TMI Tax Updates - e-Newsletter
March 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Dividends declared and paid by a foreign company outside India in respect of shares which derive their value substantially from assets situated in India would not be deemed to be income accruing or arising in India - Circular
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Income Tax:
Hire Purchase Finance charges - whether should be assessable to tax on sum of Digits basis as against Equated Monthly Instalments basis regularly followed by the Appellant? - EMI method followed by the assessee for the purpose of tax did not show any suppression of income - HC
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Income Tax:
Disallowance of a portion of the weaving charges paid - The law of averages adopted by the Commissioner of Income Tax (Appeals) cannot be held to be justifiable, as in the case on hand books of accounts were properly maintained and produced before the Department. - HC
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Income Tax:
Additions on account of excessive consumption, invisible loss shown by the assessee - in this case ultimately the wastage has to be estimated on reasonable basis. - AT
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Income Tax:
Exemption u/s 10(23C)(vi) denied - exemption u/s 11 and 12 denied - the exemption u/s 11 and 12 of the Act cannot be denied only on the basis of rejection of application of the assessee filed u/s 10(23C) - AT
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Income Tax:
Nature of land - agricultural or not - Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade or capital gain - AT
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Income Tax:
Scope of Section 14A - Disallowance of carried forward losses - whether losses are forming part of total income in view of Sec.14A as the same is result of profits and gains of business or profession? - They form part of the total income but are allowed as a deduction and reduced - AT
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Income Tax:
Trade discount in Cash - sale of tractors to farmers - onus to prove genuineness of discount - When the tractors were sold to the customers, they had already had bank accounts then why the appellant did not pay them in cheques the discount instead of paying in cash - Claim disallowed - AT
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Income Tax:
Assessee which is a co-operative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than time deposits with such co-operative society need not deduct tax at source (TDS) u/s 194A - AT
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Income Tax:
Unexplained cash credits - accommodation entries - addition under Section 68 cannot be made in the case of the conduit companies - addition made under Section 68 in the case of all the nine companies deleted - AT
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Income Tax:
Reopening of assessment - the reasons recorded for re-opening shows that the AO did not find any error in the explanation of the assessee for non-application of Explanation to Sec. 73, but still invoked the provisions of Explanation to Sec 73 - re-opening in this case was not valid - AT
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Customs:
Penalty u/s 114 - Since the respondent had knowledge about the sandalwood being part of the consignment of roofing tiles, but did not intimate the same to the customs Authorities, he is liable for penalty. - HC
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Customs:
Claim of duty drawback - Reversal of Cenvat credit before utilization amounts to non-taking of credit that such reversal can be done subsequent to export of goods - drawback claims at higher rate @ 16% of FOB value of exports allowed - CGOVT
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Central Excise:
Cenvat credit - Capital goods - Respondents have also claimed depreciation under Section 32 of Income Tax Act - respondents suppressed the facts before the department on availing simultaneous benefit - levy of penalty confirmed - AT
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Central Excise:
Valuation of stock transfer - The fact that the appellant was collecting extra amount in the invoices issued from the depot was clearly suppressed from the Revenue and this is a very important aspect - extended period of time is rightly invoked and penalty under Section 11AC is also leviable - AT
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Central Excise:
Recovery of erroneously sanctioned rebate claim - Since they have not disputed the revised rate of rebate and demand of duty determined by original authority, there is no force in contention of applicant that rebate initially sanctioned was in order. - CGOVT
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Central Excise:
Rebate claim - determination of Annual Capacity Determination (ACP) of hot re-rolled products - The department has not stated in the grounds of revision application as why department does not want to follow the said circular. - CGOVT
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Central Excise:
Denial of rebate claim - Valuation of goods - Since the 80% of duty paid is disputed on account of valuation dispute, the valuation issue is the major issue in this case. - Government has no jurisdiction to pass order in this matter - CGOVT
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VAT:
Levy of tax, interest and penalty - under reporting of sales - both authorities have rightly disbelieved the case on behalf of the appellant that he was doing the job-work and assembling the rickshaw from the spare parts purchased by the prospective customers - demand confirmed - HC
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VAT:
Violation of section 76(2)(a) of the RVAT Act - Imposition of Penalty u/s 76(6) - Penalty confirmed - HC
Articles
Notifications
Income Tax-
31/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “West Bengal Transport Workers' Social Security Scheme” a Board established by the Government of West Bengal, in respect of the certain specified income arising to the said Board
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30/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “Chhattisgarh Building and Other Construction Workers' Welfare Board” a Board constituted by the Government of Chhattisgarh, in respect of the certain specified income arising to the said Board
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29/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “Maharashtra State AIDS Control Society” a body constituted by the Government of Maharashtra, in respect of the certain specified income arising to the said body.
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28/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “Bihar Electricity Regulatory Commission” a Commission constituted by the Government of Bihar, in respect of the certain specified income arising to the said Commission
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27/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government constituted "Joint Electricity Regulatory Commission for the State of Goa and Union territories" for dealing with specified income.
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26/2015 - dated
24-3-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government constituted "Kerala Toddy Workers' Welfare Fund Board" for dealing with specified income.
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26/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Vidyaniketan Sanskritik, Maharashtra
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25/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Smt. Parsanben Narandas Ramji Shah (Talajawala) Society for Relief & Rehabilitation of the Disabled, Bhavnagar
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24/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Sri Dakshinya Bhava Samithi, Andhra Pradesh
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23/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Krishnamurthi Foundation India, Tamilnadu
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22/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Mangal Jeevan Trust, Ahmedabad
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21/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Shri Lok Sevak Sangh, Gujarat
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20/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Sardar Patel Health Foundation, Gujarat
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19/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Health Foundation & Research Centre Raliyati, Gujarat
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18/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –H.M.S Education Society, Karnataka
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17/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Swami Vivekananda Education Trust, Gujarat
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16/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Mobile Creches For Working Mother's Children, New Delhi
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (3) TMI 920
Deletion of addition made on account of sticky advances - benefit of the circular No. F 201/81/84 ITAII, dtd 9.10.1984 - Non fulfillment of conditions - Disallowance u/s 14A RW Rule 8D - disallowance on account of proportionate expenses in respect of income not forming part of income - Held that:- Following decision of Osmanabad Janta Sahakari Bank Ltd. [2015 (3) TMI 886 - ITAT PUNE] - CIT(A) has relied on the decision of Hon’ble jurisdictional High Court in the case of Godrej & Boyce Manufacturing Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). The Hon’ble High Court has held that Rule -8D is applicable from the A.Y. 2008-09 and it has no retrospective application. We find that the Ld CIT(A) has sustained disallowance at ₹ 25,000/- treating the same as a reasonable one. In our opinion, no interference is called for in the order of the Ld CIT(A) and accordingly, the same is confirmed. The method of valuation followed by the assessee Bank was to value investments at cost or market value whichever was lower. The assessee had claimed the depreciation to the tune of ₹ 11,82,35,007/- and the said depreciation was claimed as a deduction which was disallowed by the A.O, but the assessee Bank succeeded before the CIT(A). The Tribunal confirmed the order of the CIT(A). The Revenue carried the issue before the Hon’ble High Court. The core issue was the method of valuation adopted by the assessee Bank for valuing the stock of the Securities. The Hon’ble High Court followed the decision of Hon’ble Supreme Court in the case of United Commercial Bank (1999 (9) TMI 4 - SUPREME Court). In the case of United Commercial Bank (1999 (9) TMI 4 - SUPREME Court), even the issue of valuation of the stock in trade of the investment was before the Hon’ble Supreme Court. In the case of the assessee, the issue is regarding allowability of the loss on the sale of the Securities. Merely because the Securities are kept under the head till the maturity, the said Security cannot be treated as a purely investment. Law is well settled that the Securities held by the Bank are in the nature of Stock-in-Trade. We may like to quote here the decision of the Hon’ble High Court of Kerala in the case of CIT Vs. Nedungadi Bank Ltd., [2002 (11) TMI 29 - KERALA High Court ]. In the said case, the Hon’ble High Court has held that the securities held by the Bank are in the nature of stock-in-trade. Both the authorities below has merely gone on the nomenclature of the head under which the Securities are held. In our considered view, nomenclature cannot be decisive for the assessee Bank. We, therefore, hold that the loss on the sale of the Securities is revenue in nature and same is allowable - Decided partly in favour of assessee.
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2015 (3) TMI 919
Amortization of premium of investments held till maturity (HTM) by the bank - assessee is a Co-operative Society engaged in the business of banking - premium so paid was claimed as a ‘revenue expenditure’ which has been disallowed by the Assessing Officer for the reason that the securities held by the bank are ‘capital investments’ and not ‘stock-in-trade’ as considered by the assessee - CIT(A) deleted the addition - Held that:- Departmental Representative has not referred to any decision contrary to the decision of the Mumbai Bench of the Tribunal in the case Bank of Rajasthan Ltd. (2010 (12) TMI 894 - ITAT, Mumbai ) which has been relied upon by the CIT(A) in holding that the premium paid in excess of face value of investments classified under HTM category, which has been amortized over the period till maturity, is allowable as ‘revenue expenditure’. Accordingly, we affirm the order of the CIT(A) - Decided against revenue. Disallowance of employees’ contribution of Provident Fund - CIT(A) has deleted the disallowance - Held that:- CIT(A) has deleted the disallowance following the judgement of Saleem Co-operative Spinning Mills Ltd. (2006 (2) TMI 115 - MADRAS High Court ) and AIMIL Ltd. (2009 (12) TMI 38 - DELHI HIGH COURT ) to held the said contribution was paid before the due date of filing of return of income as per Section 139(1) . No decision to the contrary has been brought to our notice and therefore the decision of the CIT(A) is hereby affirmed. - Decided against revenue. Disallowance u/s 40(a)(ia) - non deduction of TDS on interest payments - CIT(A) deleted the disallowance - Held that:- Section 194A of the Act provides for deduction of tax at source on payments by way of ‘interest’ other than the interest on securities. The assessee before us is a co-operative society which is inter-alia engaged in the business of banking. Section 194A(3)(v) of the Act provides that the tax shall not be required to be deducted on income which has been credited or paid by a co-operative society to a member thereof or to any other co-operative society. The claim of the assessee is that the interest payments in question have been paid/credited to its members and therefore following the provisions of Section 194A(3)(v) of the Act, no tax was required to be deducted at source. CIT(A) has concluded that assessee had credited the impugned interest to the credit of the members, and no tax was required to be deducted in view of Section 194A(3)(v) of the Act. The aforesaid finding of the CIT(A) has not been controverted by the Revenue before us on the basis of any cogent material or reasoning. In the absence of any cogent material brought out by the Revenue, we hereby affirm the aforesaid conclusion of the CIT(A). - Decided against revenue.
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2015 (3) TMI 895
Interpretation of Section 36 (1) (iii) - advance of borrowed funds, to its sister concern - ITAT held that the sum of ₹ 25,04,385/- brought to tax by the AO on the interest free deposit of ₹ 1,75,50,000/- was not sustainable - Held that:- This court does not discern any rationale in the revenue’s argument here. That the assessee needed the premises is not in dispute; equally it had a consistent and long standing arrangement with the sister concern, is undisputed. The rental arrangement was in the form of a commission payable according to the business of the owner of the premises, i.e the sister concern. It was not disputed that the security deposit had not been increased for a long time. That it was initially kept at the old level but increased during the year was a matter of fact. However, singling out that factor to hold against the assessee in the absence of any other material establishing dubiousness in the transaction, is not warranted. The court here recollects S. A. Builders v. CIT (Appeals) [2006 (12) TMI 82 - SUPREME COURT ] where the views of this Court in Commissioner of Income Tax v. Dalmia Cement (B.) 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”, and further that no businessman can be compelled to maximize his profit, were approved. 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.The expression " commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The disallowance initially ordered by the AO and finally set aside by the ITAT for AY 2007-08 thus requires no interference. The impugned order does not suffer from any infirmity on this count. The views of ITAT are therefore, affirmed. - Decided in favour of assessee. In respect of AY 2008-09 and pertains to the finding of the ITAT that the acceptance of the second revised return, indicating revised income at ₹ 1.63 crores, originally accepted by the AO was in order. The Court notices that the CIT (Appeals) in this case issued notice for enhancement in the course of the assessee’s appeal and rejected the AO’s finding. This resulted in the first revised income being brought to tax at ₹ 4.08 crores. The counsel for the revenue urged that the ITAT’s reasoning is not acceptable given that neither in the assessment proceedings nor before the CIT(Appeals) did the assessee specify the authorities as to the rationale for revising income downwards.Counsel for the assessee on the other hand urged that the closure of the books of accounts had to be made on 30.09.2008 and consequently certain transactions were reflected in the subsequent year’s accounts. It was submitted that these facts were duly demonstrated before the ITAT and not disputed by the departmental representative. There is nothing in the order of the ITAT to indicate that the assessee had made the submissions that it claims to have done. It is quite possible that the material shown to this Court was in fact laid before the ITAT and considered by it. However, the impugned order does not reflect application of mind on this. It merely adverts to balance sheet and nothing else. Thus on this issue i.e. the acceptance of ₹ 1.63 crores (based on the second revised return), the ITAT must examine the matter afresh and return its findings on the basis of the materials made available to it during the course of hearing as well as the materials placed before the CIT(Appeals). The revenue’s appeal succeeds to this extent. - Decided in favour of revenue.
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2015 (3) TMI 894
Accrual of interest income - Hire Purchase Finance charges - whether should be assessable to tax on sum of Digits basis as against Equated Monthly Instalments basis regularly followed by the Appellant? - Tribunal held that the appellant is not entitled to maintain its book on the Sum of Digits method and offer the income on Equated Monthly Instalment Basis? - Held that:- We are in agreement with the reasoning of the Tribunal in this regard that when once the Revenue had accepted the character of the transaction as hire purchase transaction, the income that flows from the transaction has to necessarily follow the treatment that is given under the hire purchase agreement. Secondly, when the Revenue had not disputed the fact that on all the earlier years, the Revenue had treated the income as per the hire purchase agreement on EMI basis, there are no materials available as on record to show that following such method had really resulted in suppression of income, in other words, there was no true reflection of the income that has to be assessed under the Act. This Court in Commissioner of Income Tax v. Ashok Leyland Finance Ltd [2012 (7) TMI 590 - Madras High Court] came to the conclusion that the EMI method followed by the assessee for the purpose of tax did not show any suppression of income. This decision of this Court has not been challenged by the Revenue. On the contrary, the same has been followed by this Court in respect of the very same assessee for the subsequent assessment years, which we have already extracted supra. Thus no hesitation to hold that in the absence of anything to the contrary, the assessee's plea that tax should be determined on the basis of EMI method has to be accepted. The finding of the Tribunal on this score, therefore, deserves to be reversed. - Decided in favour of the assessee.
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2015 (3) TMI 893
Disallowance of a portion of the weaving charges paid - interest of justice will be served if 10% further relief is granted out of the disallowance of ₹ 2,72,939/- made by the learned Commissioner of Income Tax (Appeals) and confirmed by tribunal - Held that:- Assessing Officer after rejecting the weaving charges as claimed by the assessee, disallowed a sum of ₹ 7,50,000/-. There appears to be no reason or logic behind such disallowance of a sum of ₹ 7,50,000/-, except saying that the vouchers signed by one person on behalf of all the weavers are not acceptable. That has been explained by the assessee and recorded by the Tribunal of its order to the effect that it is the practice of the trade that weaving charges be paid to one person representing all the weavers. The law of averages adopted by the Commissioner of Income Tax (Appeals) cannot be held to be justifiable, as in the case on hand books of accounts were properly maintained and produced before the Department. We are surprised to note that in the order of the Commissioner of Income Tax (Appeals), the average manufacturing expenses seems to be fluctuating from year to year. There is marginal increase in the manufacturing expenses every year and such increase cannot be simply brushed aside. We have to take into consideration the revision of wages, in the light to the terms of the wage settlement. That record speaks for itself and justifies the expenses as claimed by the assessee. This is accepted by the Commissioner of Income Tax (Appeals) and the Tribunal. Therefore, there appears to be no justification in rejecting the books of account or the vouchers merely on the specious plea that one person signed for all the persons. As we have already stated, the Tribunal has clearly recorded that it is the practice of the trade that weaving charges are paid to one person, representing all the weavers.Tribunal also was not correct in granting further relief of 10% with no rational or reason. The entire exercise of the department appears to be on conjectures and surmises. - Decided in favour of assessee.
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2015 (3) TMI 892
Reopening of assessment - AO deleted the deduction under Section 80IB - ITAT not upholding the issuance of notice under Section 148 valid - Held that:- From the record, it appears and it is not disputed by Shri Bhatt, learned Counsel appearing on behalf of the revenue that as such alongwith the original return for the Assessment Year 2003-04 the assessee had produced the balance sheet in which the total value of the Plant and Machinery was ₹ 4,73,81,571/. Despite the above, the Assessing Officer allowed the deduction under Section 80IB of the Act and, therefore, as such, it cannot be said that there was any omission and / or suppression on the part of the assessee in not disclosing the true and correct facts. If that be so, it cannot be said that the learned tribunal has committed any error in holding the reassessment proceedings for the Assessment Year 2003-04 as bad in law. We confirm the finding recorded by the learned tribunal that initiation of the reassessment proceedings for the Assessment Year 2003-04 was not permissible and was not legal and as such was bad in law. Under the circumstances, the learned tribunal has rightly not considered the appeal preferred by the revenue which was on merits of deletion of disallowance under Section 80IB of the Act. Under the circumstances, there is no substance in the present Tax Appeals and the same deserves to be dismissed. No substantial question of law arise - Decided against revenue.
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2015 (3) TMI 891
Difference in value of closing stock - difference reckoned on the basis of the value determined by the bank and the value disclosed by the books of account as furnished to the commercial taxes department - Tribunal deleted the addition - Held that:- This Court is not inclined to entertain this appeal on the question of law raised at this point of time in view of the subsequent decision of this Court, which is also on the same issue, rendered in the case of Commissioner of Income Tax Vs Smt. Sakuntala Devi Khetan (2013 (3) TMI 270 - MADRAS HIGH COURT), wherein it has been clearly held that the Assessing Officer has to adopt the figures and turnover finally assessed by the sales tax authorities. Similar issue was also considered in the case of CIT Vs - Anandha Metal Corporation (2004 (7) TMI 49 - MADRAS High Court ), and held in favour of the assessee, which decision has been followed by the Tribunal in assessee's own case for the earlier year, wherein the matter was remanded back. - Decided against revenue.
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2015 (3) TMI 890
Stay against attachment of six bank accounts appropriating the amounts therefrom for its payments of the penalty levied rejected - petitioner is a Government of Haryana undertaking - refusal of exemption under Section 10(23C)(iv) - The tax dues have already been paid. In addition thereto, pursuant to the attachment of the accounts, an amount of about ₹ 11.27 crores has already been appropriated by the respondents-Department against a demand of ₹ 51 crores towards interest - Held that:- Two drafts amounting to ₹ 4 crores and ₹ 18 crores, we have been informed, have been prepared by the Bank for payment to the Department but the respondents have been restrained from withdrawing the same, by the interim order passed by this Court on 17.11.2014.he Bank shall, therefore, cancel the drafts and credit the same to the account of the petitioner. We are, however, not inclined to entertain the prayer for refund of the amount of about ₹ 11.27 crores, at this stage. The same must await the decision of the appeal before the CIT(Appeals). Considering the fact that the petitioner is a statutory Corporation and receives grants also from the Central Government, it would be proper that no coercive action is taken against the demand of penalty till the decision of the appeal before the CIT (Appeals). - stay granted
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2015 (3) TMI 889
Disallowance u/s 40(a)(ia) - deposit of tds into the credit of the Central Government account after the due date prescribed under section 200 - CIT(A) deleted the addition - Held that:- As pointed out by the appellant and accepted by the Assessing Officer in the remand report, individuals were not required to deduct tax under section 194C prior to June 1, 2007. Hence, since tax was not deductible by the assessee, no disallowances can be made under sec tion 40(a)(ia) for the present assessment year even though the tax deducted was paid beyond the date provided in section 200(1). Thus accept the submission of the appellant, which has been endorsed by the Assessing Officer in the remand report, that since tax was not deductible under section 194C, no disallowance could be made under section 40(a)(ia). The disallowance of ₹ 9,09,421 made by the Assessing Officer is, therefore, deleted. - Decided in favour of assessee. Additions on account of excessive consumption, invisible loss shown by the assessee - Held that:- We were impressed by the demonstration shown before us that how particular nut was carved out of a solid piece and of balance solid material can be used only as a scrap. There is a further argument that when records of the assessee have been accepted by the excise authorities then how same can be doubted by the Income-tax authorities. However, at the same time it is also a fact that the assessee has changed certain figures twice though learned counsel for the assessee tried to justify the same. We do not find much force in them. However, at the same time it cannot be denied that the assessee has suffered excessive shortage because of sophisticated nature of products and same was within the norms given by various Government agencies. Therefore, in our opinion, in this case ultimately the wastage has to be estimated on reasonable basis. Considering overall facts of the case, we are of the opinion that the ends of justice would be met if an addition of ₹ 10 lakhs is made on account of excessive wastage/invisible loss. Therefore, we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to make total addition of ₹ 10 lakhs on account of wastage and invisible loss, etc. instead of three additions of ₹ 9,09,421, ₹ 2,79,398 and ₹ 19,89,240. This position was accepted by learned counsel for the assessee as well as the son of the assessee. - Decided partly in favour of assessee.
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2015 (3) TMI 888
Exemption u/s 10(23C)(vi) denied - exemption u/s 11 and 12 denied - whether CIT(A) has erred in upholding the contention of Ld. DGIT(E) that the activities of the assessee society are found to be for earning profit and not for charitable purposes and is not justified in declining the exemptions u/s 11 & 12 of the Income Tax Act, specially when registration u/s 12A of the Act is still in force and available for the assessee and which has not cancelled as on the date of the assessment? - Held that:- CIT(A) erred in upholding the contention of the AO in the assessment order which were influenced by the order of DGIT(E). At the cost of repetition, we are inclined to hold that since the registration granted for the assessee on 3.9.2004 w.e.f. 1.4.2003 is still in force and the DIT(E) has not taken any action in pursuance to the order of the Tribunal dated 17.6.2011 (supra), then it is an obvious fact that the registration of the assessee society u/s 12A of the Act is in force, therefore, the claim of the assessee for grant of exemption u/s 11 of the Act cannot be rejected merely on the basis of order of the DGIT(E) which rejected application for registration u/s 10(23C)(vi) of the Act. At the same time, we also conclude that the exemption u/s 11 and 12 of the Act cannot be denied only on the basis of rejection of application of the assessee filed u/s 10(23C) of the Act. Before we part, we may point out that the CIT(A) in the impugned order has clearly held that action of the AO in allowing exemption u/s 11 and 12 of the Act is beyond jurisdiction exercised by him during the assessment proceedings and at the same time, the CIT(A) has upheld the action of the AO which rejected the claim of the assessee for exemption u/s 11 of the Act, this contradictory observation and conclusion of first appellate authority is not permissible and sustainable. Therefore, action of the authorities below is not sustainable. - Decided in favour of assessee. Bogus “corpus donations” and “miscellaneous donations” - AO making addition u/s 68 - Held that:- The assessee trust submitted all the required details before the authorities below but the AO objected to the claim of assessee only on this premise that the assessee could not produce in person the donor parties during the assessment proceedings. On similar liens, the CIT(A) upheld the action of the AO without addressing to the explanation and contentions of the assessee and remand report of the AO dated 4.3.2013, merely observing that the activities of the assessee society are not genuine and registration granted to the assessee u/s 12A of the Act shall be cancelled in future in due course of time. This is not judicious and proper approach for a quasi-judicial authority who are duty bound to address and adjudicate all the issues and grounds raised by the assessee. The AO and the CIT(A) are not adjudicators but they are also investigators and examiners. In view of above, we reach to a conclusion that ground no. 4 of the assessee is squarely covered in favour of the assessee by the decision of DIT vs Bharat Kalyan Pratisthan (2007 (1) TMI 98 - DELHI HIGH COURT) and DIT(E) vs Keshav Social and Charitable Foundation (2005 (2) TMI 84 - DELHI High Court ) and therefore, we set aside the orders of the authorities below and directed the AO to delete the impugned addition made u/s 68 of the Act. - Decided in favour of assessee. Excess salaries being allegedly charged with the intent of siphoning off funds of the appellant - Held that:- We are inclined to hold that although the authorities below have held that there was siphoning of funds from the funds of the society but there is no finding or conclusion that the siphoning of funds was made by the members and trustees of the society. We may also point out that when the act of embezzlement was noticed by the management during the proceedings before the DGIT(E), then the management proceeded to take action against the responsible employee and the management also submitted documents pertaining to appointment, resignation and affidavits of the alleged employees and also some of them were also produced before the DGIT(E), therefore, act of siphoning of funds cannot be attributed to the management or trustees of the society. - Decided in favour of assessee. Genuity of vehicle hiring expenses - AO held that in absence of maintenance of log book, it is not possible to verify the use of hired vehicles by the assessee society - Held that:- for verification and allowability of claim of expense of vehicle charges, the prime issue to be adjudicated is that whether the vehicle was used for the purpose and activities of the assessee society and the payment made by the assessee society was in accordance with the prevailing fair market price of the vehicle hiring charges. Although the revenue authorities can also verify the fact of personal use of the vehicle owner but this is a secondary issue which cannot be a basis for rejecting the entire claim of the assessee society. Therefore, we are of the considered view that the revenue authorities had not adjudicated this issue as per section 37 and other relevant provisions of the Act and, therefore, their findings are set aside and the issue is restored to the file of the AO to adjudicate the same in accordance with the provisions of the law - Decided in favour of assessee for statistical purposes. Construction of College and Hospital building and hostel expenses disallowed - Held that:- CIT(A) has confirmed the observations and additions made by the AO on account of construction and hostel expenses without addressing, evaluating and adjudicating the contentions of the AO in the light of submissions and explanation of the assessee. In this situation, it can safely be presumed that the AO did not afford opportunity to the assessee to explain discrepancies and inconsistencies noted by him during the assessment proceedings. issues of allowability of expenses on construction of hospital and hostel building of ₹ 85,25,300 and hostel expenses of ₹ 9,51,664 are restored to the file of AO with a direction that the AO shall adjudicate both the issues afresh, after considering submissions and explanation of the assessee along with remand report of the AO (supra), after affording due opportunity of hearing for the assessee and without being prejudiced and influenced by the earlier orders on this issue. - Decided in favour of assessee for statistical purposes. Depreciation claim disallowed - AO has denied the claim of depreciation by holding that the whole expenditure on account of addition to fixed assets has ready been allowed as application of income for charitable purposes in the earlier years in effect the written down value of the assets would be zero and also that the claim of depreciation is not allowable even when the income of the assessee is to be computed as provided under Chapter 4 as the benefit of section 11 and 12 has been denied to the assessee - Held that:- Claim of depreciation of the assessee society is legally allowable in the manner as held by Hon’ble Bombay High Court in the case of CIT vs Institute of Banking (2003 (7) TMI 52 - BOMBAY High Court) and the AO is directed to examine, verify and to allow the same, keeping in view the legal propositions as reproduced hereinabove.- Decided in favour of assessee for statistical purposes. Denying claim of exemption u/s 11 - AO estimating the income of the assessee society at ₹ 59,60,363 calculated at 50% of the gross receipts of the society during the year under consideration - Held that:- AO is empowered to examine and verify the claim of the assessee u/s 11 of the Act within the ambit of relevant provisions of the Act including section 11 of the Act. Therefore, disallowance of exemption u/s 11 of the Act as well as estimation of income of the appellant society in the status of AOP as made by the AO is not sustainable and we set aside the same. Accordingly, ground of the assessee is allowed with this direction to the AO that the assessment of the assessee trust for the year under consideration i.e. 2006-07 be reframed by granting exemption u/s 11 of the Act to the assessee society. - Decided in favour of assessee.
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2015 (3) TMI 887
Nature of land - sale of land should be treated as an adventure in the nature of trade - AO thereafter concluded that the lands are not agricultural in nature - Held that:- It is observed that by an ‘Agreement of sale with possession-cum-Irrevocable power of attorney’ dated 12th March, 2007, the land in question was transferred by the assessee to M/s. Varun Constructions alongwith other 13 land owners who were owners of the adjacent lands. The said thirteen parties had also claimed the profit arising from the transfer of their land to M/s. Varun Constructions as exempt on the ground that their lands, being agricultural lands, were not capital assets within the meaning of S.2(14). In their cases also, the claim was not allowed by the Assessing Officer and when the matter reached the Tribunal in the case of six of the said assessees, namely, M/s.Bhavya Constructions Pvt. Ltd., Shri M.S.Raghava Reddy, Shri R.Srinivasa Rao, Shri R.Uma Maheswar, Shri P.Shivakumar and Shri G.C.Subbanaidu, the coordinate bench of this Tribunal vide its order [2014 (9) TMI 85 - ITAT HYDERABAD] decided similar issue in favour of the assessee, holding that the land sold by the said assessees were agricultural lands, and therefore, the profits arising from the transfer of such lands, was not chargeable to tax in the hands of the assessee. In the present case, considering the facts and circumstances of the case it cannot be considered as an adventure in the nature of trade. The intention of the assessee from the inception was to carry on agricultural operations. Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade or capital gain. The period of holding should not suggest that the activity was an adventure in the nature of trade. Further, we make it clear that when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural land and also being specified as agricultural land in Revenue records, the land is not subjected to any conversion as non-agricultural land by the assessee or any other concerned person, transfers such agricultural land as it is and where it is basis, in such circumstances, in our opinion, such transfer like the case before us cannot be considered as a transfer of capital asset or the transaction relating to sale of land was not an adventure in the nature of trade so as to tax the income arising out of this transaction as business income. the land in question sold by the assessee, being agricultural land, the profit arising from the sale of the same, is not chargeable tot ax in the hands of the assessee as capital gain - Decided in favour of assessee.
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2015 (3) TMI 886
Accrual of interest - Addition made on account of sticky advances - CIT(A) deleted the addition accepting the plea of the assessee that provisions of section 43D are applicable to the assessee company and to hold decision of the Hon'ble Supreme Court in the case of UCO Bank vs. CIT (1999 (5) TMI 3 - SUPREME Court) is applicable even to the non-scheduled bank like assessee - Held that:- The identical issue has been considered in the case of DCIT, Vijayawada vs. The Durga Cooperative Urban Bank Ltd., Vijayawada [2011 (3) TMI 1552 - ITAT VISAKHAPATNAM] placing its heavy reliance on the decision of Vashist Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court], in which considered the decision in the case of Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT OF INDIA] to finally held that the interest income relatable to NPA advances did not accrue to the assessee. In the case before us, admittedly, assessee has directly taken the interest to the Balance Sheet and it is not routed through the Profit & Loss Account. Moreover, the issue of the taxability of the interest on the sticky losses/advances, is covered in favour of the assessee by the decision of the coordinate Benches in the case of The Durga Cooperative Urban Bank Ltd., Vijayawada (supra) and Karnavati Cooperative Bank Ltd. (2011 (11) TMI 367 - ITAT AHMEDABAD )to hold interest on the sticky advances/NPA advances cannot be brought to tax. We find no reason to interfere with the reasoned order of the Ld. CIT(A) and accordingly the same is confirmed. In the result, the Revenue's ground is dismissed. - Decided in favour of assessee. Scope of Section 14A - Disallowance of carried forward losses - whether losses are forming part of total income in view of Sec.14A as the same is result of profits and gains of business or profession? - CIT(A) directed the Assessing Officer to allow the set off of the brought forward losses of the earlier year - Held that:- As relying on CIT vs. Kribhco [2012 (7) TMI 591 - DELHI HIGH COURT ] wherein held Section 14A states that for the purpose of computing total income under Chapter IV, no deduction shall be allowed in respect of expenditure incurred in relation to the income which does not form part of the total income under this Act. It does not state that income which is entitled to deduction under Chapter VIA has to be excluded for the purpose of the said Section. The words "do not form part of the total income under this Act" is significant and important. As noticed above, before allowing deduction under Chapter VIA we have to compute the income and include the same in the total income. In this manner, the income which qualifies for deductions under Sections 80C to 80U has to be first included in the total income of the assessee. It, therefore, becomes part of the income, which is subjected to tax. Thereafter, deduction is to be allowed in accordance with and subject to the fulfillment of the conditions of the respective provisions. This is also subject to Section 80AB and 80A(1) and (2). Chapter VIA does not postulate or state that the incomes which qualify for the said deduction will be excluded and not form part of the total income. They form part of the total income but are allowed as a deduction and reduced - Decided against revenue.
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2015 (3) TMI 885
Validity of assessment framed u/s 153C read with Section 143(3) - whether is a nullity in the eyes of law for want of satisfaction recorded by the A.O. of the searched party? - Held that:- As decided in Pepsi Foods (P) Ltd. [2014 (8) TMI 425 - DELHI HIGH COURT] recording of satisfaction by AO of searched persons is a necessary pre condition for initiation of proceeding u/s 153C. As in the present case the revenue has not placed any satisfaction recorded by the A.O. of the searched persons on record pertaining to Assessment Years 2003-04 to 2008-09. Therefore, in the absence of such satisfaction by the A.O. of the searched persons, the assessment framed by invoking the provisions of Section153C cannot be sustained. Accordingly, the assessment orders pertaining to assessment years 2003-04 to 2008-09 are hereby quashed. - Decided in favour of assessee.
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2015 (3) TMI 884
Disallowance of trade discount expenses paid in Cash - sale of tractors to farmers - onus to prove genuineness of discount - difference in the expenditure recorded in the ledger account and the cash-book - Held that:- In the instant case, the appellant has not able to demonstrate, why it has offered cash discount to the customers sometimes after one month from the sale effected. It is also seen from the discount offered that the rate varies from 8 to 8.5%. This kind of cash discount is naturally unusual in this trade. More so, the appellant is a dealer and the margin for sale of tractors would normally will not be more than 10 to 15%. The appellant also heavily invested which incur interest component of such capital. Ina the tight scenario offering it 8 to 8.5% cash discount definitely not a viable business proposition. As the AO rightly observed that entry in ledger account do not tally with the cash book clearly indicates that the cash discount expenses was invented by the appellant much after the sales were affected. When the tractors were sold to the customers, they had already had bank accounts then why the appellant did not pay them in cheques the discount instead of paying in cash. The contention of the Id. AR that cash discounts are offered to the customers to avail full bank loan and to facilitate margin money also do not hold much water because the question of margin money arises before the loan sanctioned and it should have been in the account of the loanee. Further, the appellant should have given in cheques before the loan was obtained by the customers as it happens in normal cases. This obviously raised serious doubt about the genuineness of the discounts given in cash by the appellant. The appellant also had not brought any plausible explanation as to why other than cash discounts are not offered to the customers which are normal practice in this type of trade. The aforesaid finding of ld.CIT(A) is not controverted by the assessee. The contention of the assessee is that such trade discounts are allowable and is prevalent in the similar line of business. During the course of hearing, a query was raised as to how come the payment of discount to the purchasers of the tractors was made in installments and even before or after the tractor has been sold. The ld.counsel for the assessee could not give any satisfactory reply to the query. In our considered view, the assessee failed to prove the expenditure with satisfactory explanation, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld - Decided against assessee.
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2015 (3) TMI 883
Transfer pricing adjustment - selection of comparables - Held that:- As relying on CISCO Systems (India) Pvt. Ltd. Vs. DCIT, Bangalore [2014 (11) TMI 849 - ITAT BANGALORE] Infosys Ltd., Kals Information Systems Ltd. and Bodhtree Consulting Ltd. companies not to be comparable with a captive software development service provider. As far as Tata Elxsi Ltd. (segment) is concerned,on going through the segmental details of services provided as contained in annual report,, we are of the view that unless proper analysis is made with regard to the functions of both the companies it cannot be said that services performed/provided by Tata Elxsi Ltd. is high end services whereas services provided by assessee are low end services. As the issue requires thorough examination in so far as it relates to exact nature of services rendered by both the companies, we remit the comparability of the aforesaid company to the file of AO/TPO for considering afresh after affording due opportunity of being heard to assessee. Non-consideration of provision for bad and doubtful debts as part of operating cost while computing margins of comparables - Held that:- In principle we agree with the contention of ld. AR that provision for bad and doubtful debts and bad debts should form part of the operating expenditure. As relying on Kenexa Technologies (P.) Ltd. Versus Deputy Commissioner of Income-tax, Circle -2(1), Hyderabad [2014 (11) TMI 587 - ITAT HYDERABAD] we remit this issue to the file of AO/TPO for considering afresh in the light of the said decision of the coordinate bench. - Decided in favour of assessee for statistical purposes. Excluding communication expenses from the export turnover while computing deduction u/s 10B - Held that:- As relying on CIT Vs. Gemplus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT] and ITO Vs Saksoft Ltd [2009 (3) TMI 243 - ITAT MADRAS-D] we direct the AO to exclude the communication expenses from export turnover as well as total turnover while computing deduction u/s 10B of the Act.
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2015 (3) TMI 882
Non deduction of tax at source on the payment of interest on the deposits to members of cooperative society - AO initiated proceedings against the Assessee u/s. 201(1) & u/s.201(1A) - Held that:- The Bangalore Bench of ITAT in the case of Bagalkot District Central Co-op Bank, Vs. JCIT (2015 (1) TMI 1005 - ITAT BANGALORE] held that cooperative societies carrying on banking business while paying interest to members on time deposits and deposits other than time deposits need not deduct tax at source u/s.194-A of the Act by virtue of exemption granted u/s.194A(3)(v) of the Act. Also in the case of The Visakhapatnam Cooperative Bank [2011 (8) TMI 319 - ITAT VISAKHAPATNAM ] has held that co-operative societies carrying on banking business when it pays interest to its members on deposits it need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. Similar view has also been expressed by the Pune Bench of the ITAT in the case of Ozer Merchant Co-operative Bank [2015 (3) TMI 919 - ITAT PUNE]. We may add that in both these decisions the discussion did not turn on the interpretation of Sec.194A(3)(i)(b) of the Act vis-a-vis Sec.194A(3)(v) of the Act. It is thus clear that the preponderance of judicial opinion on this issue is that co-operative societies carrying on banking business when it pays interest to its members on deposits need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act For the reasons given above, we hold that the Assessee which is a co-operative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than time deposits with such co-operative society need not deduct tax at source under section 194A by virtue of the exemption granted vide clause (v) of sub-section (3) of the said section - Decided in favour of assessee.
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2015 (3) TMI 881
Unexplained credits received - deposits in appellant's bank accounts received from various intermediaries operated by Sh. SK Gupta to provide accommodation entries to various beneficiaries against cash received from them - CIT(A) confirming the addition made u/s 68 - Held that:- there is an order of the Settlement Commission as well as the Additional Commissioner of Income Tax under Section 144A holding that Shri S.K. Gupta was providing accommodation entries, he used various companies as conduit for providing the accommodation entries, cash was received through mediators from the persons who wanted to avail the accommodation entries, such cash was deposited in the bank account of the conduit companies and thereafter, cheque of the similar amount was being issued to the beneficiaries (i.e. the person who wanted to avail the accommodation entry) within a day or so. The Assessing Officer himself in the assessment order has accepted these facts. Considering the totality of these facts and the logical consequences of the order of the Settlement Commission as well as of Additional CIT under Section 144A, we have no hesitation to hold that the addition under Section 68 cannot be made in the case of the conduit companies. Therefore, we delete the addition made under Section 68 in the case of all the nine companies, which are admittedly conduit companies of Shri S.K. Gupta. See M/s Omni Farms Pvt. Ltd. & Anr. vs. DCIT [2015 (1) TMI 1119 - ITAT DELHI] - Decided in favour of assessee.
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2015 (3) TMI 880
Deduction u/s. 80IB(10) - Sub projects namely Brahmputra, kaveri, Amravati and Damodar which are the part of main project i.e. Shipra Riviera in which the development and construction work was started before Ist October, 1998 and assessee did not fulfill the requisite conditions as laid down in sec. 80IB(10) as held by AO - separate project v/s whole project - CIT(A) allowed the claim - Held that:- In the present assessment year under consideration as well as, no reason to assume that commencement of development and construction of the housing projects was started prior to 01.10.1998 for the purpose of declining the claim of deduction under sec. 80IA(4F)/80IB(10) of the Income-tax Act, 1961, has been shown by the Revenue and keeping in mind the fact that contract for construction of all the four projects of Shipra Riviera was awarded only after 30.9.1998, we are of the view that the issue is fully covered by the above decisions of the ITAT for the assessment years 2000-01 and 2001-02 which has also been followed by the ITAT in the case of assessee itself for the assessment years 2004-05 and 2006-07. Respectfully following the same, we uphold the First Appellate Order in this regard with this finding that the Learned CIT(Appeals) was justified in directing the Assessing Officer to delete the disallowance of ₹ 1,19,04,619 which was made by the Assessing Officer while denying the claimed deduction under section 80-IB of the Act in respect of the above stated four projects. - Decided in favour of assessee. Disallowance under the head ‘charity and donations’, prior period expenses and interest on TDS (UPTT) - Held that:- CIT(Appeals) has simply upheld the addition on the basis of First Appellate Order for the assessment year 2004-05 without discussing the related facts on the issue for the assessment year under consideration, we set aside the matter to the file of the Assessing Officer to decide the issue afresh noting down the facts of the case for the assessment year under consideration by passing a speaking order. - Decided in favour of assessee for statistical purposes. Disallowance of expenses claimed on repair, maintenance, travelling, conveyance, stationery etc.- Held that:- Assessing Officer has made the disallowance considering the element of non-business expenditure as well as self-made vouchers on record in a few instances. The ITAT in the assessment year 2004-05 has deleted this addition with this finding that on the basis of general observations ad hoc disallowance cannot be made in absence of even a single specific instance of non-verifiablity of the expenses or expenses having been incurred for nonbusiness purposes. Following this decision of the ITAT for the assessment year 2004-05, we direct the Assessing Officer to delete the addition in question. - Decided in favour of assessee Addition as non-business expenses - AR submitted that the amount is wrong and the same has been rectified by the Learned CIT(Appeals) vide its order dated 09.12.2011 under sec. 154 substituting the correct amount as ₹ 2,54,750 as added by the Assessing Officer - Held that:- We find that the Assessing Officer has made the disallowance of ₹ 2,54,750 debited in P & L account as membership fee on the basis that the amount is not expended wholly and exclusively for the purpose of business and cannot be even equated with the business promotion or similar such expenses. The ITAT in the assessment year 2004-05 has deleted similar addition with the finding that it was for the business purpose of the assessee. The membership fee was paid to National Real Estates Development Council which was established in the year 1998 under the aegis of Union Ministry of Housing & Urban Poverty Alleviation, Government of India for the development and promotion of housing and real estates sector in India. The ITAT held that since the assessee is in the business of housing development and real estates, this subscription is relating to business purpose of the assessee. Following the same, we direct the Assessing Officer to delete the addition. The ground No. 5 is accordingly allowed. - Decided in favour of assessee Depreciation on car disallowed - AO has made this disallowance at 10% of the claimed depreciation account of possible personal use by the directors of the company - CIT(Appeals) has upheld the same on the basis of his predecessor order in this regard for the assessment year 2004-05 - Held that:- The ITAT in the assessment year 2004-05 has deleted the disallowance on the basis that the depreciation was claimed as per the schedule attached with the balance sheet thus even if there is personal use of cars by the directors of the assessee company, addition can be made in the hands of the employees directors on account of perquisites but no disallowance can be made in the hands of company by alleging that there is personal use of cars. Respectfully following this decision, we direct the Assessing Officer to delete the addition - Decided in favour of assessee.
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2015 (3) TMI 879
Income declared under the head capital gain was held to be non-genuine and the entire sale proceeds were to be assessed as undisclosed income - bogus and fraudulent - it was noted that the contract notes, bills issued by the brokers were found to be bogus on verification from the stock exchange - Penalty levied under section 271(1)(c) - Held that:- In the totality of the above said facts and circumstances, where the assessee has placed on record the complete evidence of purchase and sale of shares, merely because the shares were Dematted in July, 2004 and thereafter, were sold in the month of August, 2004, does not establish the case of authorities below, in view of the circumstantial evidence produced by the assessee. In the totality of said evidences, we hold that once the assessee had taken the delivery of shares by way of share certificates, which in turn, were forwarded to the company along with transfer deeds on 04.07.2003 itself establishes the case of the assessee of having purchased the said shares during that period. Further, the said shares were converted into Jumbo Certificates vide communication dated 16.02.2004 and thereafter, there was de-materialization of the shares on 26.07.2004. In the entirety of the above said facts and circumstances, we hold that the gain arising on transfer of shares is to be assessed as income from long term capital gain in the hands of the assessee. - Decided in favour of assessee. No merit in the levy of penalty under section 271(1)(c) of the Act and the same is deleted. - Decided in favour of assessee.
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2015 (3) TMI 878
Reopening of assessment - Explanation to Section 73 of the Act was not applicable to the assesse - CIT(A) annulling the reassessment proceedings holding that there was no reason for the Assessing Officer to believe that income has escaped assessment and that the notice u/s.148 of the Act was invalid - Held that:- In the present case, it is noticed that the AO during the course of original assessment proceedings specifically asked the assessee about the application of Explanation to sec. 73 of the Act and the assessee had categorically replied as to how it was a company whose gross total income consisted mainly of income, which was chargeable under the "Interest on Securities", "Income from house property", "Capital gains" and "income from other sources". The assessee has stated that its principal business was granting of loan. Thereafter, the AO passed the assessment order u/s. 143(3) by considering the material on record and formed an opinion that Explanation to Sec 73 was not applicable in the case of the assessee. In the instant case, the AO has recorded the reasons before issuing of notice u/s. 148 of the Act and stated that the principal business of the assessee was not that of granting of loan but did not find any error in the submissions of the assessee that gross total income of assessee consisted mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital Gains" and "Income from other sources". Moreover, the reasons recorded for re-opening shows that the AO did not find any error in the explanation of the assessee for non- application of Explanation to Sec. 73, but still invoked the provisions of Explanation to Sec 73 of the Act. In the present case reopening of assessment was done by the AO merely on the basis of change of opinion. Therefore, re-opening in this case was not valid and the ld.CIT(A) has rightly held so. In that view of the matter, we do not find any valid ground to interfere with the findings given by the ld.CIT(A) in annulling the re-assessment. - Decided in favour of assessee.
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2015 (3) TMI 877
Penalty u/s 271(1)(c) - Disallowance of commission payment - Held that:- The assessee has furnished the full details of the claim made in the return of income as well as during the course of assessment proceedings. The information furnished was not found to be false or bogus by the assessing authority as well as the appellate authorities. The Assessing Officer has not disapproved the claim of the assessee. Therefore the reasonable inference is that the assessee's claim is not false since the lower authorities as well as the Tribunal in the quantum proceedings has not given a finding that the claim of the assessee is either bogus or false. The Assessing Officer had drawn the inference that commission payments were not incurred wholly and exclusively for business purposes. The assessee has disclosed full particulars in the return of income and hence the decision of CIT v. Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT ] applies squarely to the facts of the case. Further, the disallowance in the claim of the assessee in the quantum proceedings cannot automatically call for the levy of penalty under section 271(1)(c). Hence we are of the opinion that the penalty levied under section 271(1)(c) is to be deleted. - Decided in favour of assessee.
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Customs
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2015 (3) TMI 904
Penalty u/s 114 - Non-disclosure of the attempted export of sandalwood by others to the Department - Whether Appellate Tribunal correct in setting aside the penalty imposed by the Commissioner of Customs when admittedly the respondent has omitted to do an act or at least abetted in such omission under Section 114 of the Customs Act and as such liable to pay penalty under Section 114 - Held that:- evidence on record and the statements of various persons clearly goes to show the complicity of the respondent in the act, which render the goods liable for confiscation under Section 113 of the Customs Act. He also abetted in doing such acts, which render the goods liable for confiscation. That finding of the Commissioner is not in dispute. The Tribunal on an erroneous interpretation of Section113 read with 114 of the Customs Act has come to hold that no penalty is leviable. - where the findings of the Commissioner, on fact, supported by documents and the statement of individuals, clearly established the act of the respondent, which render the goods liable for confiscation under Section 113. The respondent is one among the culprits, who attempted to export sandalwood in the guise of roofing tiles. Since the respondent had knowledge about the sandalwood being part of the consignment of roofing tiles, but did not intimate the same to the customs Authorities, he is liable for penalty. - Tribunal has come to the erroneous conclusion that the act of the respondent in not disclosing the information is not liable for confiscation. - Decided in favour of Revenue.
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2015 (3) TMI 903
Classification of goods - Violation of principle of natural justice - Opportunity of hearing not granted - Held that:- Admittedly, opportunity was not given to the petitioner before passing such orders and there is no speaking order at all, it is only a correspondence between the parties. However, Section 149 of Customs Act is silent about the hearing the petitioner. The respondent ought not to have passed an order, without hearing the petitioner and he could have given an opportunity of hearing to the petitioner, before passing any order. Since communication dated 28.08.2014 asked the petitioner to furnish documents and also stated that the amendment is barred by the proviso to Section 149 of the Customs Act, which is extracted supra, the Appellate Authority has not passed any speaking order, though the petitioner approached the original authority for getting a speaking order and the documents referred to by the petitioner dated 05.06.2014, 25.04.2014 and 28.08.2014, cannot be treated as an order. - Matter remanded back - Decided in favour of assessee.
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2015 (3) TMI 902
Maintainability of appeal - Section 130 - Whether relaxation or exemption on the proper date for determination of the rate of duty is permissible when there is no provision under Section 15(1) of the Customs Act, 1962 or not - held that:- question that has to be determined in this appeal has a direct bearing in relation to the rate of Special Additional Duty on the goods imported and that there is a bar under Section 130(1) of the Customs Act - Tribunal in this case has come to the conclusion that in terms of Section 15(1) of the Customs Act, the rate of Special Additional Duty will not be payable by the assessee. That issue, we find, cannot be agitated before this Court in view of the specific provision under Section 130(1) of the Customs Act. Therefore, the objection of the learned counsel for the first respondent is sustained. - appeal is not maintainable - Following decision of Navin Chemicals Manufacturing & Trading Co. Ltd. - Vs-Collector of Customs [1993 (9) TMI 107 - SUPREME COURT OF INDIA] - Decided against Revenue.
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2015 (3) TMI 901
Maintainability of appeal - Monetary value - Held that:- Division Bench of this Court in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS V. STOVEC INDUSTRIES LTD., reported in [2013 (1) TMI 72 - GUJARAT HIGH COURT] held that in view of instruction dated 17.8.2011, tax appeal below ₹ 10 lakh is not maintainable and this instruction also applies to the pending appeal. Following the aforesaid decision of the Division Bench, we dismiss these tax appeals as not maintainable - Decided against Revenue.
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2015 (3) TMI 900
Claim of duty drawback - allegation that applicant had wrongly claimed and was sanctioned drawback claim at higher rate as applicant had availed Cenvat credit on the input services used in respect of impugned exported goods - Held that:- Rule 3(1) of the said Drawback Rules, 1995 stipulates that the amount of drawback can be reduced by taking into account the lesser duty or tax paid by way of rebate, refund or credit obtained. The plain wording of said provision reveal that if any amount has been availed as credit on any inputs, used in manufacture of final product, then such Cenvat credit should be reduced from eligible drawback. The rate of drawback applicable for different exports are notified by Government by issuing a Notification under Rule 3(1) of Drawback Rules after considering all the relevant factors including the amount of duty involved on inputs & input services. So, the drawback rate fixed has taken into account the service tax paid on input services also. As such department has accepted the availment of Cenvat credit and subsequent reversal of the same prior to export as non-availment of Cenvat credit on inputs. Government finds that once department accepted initial availing of Cenvat credit and subsequent reversal of same prior to export as non-availment of Cenvat facility on inputs, they cannot adopt different yardstick for input services whose credit was reversed subsequent to exports. Reversal of Cenvat credit before utilization amounts to non-taking of credit that such reversal can be done subsequent to export of goods. Government further observes that the department has treated availment of Cenvat credit on inputs and reversed subsequently before exports as non-availment of Cenvat credit on inputs and had allowed drawback at the higher rate @ 16% initially. At that time no dispute of non-reversal of Cenvat credit of input services was raised. The said point was raised subsequently and demand was raised on the ground that applicant had availed Cenvat credit of input services. It means original authority was also not clear about the issue in the beginning. So, no mala fide can be attributed to the applicant. Since, applicant has reversed the Cenvat credit in input services of ₹ 80,47,036/- along with interest of ₹ 31,74,220/- when the dispute arose and claimed that said amount was not utilized and remained in balance, so this reversal has also to be treated as non-availment of Cenvat credit on input services Government is of the considered opinion that applicant is entitled for drawback claims at higher rate @ 16% of FOB value of exports and therefore holds that the initial sanction of drawback claim @ 16% is legal & proper - Decided in favour of assessee.
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Corporate Laws
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2015 (3) TMI 899
Confidential and unpublished price sensitive information - Acquisition of shares - Insider trading - Regulation 3A of Securities and Exchange Board of India (Prohibition of) Insider Trading Regulations, 1992 - Board to investigate into the insider trading - Held that:- In the present case, as noted above, the allegations of the petitioners are with regard to insider trading. Regulation 3-A states that no company shall deal in the securities of another company or associate of that other company while in possession of any unpublished price sensitive information. Regulation 4A empowers the Board to enquiry into the violations and provisions of the regulations. The procedure for investigation is contemplated from Regulations 6 to 11-A. Powers and functions of the Board and the Penalties are provided under the provisions of the Act. Therefore, from these provisions it is clear that the Act and the Regulations, provide for forum, procedure and penalty for investigating into the offences prohibited under the Act. In other words, under the above provisions, it is the Board, which is the competent authority to investigation into the alleged offence. Coming to the facts of the case, the allegations of the petitioners have been vehemently denied by the contesting respondents, and these disputed questions of fact cannot be gone into by this court under the writ jurisdiction. As noted in the preceding paragraph, the Act and the Regulations, provide for complete procedure for investigating the allegations of insider trading. Further the contesting respondents also referred to procedure contemplated under Clause 24(f) of the Listing Agreement, which the listed company has to follow before seeking approval for scheme of amalgamation, during which also the petitioners can file objections. The Act and the Regulations provide for forum for investigating into the alleged offence of insider trading. Therefore, in my considered view, the petitioners are not justified in approaching this court without availing the alternative and efficacious remedy. Further, under Sections 391 to 394 of the Companies Act, 1956, provide the procedure for amalgamation whereunder, the respective High Courts, where the registered head offices of the two companies are located, have to consider the amalgamation of companies and in the process, they are required to consider all the issues. In my considered view, as contended by the learned counsel appearing for the 6th respondent, the present interim order may come in the process of considering the amalgamation proceedings. Therefore, as the writ petitioners have alternative remedy under the provisions of the Act and the Regulations made thereunder and in according with the said provisions, the Board has already initiated proceedings and seized of the matter and having regard to the above facts and the circumstances, I am of the considered view, that it is not desirable to continue the interim order and the issue framed is answered in the negative. Accordingly the interim order 25.4.2014 in WPMP.No.16656/2014 in W.P.No.13309/2014 is vacated and the vacate petitions are allowed.
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Service Tax
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2015 (3) TMI 918
Condonation of delay - Appeal filed in wrong office - whether on the basis of appeals claimed to be filed within time in another office due to oversight, could be a cause for getting their appeal hit by limitation - Held that:- on the perusal of documents produced by the ld. Counsel, it is observed that he has fairly made a point that Order-in-Original was sent by speed post on 27/2/2013 and was received on 28/2/2013 by them and subsequently the appeal was filed on 23/4/2013. It was within the limitation period of 16 days. I have also perused the various judgments produced by him and find that in almost all the judgments, Tribunal has taken the view that merely because an appeal has been filed in a wrong forum due to oversight, the substantive right of appeal could not be affected and this aspect should be considered for calculating the limitation. I find that Tribunal has liberally viewed such delays keeping in view the interest of natural justice and has regularised such appeals without getting these affected by limitation. - matter is remanded back to the Commissioner (appeal) for de novo consideration within 3 months in view of above finding after providing fair opportunity of hearing and also opportunity for production of documents to both the sides. - Decided in favour of assessee.
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2015 (3) TMI 917
Penalty u/s 77 - abnormal delay in filing service tax returns of 163 days - Non cooperation of appeallant - Held that:- prima facie there is lack of cooperation on the part of the appellant. Simple issue has been dragging on for seven years. They are regular assessee in touch with the department and this issue could not be sorted out. I feel it is fit case for order of partial pre-deposit of penalty. Accordingly it is ordered that the appellant to deposit ₹ 2 lakh within six weeks - Decided against assessee.
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2015 (3) TMI 916
Penalty u/s 78 - Suppression of facts - Business Auxiliary service - Held that:- it would serve the interest of justice if the impugned order is set aside and the matter is remanded to original adjudicating authority with a direction to consider the liability to penalty also afresh without taking into account the observations of the learned Commissioner (Appeals) that penalty is imposable. There are several decisions taking a view that where an assessee is paying tax as a receiver, extended period may not be invokable if the situation is revenue-neutral. Therefore the consideration of penalty becomes a question of application of facts and law and it would be appropriate if the learned original adjudicating authority reconsiders the issue in the light of decisions that may be cited and the law and the facts. - Matter remanded back - Decided in favour of assessee.
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Central Excise
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2015 (3) TMI 911
Modvat / Cenvat credit - Capital goods - Respondents have also claimed depreciation under Section 32 of Income Tax Act - Lower appellate authority has not only set aside the interest and 11AC penalty but also set aside adjudication order allowing credit from 30.5.2004 and held that respondents are entitled to the modvat credit from the date of taking credit w.e.f 30.6.99 - Held that:- no credit shall be allowed, if the manufacturer claims depreciation under Section 32 of the IT Act. Rule 57T stipulates procedure to be followed by the manufacturer who is intending to take credit of the duty paid on the capital goods under rule 57Q. Under this Rule an assessee shall file declarations before receipt of the capital goods before the Assistant Commissioner of Central Excise having jurisdiction over his factory. One of the declarations under Rule 57T stipulates that they shall not claim depreciation under Section 32 of the Income Tax Act. No doubt that the respondents succeeded in their appeal before CIT (A), but the fact remains established from the above that respondents suppressed the facts before the department on availing simultaneous benefit. The respondent's plea of communication lapse is beyond acceptable. - The deliberate misdeclaration and willful suppression of facts by the respondents was established by the adjudicating authority. The undisputed fact that, but for the Departmental officers detecting the case on 5.3.2002 it would not have come to notice and this fact was completely ignored by the LAA. Therefore, I hold that there is merit, in the revenue appeal and the impugned order waiving interest and penalty under Section 11AC and restoring the Modvat credit to the respondent w.e.f. 30.6.99 is liable to be set aside and the adjudication order dt. 28.9.2004 demanding the credit, confirming interest and imposing penalty under Section 11AC is liable to be restored. - Decided in favour of Revenue.
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2015 (3) TMI 910
Valuation of stock transfer - appellant was collecting "other charges" - These charges were meant to recover the additional cost that the appellant was incurring in transporting the goods from warehouse to depot, storing the goods in the depot and for the investment made in the storage tanks and pipelines upto the jetties - whether this amount will form part of the assessable value or not - Invocation of extended period of limitation - Suppression of facts - Penalty u/s 11AC - Differnce of opinion - Majority order - Held that:- A bare reading of Section 4(1) would indicate the essential criteria for determining the value is the place where the goods are sold by the assessee. If goods are sold at the place of removal, then the sale value is the transaction value for assessment purpose. This is clear from Section 4(1)(a) itself and I need not go to the rules. Thus for the period from 14.5.2003 onwards since the depot was considered as the place of removal, the value at which the goods are sold from the depot will be the assessable value and duty has to be charged accordingly. There is no dispute about the fact that the other charges were collected by the appellant and these were not included in the assessable value while making the payment of duty at the warehouse. There can be no doubt that for all such clearances, they were required to pay the duty at the sale price at the depot. During the period 1st July 2000 to 13th May 2003, the goods were not sold at the place of removal (which is warehouse in this case). In my view, Rule 5 is therefore not applicable to the present case. Further, Rule 7 is applicable when the goods are not sold by the assessee at the time and place of removal but are transferred to depot, etc. from where the excisable goods are to be sold. This is precisely the situation in the present case. The appellant has not sold the goods at the time and place of removal but stock transferred to their depot where the goods were stored and later on sold. In view of the above analysis, in my view, Rule 5 of the Central Excise Valuation Rules, 2000 will not be applicable, but the Rule 7 would applicable. Further, Rule 7 very clearly indicates that the value shall be the normal transaction value of such goods sold from such other place at or about the same time. Thus the transaction value prevailing at the depot will be taken as the transaction value while clearing the goods from the warehouse. Appellant has been paying the duty at their warehouse and such invoices were for STOCK transfer. Normally in such cases, one would expect that the appellant would be collecting the same amount from the buyers. The fact that the appellant was collecting extra amount in the invoices issued from the depot was clearly suppressed from the Revenue and this is a very important aspect. Since there was suppression of the actual sale price from the Revenue, the ingredients of proviso to Section 11A are satisfied and, therefore, extended period of time is invokable. Similarly, penalty under Section 11AC is also leviable as there is a clear cut suppression of facts which are very material in determining the assessable value. - extended period of time is rightly invoked and penalty under Section 11AC is also leviable. - Decided against assessee.
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2015 (3) TMI 909
Denial of rebate claim - Recovery of erroneously sanctioned rebate claim - Held that:- It is clear that applicant has filed this revision application after 3 months and 13 days when the time period spent in proceedings before CESTAT is excluded. As per provisions of section 35 EE of Central Excise Act, 1944 the revision application can be filed within 3 months of the communication of Order-in-Appeal and the delay upto another 3 months can be condoned provided there are justified reasons for such delay - applicant has not disputed the factual position that rebate has to be granted at the rate fixed as per formula prescribed in the notification. Applicant has also not argued that the amount of ₹ 3073604/-demanded towards erroneously sanctioned rebate claim was wrongly determined. Since they have not disputed the revised rate of rebate and demand of duty determined by original authority, there is no force in contention of applicant that rebate initially sanctioned was in order. Applicant's contention initial sanction of rebate was legally correct is not acceptable - no infirmity in the impugned Order-in-Appeal - Decided against assessee.
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2015 (3) TMI 908
Rebate claim - determination of Annual Capacity Determination (ACP) of hot re-rolled products - Non discharge of full duty liability - rebate @ 12% of FOB value in terms of Notification No. 31/98-CE (NT) dt. 24-08-98 - Held that:- during the relevant time, the rebate was admissible @ 12% of FOB value under rule 12 of Central Excise Rules, 2002, in terms of Notification No. 31/98-CE (NT) dt. 24-08-98. So the determination of ACP will not alter the rate of rebate claim mentioned above. Applicant has already paid the entire duty as per ACP fixed by Commissioner of Central Excise though CESTAT has granted stay against Order-in-Original passed by CCE. - in view of CBEC clarification in Circular No 418/51/98-Cx dt. 02-09-98, rebate will be allowed even in cases where manufacturer makes delayed payment of duty in these case and rebate claim was rightly held admissible to the respondents in terms of said CBEC circular. - The department has not stated in the grounds of revision application as why department does not want to follow the said circular. In view of said categorical clarification of CBEC in the matter Commissioner appeal has rightly allowed the rebate claim in terms of Notification No. 31/98-CE (NT) dt. 24-08-98 for the period 01-08-97 to 23-08-98. - No infirmity in impugned order - Decided against Revenue.
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2015 (3) TMI 907
Denial of rebate claim - assessee paid duty @8.24% instead of @ 4.12% - Duty reduced as per Notification No. 4/2006-C.E., dated 1-3-2006 as amended by Notification 4/2008, dated 1-3-2008 and 58/2008-C.E., dated 7-12-2008 - Held that:- Notification issued under Rule 18 of Central Excise Rules, 2002, prescribes the conditions, limitations and procedure to be following for claiming as well as sanctioning rebate claims of duty paid on exported goods. The satisfaction of rebate sanctioning authority requires that rebate claim as per the relevant statutory provisions is to be in order. He does not have the mandate to sanction claim of obviously excess paid duty. Therefore, the circular of 2000 as relied upon by the respondents cannot supersede the provisions of Notification No. 19/2004-C.E. (N.T.). - what the settled principle of law are that in the interest of natural justice for equity of law, whatever the implications may be i.e. either of benefits/refunds or of liability/recoveries, the applicable date of effect would be same and that can only be the date of coming into effect the applicable legislations as issued for the purpose. Therefore, in this case any plea of ignorance of law cannot be admitted as legal and proper, as such the respondent was required to pay duty @ 4% on 7-12-2008 in terms of Notification 58/2008-C.E., dated 7-12-2008. The rebate of duty paid @ 4.12% in terms of Notification No. 58/2008-C.E., dated 7-12-2008 is admissible to the respondent under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. - Impugned order is set aside - Decided in favour of Revenue.
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2015 (3) TMI 906
Denial of rebate claim - Failure to produce the copies of the BRCs - entire sale proceeds in respect of the some exported goods were not realized by the respondents within the period allowed under the FEMA, 1999 including any extension of such period - Held that:- The explanation given by respondents for short realization cannot be accepted since duty is required to be paid on transaction value of goods (exported) determined under Section 4 of Central Excise Act, 1944. Since the transaction value as shown in the BRCs was less than the value declared in ARE-1 form, the department has rightly held that respondent paid excess duty on such clearance. - Government notes that this issue has already been decided by GOI order passed in the case of CCE, Nagpur v. Sri Bhagirath Textiles Ltd. reported as [2005 (7) TMI 120 - GOVERNMENT OF INDIA]. It has been stipulated in the Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 and the C.B.E. & C. Circular No. 510/06/2000-CX, dated 3-2-2000 that rebate of whole of duty paid on all excisable goods will be granted. Here also the whole duty of excise would mean the duty payable under the provision of Central Excise Act. Any amount paid in excess of duty liability on one’s own volition cannot be treated as duty. But it has to be treated simply a voluntary deposit with the Government which is required to be returned to the respondent in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law. - Government set aside the impugned orders-in-appeal and restores the impugned orders-in-original. Government further observe that excess paid amount of duty in case of short realization of export sale proceeds may be returned to the respondent as recredit in their Cenvat credit account. - Decided in favour of assessee.
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2015 (3) TMI 905
Denial of rebate claim - Valuation of goods - Valuation as per section 4 or section 4A - Jurisdiction of GOVERNMENT OF INDIA - Held that:- there is no dispute with regard to export of goods and compliance of provisions of Rule 18 of Central Excise Rules, 2002 r/w Not. No. 19/2004-C.E. (N.T.), dated 6-9-2004. The conditions and procedure stipulated in Not. No. 19/2004-C.E. (N.T.) stands fully complied with and export of duty paid goods is also established. So, there is no violation of any statutory provisions relating to rebate claim as far as Rule 18 of Central Excise Rules, 2002 r/w Not. No. 19/2004-C.E. (N.T.), dated 6-9-2004 is concerned. The rebate claims of ₹ 71,05,078/- was sanctioned whereas balance amount of ₹ 2,85,41,026/- was rejected by original authority which account for 80% of total rebate claim of ₹ 3,56,46,104/-. However, Commissioner (Appeals) has accepted the valuation of goods done under Section 4A and held that duty was correctly paid on the value determined under Section 4A. So, he allowed the full rebate claim. Since the 80% of duty paid is disputed on account of valuation dispute, the valuation issue is the major issue in this case. So, the impugned order cannot be called as only relating to rebate claim but it also relates to valuation dispute which is the major issue in this case matter. Government has no jurisdiction to pass order in respect of Order-in-Appeal relating to valuation issue in terms of Section 35EE r/w provision (i) (ii) of Section 35(b)(1) of Central Excise Act, 1944. The jurisdiction to decide valuation issue lies with the Hon’ble CESTAT. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (3) TMI 915
Belated filing of return - tribunal found that the return was filed belatedly and as an after-thought - The Entry was further amended in the year 1997. The annual return was filed on 2nd July, 1998 showing tax liability as per the provisions of Entry J-8. Therefore, the claim of the dealer was that benefit of this Entry be granted to him and the matter be remanded back to the Assessing Authority to work out the tax liability in accordance with the provisions of Entry J-8. - Held that:- A perusal of section 46B would indicate as to how a registered dealer has not been allowed deduction under sub-section (1) of section 8 from the turnover of sales of goods because of section 12A(3) or, as the case may be, sub-section (3)(a), then, in respect of such sales he may deduct from the sale price before reducing it in accordance with Rule 46A the purchase price of such goods. Therefore, there are stipulations in the rule itself and if the dealer in this case who was registered has dealt with another registered dealer, then, with a view to enable him to obtain these reductions that the provisions have been inserted. To give effect to the rule itself and completely that one finds that the Entry has been inserted. If that Entry has come into force as in the case of the present dealer at a later date, but is given effect to from the prior date, then, compliances with certain conditions can be made later on. How in several orders of the Tribunal itself, this condition is considered and held to be capable of substantial compliance. In the present case on the admitted facts, the Tribunal found that the condition is capable of substantial compliance. The later observations of the Tribunal with regard to the alleged delay need not detain us. If the provisions are read in their proper perspective and in the above background, then, the conditions in this Entry and particularly condition No. VI can be held to be capable of substantial compliance. If that is how the Tribunal as also we conclude, then the question of law referred for the opinion of this Court will have to be answered in favour of the dealer and against the Revenue. - Decided in favour of assessee.
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2015 (3) TMI 914
Rectification of mistake - Review of Tribunal's own order - Held that:- Tribunal completely omitted from consideration the first proviso to Clause (b) of Sub-section 3 of Section 36. That proviso enabled the Appellate Authority to remit the whole or any part of the interest payable in respect of any period. It was that power which was invoked and exercised. Once the powers were exercised on the satisfaction that the dealer had financial difficulties, the manufacturing operations had come to a standstill, then, there was no case made out for Rectification. For there was no mistake and apparent on the face of the record which required any correction. - Tribunal exercised powers of review which it did not possess and recalled its earlier order in its entirety. This was impermissible in law and in the given facts and circumstances. All the questions and which have been referred for this Court's opinion and answer arise from the Tribunal's apparent mistake in reviewing its order. If there was no power conferred in it by which it could have recalled the entire order and the alleged mistakes pointed out were as if the revenue was challenging the original order delivered by the Tribunal in Appeal on merits, then, all the more we do not think that the Tribunal was justified in passing an order allowing the application of the Revenue - Decided in favour of assessee.
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2015 (3) TMI 913
Levy of tax, interest and penalty - Whether, in the facts and the circumstances of the case, the Appellate Tribunal was justified, in upholding the findings of reassessment officer which proceeds merely on the allegations of show-cause notice dated October 22, 2010 issued by the Directorate-General of Central Excise, without any independent investigation - Held that:- Reassessing officer has found that the sales were shown in the books of 160 Chhakdo rickshaws and it was found that actually the appellant had cleared 326 Chhakdo rickshaws. Thus, 166 Chhakdo rickshaws were in excess, which were not accounted for in the sales of the appellant and hence, reassessing authority passed an order with respect to the said 166 Chhakdo rickshaws. It was the case on behalf of the appellant that the appellant was doing the job-work and assembling the rickshaws from the spare parts purchased by the prospective customers and he also produced some documents in support of his contention that he was doing the job-work of assembling the rickshaws. However, no other supporting documents/bills of engine or chassis in the name of third parties/prospective customers were placed on record. The appellant produced the contracts with (1) Maldebhai Masribhai Chavda, (2) Sadurbhai Kalubhai Manek, (3) Sureshbhai Madhavdas Danidharia in support of his case that they entered into contract with the appellant for assembling the rickshaw, however, the appellant did not produce the bill of engine or chassis in the name of the aforesaid persons. He did not produce any other documentary evidences in support of his case that the spare parts, engine, chassis, etc., were purchased by the prospective customers and that the appellant was doing the job-work. In absence of any supporting documents/documentary evidences, the reassessing officer as well as the Tribunal, both have rightly disbelieved the case on behalf of the appellant that he was doing the job-work and assembling the rickshaw from the spare parts purchased by the prospective customers. It is also required to be noted at this stage that even the registration of the rickshaws were by the appellant himself. It cannot be said that the Tribunal has committed any error in confirming the reassessment order. The finding of fact given by all the authorities below are on appreciation of evidence which are neither perverse nor contrary to the evidence on record. Under the circumstances, as such no question of law much less substantial question of law arise in the present appeal. - Decided against assessee.
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2015 (3) TMI 912
Violation of section 76(2)(a) of the VAT Act - Imposition of Penalty u/s 76(6) - Non production of books of accounts - Held that:- On perusal Section 76(6), it transpires that a reasonable opportunity has to be granted to the owner or a person duly authorized by such owner or the driver or the person incharge of the vehicle or carrier. - It is clear even by the brief facts as given by the petitioner that Brahma Prakash has been claimed by the petitioner himself, in the revision petition as "petitioner's representative" and he appeared and filed reply on behalf of the petitioner, in my view, the arguments advanced by the learned counsel for the petitioner cannot be accepted at all as they are contrary to the facts averred in the instant petition vis-a-vis the argument. Even otherwise, had Brahma Prakash Agarwal been a transporter, he could not have appeared and stated that he is unable to produce the books of accounts of the firm as the accountant was out of town. The respondent ACTO granted sufficient time of appearance and hearing on April 11, 2007 vide notice dated March 27, 2007 of more than weeks but the representative of the petitioner for the reasons best known requested to pass penalty order then and there. According to me the ACTO respondent had no option except to impose the penalty when the requirements were not complied with. What further enquiry was required to be made when petitioner did not want to avail of reasonable opportunity granted by the ACTO even for producing the books of accounts and supporting material. Further it is apparent on perusal of builty that the builty refers the name of sender "Jindal" and issued by Deepak Road Lines, Hissar, Haryana and the observations of the ACTO appears to be correct that the goods were transmitted from the factory of Jindal industries from Hissar to Kishangarhbas. Neither the petitioner submitted any clarification or certificate or affidavit from the so-called "Jindal" as to non-remittance of the goods from their factory to Kishangarhbas, on the contrary even the driver Deepak Kumar stated this fact before the ACTO that the vehicle was having "loha girders" which was loaded from the factory of Jindal Rolling Mills, Hissar at 4 p.m. and was going to Kishangarhbas from Hissar. In the light of these facts, no clarification or further claim was or even reply was filed by the petitioner-assessee before none of the authorities denying these facts. Even the petitioner had failed to produce the books of accounts and other supporting material respite ample opportunity having been granted and there was no occasion for the ACTO to have examined the books of accounts, in the case of Associated Steel Industries, Kota merely on the basis of statement of the driver, the finding could not have been against the petitioner-assessee. In my view, there can be no doubt about this fact and placing reliance solely, on the statement of driver no adverse inference could have been drawn but in the instant case, even the authorized representative of the petitioner submitted that he is unable to produce the books of accounts and other supporting material as well as the declaration form ST-18A and requested for passing an order then and there despite of time having been granted by the ACTO. Not only this, no reply nor any explanation or even clarification was submitted on behalf of the assessee-petitioner on records to refute the allegations/observations of the assessing officer. Burden lay on the petitioner which has not been discharged. The finding arrived at by the Tax Board, is a finding of fact in the light of the facts narrated hereinabove. - No illegality, irregularity or impropriety in the order passed by the Tax Board. No question of law arises in this petition - Decided against assessee.
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Indian Laws
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2015 (3) TMI 898
Land allotted by DDA for institutional land - Additional Floor Area Ration (FAR) charges - Amount deposited for additional FAR under protest - Procedural provisions as retrospective - Doctrine of fairness - Held that:- In the decision reported in Indian Tobacco Association [2005 (8) TMI 113 - SUPREME COURT OF INDIA], the doctrine of fairness was held to be a relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied by the Supreme Court in the decision reported as Vijay [2006 (7) TMI 648 - SUPREME COURT]. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. In the instant case the moment the notification dated December 23, 2008 was promulgated, representations were made to do away with the condition of paying extra premium for the extra FAR. A committee was constituted to look into the issue, which decided that for three category of bodies : (i) Educational, (ii) Health Care and (iii) Social Welfare, the additional charges need to be withdrawn. The Central Government accepted the same. The notification dated July 17, 2002 was promulgated. The object of the legislation is to confer a benefit without taking away anybody's vested right and without inflicting a corresponding detriment on some other person or on the public generally. To confer a benefit is the express object of the legislation. The presumption thus would be that the intent was to give a retrospective effect. We have already reasoned above that the decision of the Division Bench of this Court dated July 20, 2012, though not so expressly stating, meaningfully read, has treated the notification dated July 17, 2002 as retrospective and thus the respondent in LPA No.107/2014 and the writ petitioners in the three captioned writ petitions would be entitled to succeed on three distinct and independent reasons. Firstly, parity with the writ petitioners of the various writ petitions which were allowed on July 22, 2012, which decision was affirmed by the Supreme Court. Secondly, on the doctrine of fairness adopted by the Supreme Court in Indian Tobacco Association's case and Vijay's case . Thirdly that the notification dated July 17, 2012 has to be given a retrospective operation. - Writ petition is accordingly dismissed.
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2015 (3) TMI 897
Appointment of Accountant Members in ITAT - Held that:- Notwithstanding the statement made on behalf of the Union of India before this Court that vacancies in the future will be made only after the amendments in the Rules are carried out, the Union of India has initiated a process to make further appointments without amending the Rules. If persons eligible under the then existing Rules which are in force even today are to be considered for appointment, surely, the petitioner, who is a wait-listed candidate, will also have to be considered for appointment by consideration of his entitlement for appointment as in the year 2007 when the appointments on the main-list were made and the two vacancies arose giving rise to the issue of operation of the waiting list. What follows from the above is that even accepting the order passed by this Court in [2011 (11) TMI 49 - SUPREME COURT OF INDIA], in view of the subsequent facts and events that have occurred, namely, action of the Union of India in resorting to a fresh process of selection and appointment without amendment of the Rules, the right of the petitioner to be considered for appointment on the basis of his position in the Waiting List has once again come to fore which needs to be resolved by an appropriate order. - Decided in favour of Appellant.
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2015 (3) TMI 896
Refusal of tax concession by State to a film on the ground that the film is based on a controversial subject of homosexuality - does the State policy granting such concession to all Gujarati films barring those excepted in the policy itself would permit the authority to exercise such power in the present case - Held that:- First the initial hesitation of the Commissioner of Entertainment Tax in granting exemption was that the film had received "A" certificate. That is how he issued the first notice calling upon the petitioner why on such ground exemption should not be refused. This ground was neither germane nor flowing from the Government policy. Merely because a film is certified by the Censor Board for being viewed by audience not below the age of 18 years, would not mean that it falls in any of the categories mentioned in para 4. The Commissioner thus laboured under a complete misconception in this regard. Wisely and rightly, therefore, he quickly dropped this objection. There is no prohibition against exhibiting this film. In any case, the Commissioner of Entertainment Tax was not controlling exhibition of the film in different cinema halls in the State or outside. He was only called upon to judge whether the film should receive tax concession or not. Even without tax concession, the producer could as well have exhibited the film in different cinema halls. His conclusion that the film will lead to friction is not based on any material. He has not referred to any data to establish this conclusion. Further, his task was to decide application for tax exemption and the question of law and order was not within his purview. Neither Home Department nor the police authorities seem to have suggested to him that they will not be able to manage law and order situation if the film is granted tax exemption. Right to freedom of speech and expression guaranteed under article 19(1) of the Constitution is zealously guarded by the constitutional courts. A film is considered a powerful tool for expressing one's ideas and thoughts. Any restriction on such right if not authorized under clause (2) of article 19 must be struck down. If we accept this proposition that the petitioner has right to freedom of speech and expression through making and exhibiting a film on a topic of his choice, any restriction on such right must be reasonable and backed by authority of law for the grounds stated in article 19(2) of the Constitution. One may argue in the present case that exhibition of the film is not prohibited and only tax concession is denied. Even this will seriously restrict the petitioner's right to freedom of expression. When all other Gujarati colour films barring small exceptions noted are being granted tax exemption, insisting the petitioner to exhibit his film in the market after paying full entertainment tax would severely restrict the audience of the film. This would be a serious affront on the petitioner's right to freedom of speech and expression. Unreasonable or excessive tax on media is considered one of the facets of denying the rights under article 19(1) of the Constitution as held by the Supreme Court in the case of Indian Express Newspapers (Bombay) P. Ltd. v. Union of India[1984 (12) TMI 65 - SUPREME Court]. In the said case, the court was considering the challenge to a notification issued by the Central Government under section 25(1) of the Customs Act withdrawing certain exemptions to import of newsprint used for publication of newspapers. Court only recognize the right of a film maker to make a film on the topic and exhibit the same as long as it does not offend the restrictions envisaged in clause (2) of article 19 of the Constitution and to seek and insist on getting tax exemption if the film falls within the prescribed criteria laid down by the Government in its policy declaration and not be denied the same merely because the subject is controversial. The issue perhaps embarrasses some members of the society and is talked in hushed whispers, that however would not mean that it falls in the categories mentioned in para 4 of the Government policy. A controversial subject is different from a controversial film and the film being controversial and a film being objectionable are yet two different aspects. All in all, from the dialogues mentioned by the Commissioner as objectionable, we can safely conclude that the objections were wholly misguided based on fallacious premises. His role was not that of the Censor Board. His conclusions thus were erroneous. - Decided in favour of Appellant.
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