.
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