TMI Tax Updates - e-Newsletter
March 5, 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:
Entitlement to interest u/s 244A on refund - excess self-assessment tax paid - In absence of explanation as to how the assessee erred in calculation of self-assessment tax, there being no allegation that such excess deposit was pursuant to demand by the Revenue, the claim for interest on excess payment voluntarily made cannot be sustained - HC
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Income Tax:
Remitting the matter to higher forum for decision on merits - It would be in the fitness of things that the matter is remitted to the DRP rather than AO - HC
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Income Tax:
Attachment of assessee's property and bank accounts - when the appeal provision is provided under Rule 86 of Second Schedule to the Act and the petitioner has filed such an appeal even according to the Chief Commissioner of Income Tax, then the Jurisdictional Commissioner should have decided such an appeal at the earliest - HC
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Income Tax:
Diversion of JV receipts - ITAT did not fall into error of law, in holding that the JV was not an association of persons and liable to be taxed on that basis - HC
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Income Tax:
India Development Bonds received from NRI's/Overseas Corporate Bodies as gifts - immunity from inquiry regarding the source - immunity only on compliance with the conditions of Section 6 and to the extent legislated - HC
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Income Tax:
Non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA (2) of the Income Tax Act 1961 would not result in a deemed grant of registration - HC
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Income Tax:
Higher deduction of Tax (TDS) by the employer u/s 192 from salary - Eligibility to claim deduction u/s 80C (2) (xviii) - if any amount has been deducted in excess from the payments effected to the petitioner, the petitioner is not seriously aggrieved because he would get credit of the same in his assessment under the Income Tax Act - HC
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Income Tax:
It cannot be said that use of water is not necessary for manufacturing of sugar - the tube well including its machinery and building would be used for the purpose of business or profession would fall within the definition of word 'plant' and on which depreciation would be allowed u/s 32 (1) - HC
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Income Tax:
Benefit of Article 22 of DTAA between India and Switzerland - Where the ships are owned or chartered by a non-resident shipping company and the agency PE merely clears inbound cargo and books outbound cargo and carries out similar ancillary functions, the ships are clearly not the assets of the PE nor are they is some other way effectively connected with a permanent establishment. - AT
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Customs:
Refund of SAD - Notification No. 102/2007 - Appellant failed to make any endorsement in the commercial invoices issued for the domestic sale that "no credit of SAD of Customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, shall be admissible" - Refund allowed - AT
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Customs:
Modification and audit by proper officer under Section 17(6) - no speaking order has been passed when the value was enhanced and assessment was finalized and therefore, provisions of Section 17(6) are clearly attracted - AT
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Service Tax:
Denial of refund claim u/s 11B - SEZ - even if the appellants were not eligible for refund under Notification No.9/2009-ST, the appellants were clearly eligible for refund under section 11B of the Central Excise Act, 1944. - HC
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Central Excise:
Remission of duty - Goods destroyed in fire - such semi finished goods are also entitled to the remission of duty but even if the Commissioners' stand is accepted, no duty liability would arise in respect of semi-finished goods to duty of excise. - AT
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VAT:
The Tribunal was of the view that once the judgment was delivered on 24.08.2005, the assessee should have paid the money immediately thereafter. The same having not been done, it amounts to deliberate noncompliance of the law. We find it difficult to accept this reasoning. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (3) TMI 111
Transfer pricing adjustment - computation of ALP - DRP considering Interest Receivable from AE Company at ₹ 28,627,089/- instead of ₹ 29,182,060/- (as per 3CEB) - Held that:- Where the assessee had entered into a transaction with its associated enterprises in foreign currency, and the transactions were international transactions, then the same had to be looked into by applying commercial principle in regard to international transactions. In the facts of present case, the assessee had borrowed the loan from Citi Bank and advanced the same on LIBOR+ rates to its associated enterprises, then the said transaction with its associated enterprises is within arm's length price. The TPO / AO thus, directed to re-compute the arm's length price of the international transactions. Another aspect to be kept in mind is the plea of the assessee with regard to the interest receivable. The assessee had also raised the issue that the TPO had adopted the interest receivable from associated enterprise company at ₹ 2,86,27,089/- instead of ₹ 2,91,82,060/- which is disclosed in the audit report in Form No.3CEB. The Assessing Officer is also directed to verify the claim of the assessee in this regard and compute the arm's length price of the international transactions. Reasonable opportunity of being heard shall be afforded to the assessee by the Assessing Officer / Transfer Pricing Officer. - Decided in favour of assessee for statistical purposes. Disallowance of additional depreciation under section 32(1)(ii)(a) - Held that:- Racks cannot be considered as part of block of Plant & Machinery and no additional depreciation is allowable on the same. Further, depreciation @ 10% is to be allowed on such Racks being Furniture & Fixtures. Depreciation on Trolley which as per the Assessing Officer is part of the Furniture & Fixtures as the same is used for transferring material and goods from one place to another. The value of the Trolley is ₹ 16.01 lakhs and ₹ 20.78 lakhs. Keeping in mind the nature of asset and functional test, we find no merit in the order of Assessing Officer in this regard and direct the Assessing Officer to consider the same within block of Plant & Machinery and allow the depreciation and additional depreciation on the same. Depreciation on Air-conditioner which is Plant & Machinery on which the depreciation at higher rate is allowable. However, no additional depreciation on the same is allowable since the same cannot part take the machinery used for manufacturing activities. Further, TV Music System is an electronic item on which higher rate of depreciation is allowable. However, no additional depreciation is allowable on such TV Music System. The Industrial Fan being utilized as part of the manufacturing activity, was entitled to the claim of higher depreciation and also additional depreciation on Plant & Machinery. Depreciation on Water Cooler, Dispenser, Refrigerator, Handicam, Projector and Scanner are all electronic items and are to be considered under the said head. However, the assessee is not entitled to claim of additional depreciation as the same were not part and parcel of manufacturing activity carried on by the assessee. Depreciation on UPS, Inverter, Attendance Card Reader, EPBX System and Energy Saver, which are electronic items but are not part and parcel of Plant & Machinery utilized for manufacturing activity. The assessee was not entitled to the claim of additional depreciation on the same. - Decided partly in favour of assessee. Discount on pre-payment of Sales Tax Deferral liability - treating Discount as remission / cessation of liability chargeable to tax under section 41(1) of the Act - Held that:- As reying on Sulzer India Ltd. Vs. JCIT [2010 (11) TMI 728 - ITAT, MUMBAI] the deffered sales tax liability i.e. the difference between the payments of the net present value against future liability credited by the assessee under the capital reserve account in its books of account, was a capital receipt and the same could not be termed as remission / cessation of liability, consequently, no addition could be made under the provisions of section 41(1) of the Act. Reversing the order of authorities below, we allow the claim of the assessee. - Decided in favour of assessee. Re-calculation of book profit under section 115JB - whether AO can consider the disallowance under section 14A of the Act and add the same to the profits of the business in order to compute the book profits under section 115JB of the Act - Held that:- Direct the Assessing Officer to exclude the disallowance made under section 14A of the Act, while computing the book profits u/s 115JB of the Act. Accordingly, we direct the Assessing Officer to re-compute the book profits under section 115JB of the Act. - Decided in favour of assessee.
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2015 (3) TMI 110
Entitlement to interest under Section 244A on refund - excess self-assessment tax paid under Section 140A - Held that:- There cannot be a general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refunded amount. The letter and spirit of the law on the subject is that the party which committed the error in proper calculation (or delay in proper assessment) must bear the burden. If the excess amount is paid due to erroneous assessment by the Revenue, having exacted such burden wrongfully and inequitably on the assessee and having retained the excess amount thus received, the reimbursement must be accompanied by payment of interest at the statutorily prescribed rate. Conversely, if the assessee is to blamed for the miscalculation (or for delay or, for that matter, want of claim of refund), the Revenue does not owe any interest even if the excess payment of tax is liable to be refunded. In absence of explanation as to how the assessee erred in calculation of self-assessment tax, there being no allegation that such excess deposit was pursuant to demand by the Revenue, the claim for interest on excess payment voluntarily made cannot be sustained. In the result, the appeal is allowed and the impugned order passed by ITAT directing the AO to pay interest to the assessee on the refunded amount is set aside. - Decided in favour of revenue.
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2015 (3) TMI 109
Entitlement to deduction u/s 80P(2)(a) - commission earned on electricity bill - Held that:- The facility of collection of bills provided by the bank is found to qualify as banking activity and the commission has been thus allowed to be deducted under Section 80P(2)(a) of the said Act as held in CIT(A) V/S Ahmednagar District Central Co-operative Bank Ltd., Osmanabad District Central Co-operative Bank Ltd. and Latur District Central Co-operative Bank Ltd. [2003 (7) TMI 50 - BOMBAY High Court ] - Decided in favour of assessee. Commission derived from Cotton Hundi business - Held that:- The cheques issued by the State Government to the cotton growing farmers as price of cotton purchased are immediately honoured by the assessee and the State Government then reimburses the assessee after some time. It is, therefore, obvious that the funds of the bank are used in the process and for such use the State Government is compensating it by paying the commission. Considering the law looked into supra, we find that the said commission also qualifies for such deduction. See CIT vs Nawanshahar Central Coop. Bank Ltd [2012 (9) TMI 404 - SUPREME COURT] - Decided in favour of assessee.
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2015 (3) TMI 108
Remitting the matter to higher forum for decision on merits - Remand of matter to the (AO) for reconsideration - whether the matter is to be remitted to the ITAT rather than to the AO? - Held that:- The DRP’s determination in these circumstances, concerning the AY 2010-11, made earlier on 30.10.2013, stood. It is a matter of record that the revenue did not choose to either reopen the assessment in any manner nor call into question the decision of the DRP in terms of Section 253(2A) which enables revenue to approach the ITAT in respect of any of its grievances against the order of the DIT. This provision was supported by Finance Act, 2012 w.e.f. 1.7.2012 - i.e. before the draft assessment order was made in respect of AY 2010-11. In these circumstances, we are of the opinion that the restricted remand to the AO was not justified. At the same time, this Court is not persuaded to the submissions of the revenue that since the assessee considered the entirety of circumstance for the other years in its order dated 28.11.2014 which led to the final assessment order dated 4.12.2014, which is in turn is the subject matter of the assessee’s appeal before the ITAT, the latter course is the most appropriate one. This is because the ITAT’s impugned order in this case followed by the DRP was cryptic in its order and had nothing to say in respect of draft assessment order, initially framed on 28.3.2013. Thus going through circumstance at two stages i.e. when the first draft assessment was made and subsequently under Section 263, the course of action urged by the revenue given that it also did not articulate grievance of the DRP’s order is not appropriate. It would be in the fitness of things that the matter is remitted to the DRP rather than AO which would consider the matter referred to it and after hearing the submissions of the parties deal with them with proper reasoned order, but in accordance with law.
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2015 (3) TMI 107
Determination of value of property - under valuation of the property as held by AO - ITAT upholding the assessee’s contention that the value determined by the Assessing Officer (AO) in respect of the property was unsustainable - Held that:- ITAT took into consideration the suit for injunction filed by the purchaser Sh. M.P.Jain and the compromise statement dated 18.09.1989. It is also evident that despite the statement being recorded on 18.09.1989, title was not conveyed to the purchaser even though he continued to be in the possession of the property. It is matter of fact that original owner Sh.Tarsem Singh died in 1996; Sh.Gurdayal Singh, his agent/guardian died in 1994. After his death, the LRs continued to contest the title and eventually the purchaser agreed to pay a further amount of ₹35 lakhs. The ITAT took note of several decisions, including CIT vs. Naveen Gera (2010 (8) TMI 194 - Delhi High Court) and K.P. Varghese vs. Income Tax Officer [1981 (9) TMI 1 - SUPREME Court] to show that the AO has to base his view with regard to under valuation, upon objective material. The intervening death of the original owner only aggravated the problem inasmuch as the LRs apparently refused to honour the agreement which eventually forced the purchaser to shell out the further amount mentioned in the original agreement even though substantial amounts had been paid earlier. The fact that in the agreement, the parties ultimately agreed to abide by the statement recorded by the court in the year 1989, ifso facto, could not have been the ground for suspecting its bonafide. Given the fact that an order XXII Rule 3 CPC application was filed and the compromise duly recorded in the Court, we are of the opinion that the ITAT’s order does not lead to any substantial question of law requiring consideration. - Decided against revenue.
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2015 (3) TMI 106
Undervaluation of the closing stock - Tribunal upholding the order of the CIT(A) in deleting the addition - Held that:- As relying on assessee's own case [2013 (10) TMI 16 - ALLAHABAD HIGH COURT] wherein held that the changed method of accounting was more scientific and did not result any evasion of tax. - Decided in favour of assessee. Sale of the bagasse to its sister concern - Held that:- As relying on assessee's own case [2015 (3) TMI 94 - ALLAHABAD HIGH COURT] Tribunal was legally justified in upholding the order of the CIT(A) in deleting the addition on account of under statement of sale proceeds of baggase, disallowance on account of treatment of capital expenses as revenue expenses in molasses fund - Decided in favour of assessee. Depreciation on tube-well - Tribunal directing the Assessing Officer to allow depreciation treating it as plant and machinery - Held that:- As relying on assessee's own case [2015 (3) TMI 94 - ALLAHABAD HIGH COURT] we decline to interfere with the impugned order passed by the Tribunal on this issue. - Decided in favour of assessee. Excess provision of gratuity - Held that:- Deduction of gratuity is allowable as per Section-43B on the basis of actual payment. The A.O., in its order has observed that if this amount is pertaining to the assessment year 1984-85 onwards, then assessment order will be rectified on this point to that extent. None of the parties was able to tell whether any rectification was made out or not. Thus we set-aside the impugned orders passed by the appellate authorities pertaining to this issue and restore the matter back to the A.O. to examine whether any rectification order has been passed or not. The A.O. is directed to decide the issued denovo whether the claim is merely written back of the provision or the actual payment, but after providing necessary opportunity to the assessee as per law. - Decided in favour of revenue for statistical purposes. Business loss on account of export of sugar - Tribunal upholding the order of the CIT(A) in treating the expenditure incurred by the assessee against export quota sales of sugar as loss - Held that:- It is not evident whether the amount in question is penal in nature or not, if it is penal in nature then the same cannot be allowed as a business loss, if it was optional either to export the sugar or to pay the amount then the same can be allowed as business loss. Hence, we set-aside the impugned order and restore the issue to the A.O. to decide the same on merit in view of above discussion and by providing reasonable opportunity to the assessee. - Decided in favour of revenue for statistical purposes.
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2015 (3) TMI 105
Attachment of assessee's property and bank accounts - tax dues payable by the petitioner's late father - non consideration of appeal by Jurisdictional Commissioner - Held that:- The delay in the Jurisdictional Commissioner of Income Tax taking up the petitioner's grievance which even according to the Chief Commissioner was nothing but an appeal under Rule 86 of Second Schedule to the Act and disposing it of on merits, has caused prejudice to the petitioner as his grievance that the attached property does not belong to his father, has gone unattended leading to the TRO passing order dated 25.9.2012. It is only thereafter on 15.5.2014 the Jurisdictional Commissioner disposed of the petitioner's appeals in the form of grievance dated 13.4.2012 and 7.5.2012, in effect taking the plea of fait accompli by virtue of the order dated 25.9.2012 passed by the TRO. We find that when the appeal provision is provided under Rule 86 of Second Schedule to the Act and the petitioner has filed such an appeal even according to the Chief Commissioner of Income Tax, then the Jurisdictional Commissioner should have decided such an appeal at the earliest. This not having been done in the present case, has resulted in great prejudice to the petitioner as his grievance against the order of attachment passed by TRO is not being considered in appeal even though the Statute provide for the same. The TRO should have in all fairness awaited the disposal of the petitioner's appeal under Rule 86 to the Second Schedule of the Act pending with the Jurisdictional Commissioner of Income Tax before disposing of the attachment proceedings under Rule 11 of the Second Schedule of the Act. - Thus restore the petitioner's appeal before the Jurisdictional Commissioner for fresh disposal. Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 104
Attachment orders - demand notice - Held that:- The authority should have considered the legal submissions raised by the petitioner before passing the impugned order. In any event since the matter is sub judice before the appellate forum, the authority should have considered whether 50% of the demand could be ordered, taking into account the totality of circumstances. Though this Court is bound to consider the situation prevalent on the date of the order, taking note of the subsequent events, namely, attaching 100% of the amount, when the petitioner has stated that the order has got to be tested in appeal, attaching 100% amount would clearly shows that the respondent was interested in collecting the entire amount, I am of the view that the impugned order has to be set aside and the matter has to be remanded to the appellate authority to consider the case afresh on merits and in accordance with law. Decided in favour of assessee
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2015 (3) TMI 103
Contempt of Courts - withdrawal of the affidavit and the allegations - Held that:- Given the nature of the conduct displayed by Sh. Gupta, i.e. preferring an application for intervention which was rejected, thereafter engaging in e-mail communications with the Standing Counsel and levelling allegations against them; addressing e-mails directly to this Court and finally, placing on record an affidavit detailing the allegations even while stating that he would withdraw some of them vis-a-vis the Standing Counsel, but would nevertheless press those allegations against the same individuals elsewhere, prima facie amounts to criminal contempt punishable in accordance with law. This Court has been informed that two of the Standing Counsels - Sh. Balbir Singh and Sh. Rohit Madan, who had previously appeared, have already recused themselves from the matter. The behaviour outlined above amounts to seeking to prejudice and interfere or tending to interfere with the due course of proceedings in the present appeals. Thus consequently appropriate action and further proceedings under Section 15 of the Contempt of Courts Act, 1971 is warranted. In the circumstances, Sh. Rakesh Kumar Gupta is issued with Show Cause Notice, returnable on 09.04.2015 to give his explanation why he should not be proceeded with under Section 15 of the Contempt of Courts Act, 1971 in respect of the above allegations.
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2015 (3) TMI 102
Diversion of JV receipts - proportion of the project receipts, commensurate with the risks/performance obligations attributed to the assessee JV to whom tender had been awarded for the project - whether it is allowable for the assessee to divert the entire receipts to its JV partners by designing a sub-contract to that effect? - Held that:- The consistent and concurring opinions of CIT (A) and ITAT were that the JV was formed only to secure the contract, in terms of which the scope of each JV partner’s task was distinctly outlined. Further, the entire work was split between the two JV partners; they completed the task, through sub-contracts and were responsible for the satisfaction of the NHAI. Therefore, applying the principles of the law declared in Linde AG, Linde Engineering division and Anr [2014 (4) TMI 975 - DELHI HIGH COURT], it is held that the ITAT did not fall into error of law, in holding that the JV was not an association of persons and liable to be taxed on that basis. Decided in favour of the assessee.
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2015 (3) TMI 101
Unexplained cash deposits in the assessee’s bank account - ITAT deleted the addition - Held that:- the amount lying in the respective account as per the assessee was in fiduciary capacity to be utilized for buying policy of the respective vehicle. No evidence has come on record that the amount has ever been utilized by the assessee for her own purpose and there was positive evidence that all the amount from time to time was transferred to the account of ICICI Lombard General Insurance Company Limited. Under the circumstances, the explanations were found to be satisfactory by the CIT (Appeals) as well as by the Tribunal which is the ultimate fact finding authority. We do not find that any substantial questions of law would arise for consideration as sought to be canvased. - Decided in favour of assessee.
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2015 (3) TMI 100
India Development Bonds received from NRI's/Overseas Corporate Bodies as gifts - immunity provided to the bond holder u/s 6 and 7 of the Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 which includes that no enquiry to be made from bond holder, regarding the source, is also available to gifts, which are found to be bogus? - Held that:- Under clause (a) of sub-section (1) of Section 6 of the Act, the immunity would extend only against the disclosure of the nature and source of the investment in the bonds. The immunity would be available to an NRI or OCB who or which owns the bonds on the one hand and, on the other hand, to a resident of India to whom a gift of such bonds have been made by an NRI or OCB. The immunity would not be applicable where the gift is found not to meet the requirements spelt out in clause (a) of sub-section (1) of Section 6. The immunity in clause (a) is against a disclosure of the nature and source of the investment in such bonds; in clause (b) against enquiry or investigation on the ground that such person owns such bonds and in clause (c) against the reception in evidence of the fact that any of the persons mentioned in clause (a) owns such bonds, in any proceedings relating to an offence or the imposition of any penalty under the Acts in question. Thus the judgment of the Division Bench at Lucknow in Usha Omer (2011 (7) TMI 441 - Allahabad High Court ) would have to be read down so as to confer an immunity only on compliance with the conditions of Section 6 and to the extent legislated, as explained in answer to Question-A above. - Decided against assessee.
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2015 (3) TMI 99
Effect of non consideration of the application for registration within the time fixed by Section 12AA(2) - Whether would be deemed grant of registration? - Held that:- As relying of Sheela Christian Charitable case [2013 (3) TMI 268 - MADRAS HIGH COURT] wherein held that the Tribunal was not right in holding that the failure to pass an order in an application under Section 12AA within the stipulated period of six months would automatically result in granting registration to the trust. Non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA (2) of the Income Tax Act 1961 would not result in a deemed grant of registration and the judgment of the Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment [2008 (4) TMI 700 - ALLAHABAD HIGH COURT] does not lay down the correct position of law. - The appeal shall now be placed before the regular bench in accordance with the roster for final disposal in terms of the questions so answered - Decided against assessee.
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2015 (3) TMI 98
Suppression of sales - aggregate of sales in the annexure produced before the AO did not tally, both in the number of purchasers and the amounts paid as per AO - ITAT deleted addition - Held that:- CIT (A) as well as the Tribunal have concurrently found that there was a clerical mistake in accounting and recording of sale to BARC in the subject assessment year even though it pertains to the following Assessment Year. This mistake was not only evident from the date of the invoices produced before the authorities but also from the fact that the aforesaid sale was taken into account in the Respondent Assessee's sales for the following Assessment Year. The aforesaid finding being pure finding of fact does not raise any substantial question of law. Therefore, no interference of this Court, is warranted. - Decided in favour of assessee. Unaccounted advances - Tribunal remanding back the issue of verification of the advances to the file of the CIT(A) when it had noted that the CIT(A) had passed a perverse order by allowing a claim where the assessee was not in a position to produce evidence - Held that:- The impugned order after recording a finding that the conclusion was arrived at by the CIT(A) was without proper consideration, restored the issue to him for fresh consideration. We do not see any prejudice being caused to the Respondent Assessee if the matter has been restored to the CIT(A) for fresh consideration. No substantial Questions of law. - Decided against revenue
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2015 (3) TMI 97
Total income reduced below the Returned Total income by ITAT - Held that:- A.O. has estimated the total income at ₹ 10,12,289/-. During the assessment year under consideration, the assessee has shown gross profit @0.5% on the total turn over. It also appears from the record that in the earlier years, the Department had accepted the turn over @ 0.6%. But the fact remains that during the assessment year under consideration, the quantum of turn over was higher so the Tribunal has rightly observed that the gross profit shown by the assessee @ 0.5% is justifiable. From the above, it is clear that addition was made on estimate basis. Needless to mention that the estimation is a question of fact which is based merely on guess work and addition on estimate basis is not sustainable. The issue involved in this appeal is a question of fact, which was rightly decided by Tribunal. - Decided in favour of assessee.
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2015 (3) TMI 96
Unexplained gold ornaments - CIT(A) concluded that AO was not justified in treating the gold ornaments, belonging to the family diety and purchased by Shri Chandra Prakash, as unexplained investment - Held that:- The facts mentioned by the Commissioner of Incometax as noticed and also the averments contained in the memo of appeal indicate that necessary opportunity was allowed to the Assessing Officer to meet the stand of the assessee about the ornaments purchased by Shri Chandra Prakash. AO was not justified in not accepting the explanation of the appellant in respect of gold ornaments weighing 241 grams, which the appellant had claimed that the same belonged to the family diety. In fact, at the time of search also such gold ornaments were there on the family diety and the same were also not seized. The family deity is quite old and it seems the custom of appellant's family. The AO was also not justified in drawing adverse inference in respect of gold ornaments weighing 150 grams purchased by Sh. Chander Prakash in respect of whom proceedings u/s 148 were already initiated. - Decided in favour of assessee.
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2015 (3) TMI 95
Higher deduction of Tax (TDS) by the employer u/s 192 from salary - Eligibility to claim deduction u/s 80C (2) (xviii) - house that was constructed using the loan was in the joint names of the petitioner and his wife - assessee sought a direction to the respondents to assess the petitioner for income tax only after deducting the monthly instalments recovered from the salary of the petitioner towards housing loan repayment. - Held that:- Whatever may be the treatment given to the claim for deduction in the assessment of the petitioner under the Income Tax Act, in the writ petition, the grievance is with regard to the deductions effected by the employer in terms of the Income Tax Act, while effecting payments to the petitioner by way of salary. The said deductions, by way of tax deducted at source, are made by the employer pursuant to his obligation under the Income Tax Act and, whatever tax is deducted at source is credited to the account of the Income Tax Department and the said payments would be given credit to while completing the individual assessment of the petitioner. In that view of the matter therefore, if any amount has been deducted in excess from the payments effected to the petitioner, the petitioner is not seriously aggrieved because he would get credit of the same in his assessment under the Income Tax Act. Thus, while see no reason to grant any relief as sought for by the petitioner in the present writ petition and therefore, dismiss the same, make it clear that, if any deductions have been effected by the employer by way of tax deducted at source under the Income Tax Act, and the amounts credited to the Income Tax Department, then the Department shall take this fact into account while completing the assessment of the petitioner under the Income Tax Act. In the said assessment of the petitioner, if it is found that excess amounts have been deducted from the payments made to the petitioner, which are in excess of his tax liability under the Income Tax Act, then the excess amount of tax collected from the petitioner, shall be refunded to him. - Decided against assessee
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2015 (3) TMI 94
Sale of bagasse to sister concern - sale at lower rate in comparison to market rate - Tribunal upholding the order of CIT (A) in deletion the addition - Held that:- An agreement with the sister concern at the beginning of the accounting year at consistent rate on which bagasse was sold, throughout the year does not require any interference. Since the rates were fluctuating throughout the year and that the continuous supply of bagasse had to be maintained for producing electricity, the agreement to the sister concern at consistent rate of ₹ 10/- as against the fluctuating market rate of ₹ 7.65 to ₹ 23, the price of ₹ 10/- per qtl. was not unreasonable and thus the agreement between the assessee and M/s U.P. Straw Board Project Pvt. Ltd. was not unreasonable or unjustified. We have upheld the finding of ITAT as finding of fact. - Decided in favour of assessee. Depreciation on tubewell - Tribunal upholding the order of CIT (A), who directed to treat tubewell as a plant - whether the Tribunal was right in law in failing to allow investment under Section 32A of the Act on canteen equipment and water coolers having failed to appreciate that these items are also plant and machinery? - Held that:- So far as factory cleaning machines are concerned, the Tribunal has upheld the view of the CIT(A) and also noted that the investment allowance had been granted on such items in the earlier years. The AO's order has not discussed this issue. The reasons given by the Department for not granting investment allowance is clearly erroneous and the Tribunal was right in directing the ITO to allow investment allowance on calculators for the year 1979-80 and factory cleaning machines for the asst. yr. 1980-81. - Even if sugar mill is not water intensive industry, we cannot visualise that industry can run without water. The water drawn from tubewell may be stored in tanks. The water is essential for the purposes of various processes involved in manufacture of sugar and its byproduct such as molasses and bagasse. It cannot be said that use of water is not necessary for manufacturing of sugar. In the circumstances, we hold that the tube well including its machinery and building would be used for the purpose of business or profession would fall within the definition of word 'plant' and on which depreciation would be allowed under Section 32 (1) of the Act. - Decided in favour of the assessee Deduction being receipt on account of extra sale price realized on sale of sugar in open market out of levy quota - Tribunal alowed claim - Held that:- Question is covered by the judgment in CIT v. Ponni Sugar and Chemical Ltd., (2008 (9) TMI 14 - SUPREME COURT ) and CIT v. Kisan Sahkari Chini Mills Ltd., (2009 (5) TMI 72 - ALLAHABAD HIGH COURT) and is decided in favour of the assessee Non admissibility of depreciation on revalued of asset for the purpose of computation of income u/s. 115J - Held that:- As relying on CIT Bareilly v. Rampur Distillery and Chemicals Ltd., [2013 (1) TMI 59 - ALLAHABAD HIGH COURT] decided in favour of the assessee
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2015 (3) TMI 93
Benefit of Article 22 of DTAA between India and Switzerland - taxability of the profits from the operation of ships in international traffic earned by the assessee in India - Whether the property in respect of which international shipping income was received by the assessee company through shipping business carried on in India through the P .E. situated therein i.e. ships was effectively connected with such permanent establishment? - Held that:- Article 22(2) brings profits of the PE within the scope of Article 7 only if the relevant income of the PE arises from a right or property effectively connected with such relevant income of the PE arises from a right or property effectively connected with such PE which necessarily refers to the ship itself as the property which generates the income is the ship. In the circumstances when the ships clearly do not form part the assets of the PE in India but are the assets of the non-resident shipping company abroad, the same cannot be said to be effectively connected to such PE. Where the ships are owned or chartered by the non-resident shipping company abroad and the agency PE merely clears inbound cargo and books outbound cargo and carries out similar functions, the ships are clearly not the assets of the PE nor are they any other way effectively connected with the PE. Thus concluded that the provisions of Article 22(1) of the treaty would be applicable and the profits of shipping operations in international traffic in the case of non- resident shipping company would be taxable in the country of residence i.e. Switzerland and not in India. - Where the ships are owned or chartered by a non-resident shipping company and the agency PE merely clears inbound cargo and books outbound cargo and carries out similar ancillary functions, the ships are clearly not the assets of the PE nor are they is some other way effectively connected with a permanent establishment. - Decision in the case of Assistant Director of Income-tax, (International Taxation) -3(2) Versus Mediterranean Shipping Co. [2012 (11) TMI 326 - ITAT MUMBAI] followed - Decided in favour of assessee. Interest income received from the Income Tax Department on refund as per the Article 11 of the Indo-Swiss Treaty - CIT(A) directing to tax @ 10% - Held that:- Respectfully following the ratio laid down in ACTI Vs. Clough Engineering Ltd. [2011 (5) TMI 562 - ITAT, DELHI] that refund of income-tax is taxable under Article 11 i.e. @10% - Decided against revenue. Charging of interest u/s 234B - Held that:- This ground is also covered by the decision of Hon’ble Bombay High Court in the case of NGC Network LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT). It has also been brought to our notice that in assessee’s own case, the Tribunal in A.Y. 2007-08 as decided this issue in favour of the assessee which has been confirmed by the Hon’ble High Court also. - Decided against revenue.
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2015 (3) TMI 92
Transfer pricing adjustment - selection/rejection of comparables - Held that:- For Infosys BPO Ltd. contentions with regard to the brand value and brand building exercise, having huge asset base, can be considered to arrive at the conclusion that Infosys is functionally not similar to that of assessee. Infosys BPO stands on its own as an exclusive BPO of the Infosys Technologies and in earlier years, generally Infosys BPO is excluded in many of the cases. Therefore, we direct the Assessing Officer/TPO to exclude this company. Genesys International Ltd. - Respectfully following the decision of Mercer Consulting (India) (P.) Ltd. [2014 (10) TMI 467 - THE ITAT DELHI] there is vast difference between the functions of the above company and that of assessee. This company as such, cannot be treated as comparable on FAR analysis. Eclerx Services Ltd. - As seen from the Annual Report, the above company is involved in diverse nature of services and there was no segmental data for diversified service port folio. Moreover this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee s services. We therefore, direct the Assessing Officer/TPO to exclude this company. Cosmic Global Ltd. - Respectfully following the decision of Mercer Consulting (India) (P.) Ltd. [2014 (10) TMI 467 - THE ITAT DELHI] this company cannot be treated as comparable on FAR analysis. Acropetal Technologies Ltd. (Seg.) - As seen from the Annual Report, this company is involved in engineering design services and has products also, which makes it functionally not comparable. Even at the segmental level, it provides engineering design services, which was considered as high end by the coordinate bench of the Tribunal in the case of Hyundai Motors India Engineering (supra) in earlier year. Therefore, we are of the opinion that this company cannot be selected as a comparable. We accordingly direct the Assessing Officer/TPO to exclude this company. Accentia Technologies Limited. - Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (2014 (10) TMI 467 - THE ITAT DELHI), which indicates that the TPO therein has excluded it at the outset. Allsec Technologies Ltd. - On a perusal of the annual report of company it is seen that during the relevant FY, it has acquired a company. Further, it is clear that company has made losses and it is not clear whether loss is on account of acquisition or not. Moreover, the Tribunal has been consistent in its view that a company in the year of acquisition cannot be treated as a comparable. Accordingly, we uphold the rejection of the aforesaid comparable. Cepha Imaging Pvt. Ltd - Considering the functionality of the company and following the observations made by Delhi Bench of the Tribunal in case of Mercer Consulting Pvt. Ltd. (2014 (10) TMI 467 - THE ITAT DELHI) held the aforesaid company as uncomparable to assessee. As ld. AR has failed to bring any material to contradict the aforesaid finding of the coordinate bench, we are inclined to follow the decision of the coordinate bench in upholding the view of the TPO - we uphold the rejection of the aforesaid comparable. Determination of ALP of management fees and licence fee paid to AEs at Nil - Held that:- TPO went beyond his jurisdiction in denying the payment out-rightly, whereas, his role is limited to determining the ALP. In the guise of determination of ALP, the TPO cannot question the business decision of payment and determine that no services were rendered. In that view of the matter, the direction of the TPO cannot be upheld at all. While determining the PLI, payment of management fees is also considered as an expenditure. In that sense, even after paying the management fee at 4%, the profit level indicator is more than the comparable cases. Therefore, assessee s transactions are deemed to be at arm s length. Considering that also, denial of management fees is not proper on the part of the TPO/ Assessing Officer. Considering the above, we are of the opinion that the action of the TPO in determining the ALP at NIL is not according to the provisions of law and also on facts. Though, in principle we agree with assessee that determination of ALP at Nil and denial of management fee is not correct, we remit the issue back to the file of the AO/TPO to determine the quantum of management fee and licence fee with reference to agreement between the parties. - Decided in favour of assessee for statistical purposes. Non-consideration of provision for bad and doubtful debts in computation under TNMM for certain comparables - Held that:- Bad debts and provision for bad and doubtful debts are part of the operating expenses and be included for the purpose of computing profit and loss of comparable companies as relying on Kenexa Technologies Pvt. Ltd. Vs. DCIT [2014 (11) TMI 587 - ITAT HYDERABAD] - Decided in favour of assessee Risk adjustment - Held that:- As risk adjustment has to be quantified on certain scientific basis, it cannot be granted in a routine manner by fixing certain percentage on adhoc basis. It is for assessee, to demonstrate risk assumed by each of the company vis- -vis assessee and quantify the allowance to be made in that regard. As assessee has not undertaken any such exercise, at this stage, we cannot direct AO/TPO to allow risk adjustment at a certain percentage on a purely estimate basis. Remit this issue back to the file of AO for considering afresh Nonconsideration of revised computation of income filed by assessee claiming deduction u/s 10A - Held that:- When assessee has filed revised computation along with certificate in Form 56F, AO should have verified correctness of assessee s claim instead of discarding it at the threshold. - Decided in fvaour of assessee for statistical purposes. Disallowance of expenditure on software licence fee - Held that:- In the present case, assessee has not brought any material on record to establish that by applying the functional test, the expenditure can be said to be of a revenue nature. Moreover, after 01/04/2003 computer software has been specifically brought into the schedule at par with computer as far as eligibility of depreciation is concerned. Therefore, after 01/04/2003, computer software in the nature of application software and not mere licence for renewal have to be treated as capital assets eligible for depreciation at the same rate as of computer. Therefore, expenditure incurred for acquiring such asset will be capital expenditure. However, we accept ld. AR s alternative contention that depreciation should be allowed at 60%. As per the new appendix applicable from AY 2006-07, depreciation on computer and computer software is to be allowed at 60%. As AO has not brought any material on record to show that computer software acquired by assessee is not in the nature of software as mentioned in the appendix, in our view, AO is not justified in allowing depreciation at 25%. We, therefore, direct AO to allow depreciation on the computer software at 60%. - Decided partly in favour of assessee. Disallowance of depreciation - asset not used for the purpose of business - Held that:- While we uphold the view of AO that the amount cannot be written off till it exists in the block of assets, but at the same time, we are of the view that if depreciation is allowed in the preceding years on such assets and it still forms part of the block, depreciation cannot be disallowed in the impugned AY. Accordingly, we remit the issue back to the file of AO for deciding afresh after verifying facts. - Decided in favour of assessee for statistical purposes. TDS credit - Held that:- As can be seen, DRP has specifically directed AO to allow TDS credit as per form 26AS. Considering the aforesaid fact, we remit this issue to the file of the AO with a direction to allow TDS credit to assessee as per Form 26AS - Decided in favour of assessee for statistical purposes. Wrong calculation of interest u/s 234D on the excess refund issued u/s 143(1) - Held that:- Remit this issue back to the file of AO for deciding afresh after considering the submissions of assessee and verifying the evidences produced before him - Decided in favour of assessee for statistical purposes. Adoption of foreign exchange gain/loss as operating income/loss - Held that:- Having considered the submissions of the parties and perused the materials on record and reying on case of Foursoft Ltd. [2008 (9) TMI 919 - ITAT HYDERABAD], we do not find any infirmity in the order of DRP holding that foreign exchange gain/loss has to be treated as part of operating income/loss. - Decided against revenue.
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2015 (3) TMI 91
Income claimed exempt under Section 10(23G) - assessee is a scheduled bank and carries on banking business - Held that:- Before us, the limited request of the learned counsel for the assessee was hat the necessary approvals from the CBDT is available and will be provided to the Assessing Officer. He prayed that the order of the Assessing Officer may be set aside and the assessee allowed opportunity of providing the necessary approvals for grant of exemption u/s.10(23G) of the Act. It would be just and appropriate to set aside the addition made by the Assessing Officer in this regard and allow opportunity to the assessee to produce the required certificate which will enable the assessee to claim exemption u/s.10(23G) of the Act. - Decided in favour of assessee for statistical purposes. Revenue expenditure claimed on account of software expenses - Held that:- Respectfully following the decision of the Tribunal for A.Y. 2004-05, we hold that expenditure incurred on purchase of software should be allowed as revenue expenditure. - Decided in favour of assessee. Amortization of investments under HTM category - Held that:- Issue requires to be examined by the AO afresh in the light of the ultimate decision on the claim of assessee for deduction for amortisation of investments in A.Ys. 2001-02, 2002-03 and 2003-04. If, consequent to appellate orders, amortisation is allowed as deduction in those assessment years, then the assessee will not be entitled to claim deduction in the present assessment year, which is stated to be the year in which the securities were sold. The AO is therefore directed to verify this aspect and consider the claim of assessee afresh, after affording the assessee an opportunity of being heard. - Decided in favour of assessee for statistical purposes. Expenditure incurred on Employee Stock Options (ESOP) disallowed - Held that:- As relying on order of Tribunal for A.Y. 2004-05. in assessee's case wherein the claim of the assessee for deduction has to be allowed in principle it would be just and appropriate to direct the AO to consider the claim of assessee for deduction afresh - Decided in favour of assessee for statistical purposes. Provision for salary arrears disallowed - Held that:- The estimate made by the assessee is reasonable and the assessee has written back the excess provision. In these circumstances, we are of the view that the claim of the assessee for deduction has to be allowed as it cannot be said that the liability in question is a contingent liability. - Decided in favour of assessee Interest paid to MMRDA disallowed - Held that:- Liability to pay interest crystallized only during the previous year and can be considered for allowance in A.Y. 2005-06. Payment of interest in respect of capital borrowed for acquiring assets to carrying on of business must be regarded as revenue expenditure in commercial practice and should not be termed as capital expenditure as relying on Bombay Steam Navigation Co. Pvt. Ltd case [1964 (10) TMI 12 - SUPREME Court] . Reliance placed by the ld. DR on Explanation 8 to section 43(1) of the Act is not applicable for the reason that the asset involved in the present case is a land, which is not a depreciable asset. Section 43(1) of the Act defines cost of acquisition of capital asset for the purpose of allowing depreciation. Also to be noticed that the deposit of the balance lease premium by the assessee in the IDBI Bank, pursuant to the directions of the Bombay High Court pending disposal of the writ petition filed by the assessee, yielded interest income which was duly offered by the assessee to tax. All the cumulative facts and circumstances clearly go to point out that expenditure in question was revenue expenditure and it has to be allowed as deduction in computing total income. - Decided in favour of assessee Claim of unamortized premium paid on change in the method of accounting disallowed - Held that:- legally assessee has a right to change the method of accounting that it was adopting. The requirement of law is that change in method of accounting should be bonafide and should be consistently followed after the change by the assessee. In the present case, as we have already seen, the AO did not assign any reason for rejecting the claim of assessee for deduction. The CIT(A), on the other hand, was of the view that there were no justifiable reasons for change in method of accounting. In our view, the reasons assigned by the revenue authorities for rejecting the claim of assessee are without any basis. As has been observed by the Hon'ble Supreme Court in the case of Bilahari Investments Pvt. Ltd. (2008 (2) TMI 23 - SUPREME COURT), the department has to show that change in method of accounting results in distortion of profits. In the absence of such a finding, it has to be necessarily concluded that the change of accounting is revenue neutral. We are of the view that change in method of accounting is bonafide. We therefore hold that the claim of assessee deserves to be accepted - Decided in favour of assessee. Diminution in value of investment under AFS/HFT categories - CIT(A) deleted addition - Held that:- CIT(A) was correct to as concluded the Assessee is entitled to value all the investments, which are part of the trading stock at cost price or market value, whichever is lower under section 145 of the Act. Therefore, the total depreciation in respect of the investment amounting to ₹ 16,99,68,583/- was claimed and that the AO was not correct in adding back the appreciation. - Decided in favour of assessee. Broken period interest - CIT(A) deleted addition - Held that:- The assessee has been following the method of offering interest on securities to tax on receipt basis on maturity and the same has been accepted by the revenue in the past. In view of the aforesaid decision, we are of the view that the order of the CIT(A) does not call for any interference. - Decided against revenue.
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Customs
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2015 (3) TMI 120
Concessional rate of duty under Notification No. 21/2002-Cus (Sl. No. 20) - mis-declaration of re-rolling scrap - confiscation of the same under Section 111(d) & (m) of Customs Act, 1962 - Held that:- Original adjudicating authority held the goods to be re-rollable scrap based only on the opinion of custom authorities who examined the goods. No expert opinion was obtained. As against that, the Commissioner (Appeals) has based her findings on several documentary evidences as mentioned earlier, including the pre-shipment inspection certificate which clearly certified the goods to be heavy melting steel scrap. In a dispute involving Custom, the Revenue s argument that examination report by Customs officers should be accepted without any other supporting evidence defies even the most basic jurisprudential principles. It is also seen that in the discussion and finding portion of the primary order there is not even a word about enhancing the value, leave alone basis for doing so. Thus enhancement of value is devoid of sustainability. - entire documentary evidences on record reflect upon the fact that the imported goods were nothing but heavy melting scrap and there being no expert opinion to conclude against the appellant, we extend the benefit to them and set aside the impugned order. - Decided against Revenue.
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2015 (3) TMI 119
Refund of SAD - Notification No. 102/2007-Cus dated 14/09/2007 - Appellant failed to make any endorsement in the commercial invoices issued for the domestic sale that "no credit of SAD of Customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, shall be admissible" - Held that:- As is evident from the domestic sale invoices, there is no mention anywhere in those invoices of the SAD paid by the importer. Further, there is no registration number of the appellant as a cenvatable dealer mentioned in those invoices. Therefore, in terms of the Rule 9 of the Cenvat Credit Rules, 2004, the tax invoices issued by the appellant is not a cenvatable document(s) at all and hence, no credit of any import duty paid by the appellant can be taken on the strength of these invoices, notwithstanding the non-making of endorsement in this regard on the documents. Thus, the issue involved herein is squarely covered by the decision of the Larger Bench cited [2014 (8) TMI 214 - CESTAT MUMBAI (LB)]. - Decided in favour of assessee.
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2015 (3) TMI 118
Denial of refund of pre deposit - Penalty waived by Tribunal [2013 (7) TMI 80 - CESTAT MUMBAI] - Held that:- It is observed that Revenue has retained the pre-deposit amount for more than 2 years after passing of the final order of this Tribunal for no reason. The Revenue neither filed an appeal against this Tribunal order nor obtained any stay, therefore, it is clear case of harassment to the assesse that the legitimate claim of the applicant has not been granted. Therefore, the Commissioner (Export), JNCH, Mumbai is directed to dispose of the claim of the applicants within a period of 1 month from the date of receipt of this order - Decided in favour of assessee.
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2015 (3) TMI 117
Valuation - Modification and audit by proper officer under Section 17(6) - goods have been assessed by the assessing officer though without passing a speaking order - Held that:- Respondent M/s I-Tech Corporation imported HSS Drills 6840 Kgs, Taps 3000 Kgs, Rounds 1850 Kgs, Broaches 540 Kgs, Cutters HSS 300 kgs, Blades 70 kgs, and Tool Tips 1950 kgs and declared the transaction value as per the invoice. However, the assessing officer enhanced the transaction value by re-determining the same and duty was paid on the enhanced value. Aggrieved by the assessment order, the appellant filed an appeal before the lower appellant authority on the ground that the value was enhanced without giving any speaking order and principles of natural justice have been violated and there is no basis whatsoever to dispute the value declared. Therefore lower appellate authority after considering provisions of Section 17(6) of the Customs Act ordered for auditing of the records of the importer as per the procedure prescribed. - fact on record is that no speaking order has been passed when the value was enhanced and assessment was finalized and therefore, provisions of Section 17(6) are clearly attracted. Therefore, we do not find any infirmity in the order passed by lower appellate authority. Consequently, the same does not call for an interference. - Decided against Revenue.
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2015 (3) TMI 116
Waiver of pre deposit - Valuation of goods - Penalty Section 112 (a) and read with Section 114A - Held that:- Declared price of the imported goods, which are brass items, is less than the value of brass scrap during the period of dispute. This fact casts serious doubts about the declared transaction value. Moreover the imports are from a trader and not from a manufacturer and the invoices regarding the price at which the goods were purchased by the supplier from the manufacturers have not been produced. In view of this, we hold that the appellant have not been able to establish prima facie case in their favour and as such the amount of ₹ 1,16,487/- paid by the appellant during investigation is not sufficient to safeguard the interest of the Revenue. The appellant, therefore, are directed to deposit an amount of ₹ 5,00,000 alongwith appropriate interest in addition the amount already paid by them within a period of six weeks from the date of this order. Compliance is to be reported on 23rd February, 2015. On payment of this amount within the stipulated period, the requirement of balance amount of duty demand, interest thereon and penalty shall stand waived and recovery thereof stayed. - Partial stay granted.
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Corporate Laws
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2015 (3) TMI 115
Application for amalgamation under Section 391(2) to 394 of the Companies Act, 1956 - The Regional Director observations regarding compliance of Section 117 & Section 394 of Companies Act ,2013 and Treatment of asset & liabilities with compliance of AS-14 issued by ICAI It is submitted that commercial production of the transferor company has not been started and no profit and loss account has been drawn till date and also the company does not have any reserve and surplus in the balance sheet. It is also submitted that since the share exchange ratio is fixed at 1:1, no surplus shall arise post amalgamation. However it is submitted, surplus, if accrues, shall be transferred to capital reserve and the scheme shall be amended accordingly as may be directed by this Court. According to the learned counsel for the petitioners, the observation made in paragraph 2(a) of the affidavit filed by the Central Government as regards complying with the provision of Section 117 of the Companies Act, 2013 and filing of form MGT-14 is concerned, the same are not required since Clause 25 of the Articles of Association of the transferee company specifically states that the share capital can be altered by passing any Ordinary Resolution. It is further submitted for the petitioners that as stated in Clause 10.1 of the scheme of amalgamation, the authorized share capital of the transferee company shall automatically stand increased without any further act, instrument and deed on the part of the transferee company I find that observations of the Regional Director, Company Law Board, Eastern Region, Ministry of Corporate Affairs made in paragraph 2(a) of their Affidavit i.e. compliance of Section 117, are unnecessary and therefore on this aspect the submissions made by the learned counsel for the petitioners are accepted. It is held that compliance with provisions of Section 117 of the Companies Act, 2013 and filing of e-form MGT-14 are not required. -Scheme of Amalgamation approved.
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2015 (3) TMI 114
Application for proposed Scheme of Arrangement under Section 391 & 394 of the Companies Act, 1956 - Objection from Income Tax Authorities - Addition of income matter pending with CIT(A) - Allow to collect future demand from the new companies - Held that:- It is directed that Income Tax Department is permitted to restrain its resource for recovery of any existing or future tax liabilities of Demerged or Resulting Companies, under the proposed scheme irrespective of the sanction of the Scheme. The sanction of the Scheme would not affect the powers of the Income Tax Department for recovery, including imposition of penalties etc. as permissible under law, irrespective of the sanction of the scheme.It is clarified that the approval of the Scheme, would in no manner affect the tax treatments of the transactions under the Income Tax Act, 1961 or any other applicable taxing statute, nor would the sanction of the Scheme serve as a defence for the petitioners against tax treatment under the above mentioned statutes. In view of the approval accorded by the Shareholders of the Petitioner Company; representation/reports filed by the Regional Director, Northern Region, attached with this Court to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956.- Scheme of arrangement approved.
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2015 (3) TMI 90
Matter of Substitution - Assignment of debts - Activity permissible under the Banking regulations Act,1949 - Held that:- Having heard learned Senior Advocates for the parties and having gone through the entire records of the case, we are of the opinion that the issue of substitution has already been considered and concluded by the Apex Court in ICICI Bank Limited [2010 (9) TMI 236 - SUPREME COURT OF INDIA] as observed in the foregoing paragraphs. Therefore, so far as the other issues which are kept open by the Apex Court and for which the matters are remanded to this Court, considering the interests of both the sides, we remand the matter to the learned Company Judge and deem it fit to keep the matter open at large before the learned Company Judge permitting the parties to raise contentions after completing pleadings. The issues other than substitution shall be allowed to be raised before the learned Company Judge. The learned Company Judge shall decide the issues afresh keeping in mind the pleadings and recent law developed on the subject. It is made clear that the issues, if at all raised by either side shall be decided by the learned Company Judge along with final hearing of the Company Petition. - Appeals are partly allowed.
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Service Tax
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2015 (3) TMI 138
Denial of refund claim u/s 11B - SEZ - assessee claimed refund of service tax paid thereon under Notification No.9/2009-ST dated 3rd March, 2009, as amended by Notification No.15/2009-ST dated 20th May, 2009 - Department was of the view that the services consumed within the SEZ are exempt from tax. Hence, no refund can be claimed on such exempt input services under the Notifications - Maintainability of appeal - Held that:- As per Rule 31 of the Special Economic Zone Rules, 2006, the appellants are entitled for exemption from payment of service tax on the services which are used or provided for a unit in the SEZ. The Tribunal referred to section 51 of the SEZ Act, 2005 and held that these provisions prevail over the provisions contained in any other law for the time being in force. It is the avowed policy objective of the Government of India that exports should not bear the burden of taxes. If this policy objective has to be sub-served and the objective realized, broader view of the provisions relating to refund has to be taken. Therefore, even if the appellants were not eligible for refund under Notification No.9/2009-ST, the appellants were clearly eligible for refund under section 11B of the Central Excise Act, 1944. Therefore, the rejection of service tax refund is not sustainable in law. Clause (c) of explanation to section 35E(5) reveals as to how it covers a case of the goods being excisable at all or whether the rate of duty of excise on any goods is nil. This clause is an aid or guide with the assistance of which we can decide as to whether any question has a relation to the rate of duty of excise as appearing in section 35-G(1) of the Central Excise Act, 1944. - Preliminary objections are upheld - Appeal are not maintainable - Decided against Revenue.
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2015 (3) TMI 137
Denial of input service credit - benefit under Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that:- The reliance of Maruti Suzuki (2009 (8) TMI 14 - SUPREME COURT) by the learned A.R. has no relevance to the facts of the appeals in question as in the case of Maruti Suzuki Ltd. (supra), CENVT credit is available on "inputs" and here we are discussing about the "input services". However, I find that the insurance cover on employees and on their dependents have no relation to the business activity of the appellant. Therefore, I do agree with the contention of the learned A.R. that the credit availed on the service tax paid on the "insurance service" is not admissible. For the rest of the services, I hold that the appellant is entitled for input service credit as per the judgment of the Ultra Tech Cement Ltd. Accordingly, I allow input service credit on all the services availed by the appellant in the course of manufacture except on insurance cover on the employees and on their dependents. - Decided in favour of assessee.
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2015 (3) TMI 136
Quntification of refund claim - Commissioner (Appeals) has taken a view that input services on which the refund of service tax has been claimed have been said to have nexus with the output services and has remanded the matter to the original authority for re-quantification with a direction to the lower authority to re-examine the rejected eligible input service - Held that:- in all these cases, the matters have been remanded only for quantification of the refund amount and payment. The original authority according to the appellants had rejected the claims on the ground that there was no nexus between input services and output service and therefore he had not considered the quantum of refund admissible. In any case, the original authority can alone issue a cheque after quantification. Therefore, the matter will have to go back to the original authority for issue of cheque after sanction of refund. That being the position, in this case, even if the Commissioner does not have the power to remand, in our opinion since the Tribunal has the power, we can exercise such power and hold that the remand direction can be sustained and the matters can be treated as remanded by the Tribunal - Decided against Revenue.
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2015 (3) TMI 135
Convention Services - Outdoor Catering Service - Penalties under Sections 76, 77 and 78 - Held that:- The demand is for the convention service. As per the provisions of Section 65 (32) of the Finance Act, the 'convention' means as a formal meeting or assembly which is not open to the general public, but does not including a meeting or assembly, the principal purpose of which is to provide any type of amusement, entertainment or recreation and as per the provisions of Section 65 (76a) of the Finance Act, 1994, "outdoor caterer" means a caterer engaged in providing services in connection with catering at a place other than his own. In the present case, there is evidence on record to show that the appellants are giving the Banquet hall to organize, marriage functions, get togethers, birthday parties etc. It is also evidence on record to show that the appellants are providing taxable services. Keeping in view, we find that there is no infirmity whereby the demand is confirmed in this regard. In respect of penalty imposed under Section 78 of the Finance Act, 1994 we find that the lower authority has imposed a penalty equivalent to twice amount of service tax which is in the given circumstances is harsh. Therefore, the penalty under Section 78 is reduced to equal amount of service tax confirmed - Decided partly in favour of assessee.
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Central Excise
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2015 (3) TMI 130
Denial of MODVAT Credit - Rejection of the assessee's application for the permission can be granted to store the goods outside the godown - Held that:- Manufacture shall not take credit after six months of the date of issue of any document. The assessee applied for permission to store the inputs used outside the factory permission. This application was rejected subject to the condition that the assessee could bring in the goods in smaller lots and take credit on the receipt of the last and final lot. Based on this direction, the assessee brought the goods in smaller lots spaced over a period of time and the last and final lot apparently was brought after the expiry of six months - when certain goods based on the invoice was received during the period of six months but the last and final lot was received after the period of six months, we are of the opinion that Rule 57D(6) now Rule 57G(2) of the Rules being procedural in nature does not dis-entitle the claim of the assessee for claiming Modvat credit. In the absence of any deliberate delay, coupled with the fact that the transaction executed by the assessee, being a bonafide one and, based on the direction of the Superintendent, Central Excise dated 8th February, 1995, the assessee, in the instant case, was entitled for Modvat credit. The Trade Notice No.67 of 1996 clarifies such peculiar circumstances - applicant-assessee was entitled to the Modvat credit based on the letter of the Superintendent, Central Excise Range, Hapur dated 8th February, 1995 - Decided in favour of assessee.
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2015 (3) TMI 129
Availment of CENVAT Credit - Penalty u/s 11AC - Suppression of facts - benefit under Section 11A(2B) - Held that:- Admittedly there is no contumacious conduct or fraud on part of the appellant and further the appellant has paid the duty with interest under intimation before the issue of show-cause notice. As they have deposited the tax and interest in question on 17.12.2009, whereas the show-cause notice was issued on 27.4.2011 i.e. after more than 18 months of such deposit and intimation given by the appellant. Thus, I hold that the appellant is entitled to the benefit under sub-section 2B of Section 11A of the Central Excise Act. Thus, the appeal is allowed in favour of the appellant and impugned order is set aside. - Decided in favour of assessee.
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2015 (3) TMI 128
Clubbing of clearances - Imposition of penalty - Seizure of goods - Held that:- impugned order has fully taken into accounts the facts like unity of control, financial flow back, absence of manufacturing facility at M/s. CPMPL, common employees and office, and rent-free space given to M/s. CPMPL and after a detailed discussion supported by judicial pronouncements has clearly established the sustainability of the allegation that clearances of two units are to be clubbed as M/s. CPMPL was merely a dummy unit of M/s. CE. The adjudicating authority also established on sustainable basis that the brand name ‘Chirag’ did not belong to the appellants but actually belonged to others who have been mentioned by name in the impugned order. Mr. Praveen Parashar s application to get the said brand name registered in his name had not been approved. That the brand name happens to be the same as the name of a son in the family does not make the brand name belong to them. As M/s. CPMPL is found to be a dummy unit, the seizure and subsequent confiscation is also clearly sustainable as has been brought out by the adjudicating authority. As regards penalty on Mr. Praveen Parasher, it is seen that he is the proprietor of M/s. CE and therefore, as penalty on M/s. CE has been imposed, separate penalty on Mr. Praveen Parasher is not warranted. But in the present case, Mr. Praveen Parasher was the main person and was the master mind behind the whole modus operandi (beyond his role as proprietor) as has been clearly brought out in the impugned order. Therefore penalty on him is not only attracted but also warranted. Ms. Hemlata Parasher as Director of Mr. CPMPL knowingly participated in the entire modus operandi and she as Director allowed M/s. CPMPL to knowingly and willingly provide cover by pretending to be a SSI manufacturer though they did not have any infrastructure for doing so. So liability of Ms. Hemlate Parasher to penalty is not questionable. Adjudicating authority should have dealt with the appellants contention that the value of the traded goods and the goods exported are not includible for the purpose of computation of the impugned demand. Therefore, with the consent of the ld. AR, we waive the pre-deposit, set aside the impugned order and remand the case for de novo adjudication only for the limited purpose that the appellants contention that the value of the traded goods and the goods exported needs to be excluded for the purpose of computing the impinged demand should be considered with a view to (re) computing the demand and also penalties to the extent they (i.e. penalties) get impugned upon by the (re) computation of s demand. - Decided partly in favour of assessee.
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2015 (3) TMI 127
Cenvat credit - rent-a-cab service - air travel agent service - Held that:- appellant cites Board's Circular No. 943/4/2011-CX dated 29.4.2011 at serial No. 12, wherein the Board has clarified that the credit on rent-a-cab service shall be available if its provision had been completed before 1.4.2011. In respect of air travel agent service, the learned counsel states that this Tribunal in the case of Goodluck Steel Tubes Ltd. v. CCE, Noida, reported in [2014 (1) TMI 37 - CESTAT NEW DELHI] has held that the credit on the air travel agent service would be available. The learned counsel also states that the demand is pertaining to the period February 2007 to September 2010. - Decided in favour of assesse.
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2015 (3) TMI 126
Waiver of pre deposit - CENVAT Credit - Imposition of penalty - Malafide intention - Held that:- The double entries and system errors had not been detected by the Department they would have continued to enjoy the benefit of ineligible credit at the expense of the exchequer. We find that the irregular availment of the credit was continued about four years. It is difficult to accept that the system error continued for four years. The learned counsel submitted that during the four years, audit was conducted and they have not detected the defect. We are not impressed with the submission of the learned counsel for the reason that it is not the duty of the audit party to examine the system error. On the other hand, we are convinced with the finding of the Commissioner that the applicant is a large corporate house and they have not detected the system error for four years. Hence, the applicant failed to make out a prima facie case for waiver of entire dues. - Partial stay granted.
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2015 (3) TMI 125
Penalty u/s 11AC - shortages/adjustments recorded in the ER-1 return - Held that:- Entire issue relates to demand of duty on the shortages/adjustments recorded in the ER-1 return for the month of May, 2011 by the Appellant themselves. It is the claim of the Appellant that prior to levy of excise duty, shortages in the stock of Coal was noticed by their vigilance team and it continued till April, 2011.On the basis of second stock verification by their vigilance team, the final shortage figure was confirmed to be 11.76 lakh M.T. which they have adjusted in their books of accounts and reported accordingly in their ER-1 return. We find from the records that the Ld.Commissioner has arrived at a conclusion about removal of the said shortages in stocks on the basis of their declaration only. Now,the Appellant had produced a copy of CBI report, wherein, inter alia, discrepancy in the stock was found to be due to excess reporting in the earlier period by the officers of the Appellant. This fact in our opinion needs to be scrutinized along with other evidences on record and the evidences that would be produced by the Appellant. Therefore, in the interest of justice, it is appropriate to remit the case to the Ld.Commissioner - Decided in favour of assessee.
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2015 (3) TMI 124
Waiver of pre deposit - Penalty under Rule 26 - Held that:- In view of the amendment made under Section 35F of the Central Excise Act, 1944, I direct the appellants to deposit an amount of 7.5% of the penalty imposed on them by way of pre-deposit and on such compliance, the balance of penalty shall remained waived till disposal of the appeal - Partial stay granted.
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2015 (3) TMI 123
Availment of benefit of Notification No.4/2006-CE dt. 1.3.2006 (Serial No.91) as amended and payment of duty @ 4% w.e.f. 1.4.2010 on "White Duplex Board" - According to the Revenue, the applicants should avail benefit of exemption under S.No.90 of the said notification and therefore they have contravened the sub-section (1A) of Section 5A of the Central Excise Act - Held that:- Following decision of Sripathi paper and Boards Pvt.Ltd. Vs CCE Tirunelveli [2013 (11) TMI 1119 - CESTAT CHENNAI] - we waive predeposit of duty along with interest and penalty till disposal of the appeal. - Stay granted.
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2015 (3) TMI 122
Waiver of pre deposit - Whether the appellant is liable to pay central excise duty on the finished products manufactured by them lying in the factory destroyed during the course of violence by the employees and members of the public on 27/01/2012 - Held that:- Having regard to the fact that appellants had sought protection and had approached the High Court and as per the High Court directions, protection had been given and even on the day of violence they had filed many FIRs would show that appellants had done whatever they could do on a prima facie basis. If a huge crowd gathers, even police force cannot completely control such a crowd and prevent happenings in mob violence. Further the loss incurred by the company is much more than the loss to the Government in terms of Central Excise revenue. It has to be noted that appellants lost property worth more than ₹ 50 crores in the incident. Having regard to all these circumstances, we consider that appellant has made out a prima facie case for waiver of pre-deposit and stay against recovery - Stay granted.
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2015 (3) TMI 121
Remission of duty - Goods destroyed in fire - Reversal of CENVAT Credit - Held that:- Revenue is not disputing the fact of occurrence of fire and resultant destruction of t the goods either in the appellant’s factory or in the job workers factory. As a result, mere observation of the Commissioner that no reasonable steps were taken to avoid the fire cannot be appreciated inasmuch as nobody likes to invite fire resulting in destruction and loss of stock. As regards the destruction of the goods in the job workers factory admittedly the receipted goods were work-in-progress and were not the finished goods. Though I am of the view that such semi finished goods are also entitled to the remission of duty but even if the Commissioners' stand is accepted, no duty liability would arise in respect of semi-finished goods to duty of excise. It has to be kept in mind that the proceedings before the Commissioner were for remission of duty and not for demand of duty in respect of inputs sent to the job workers factory and non-receipt back in terms of provisions of Rule 16 B of the Central Excise Rules, 2002. As such, I find no merits in the impugned order of Commissioner which is set aside - Decided in favour of assesse.
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CST, VAT & Sales Tax
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2015 (3) TMI 134
Interest or penalty if there is an attempt to evade or avoid payment of tax- Adjustment of carried forward input tax credit - Whether Hon’ble Tribunal erred in deleting the liability of penalty and interest by permitting such adjustment of carried forward input tax credit - Held that:- It is not in dispute that the assessee had no surplus balance of input credit, which has been adjusted against the demand of tax upon reassessment. Under these circumstances, the element of avoidance of tax could be said as lacking. Consequently, the deletion of interest and penalty on the part of Tribunal could not be said as unjustifiable. In the event, when the issue is already covered by the above referred decision, we do not find that any substantial question of law would arise as sought to be canvassed. Following decision of STATE OF GUJARAT Versus JAY STEEL AND TUBES TRADERS [2015 (2) TMI 372 - GUJARAT HIGH COURT] - Decided against Revenue.
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2015 (3) TMI 133
Rectification of order - Extension of time - Pre deposit ordered - Held that:- Writ Petition under Article 226 of the Constitution of India cannot be filed only to seek such sympathetic and equitable reliefs. We do not think that the condition imposed is either unfair or in any way unreasonable and unjust. Therefore, the rejection of the Application by the impugned order dated 2nd December, 2014 need not be interfered with. - Upon taking instructions from the representative of the Petitioner present in Court, Mr. Patkar states that the sum as directed in the original order of the Maharashtra Sales Tax Tribunal at Mumbai would be deposited or payment made on or before 31st March, 2015. Purely to accommodate the Petitioners and in the light of their financial difficulties, we accept this statement of Shri Patkar made on instructions. If the amount directed by the Tribunal is deposited within this reasonable time, the Tribunal shall consider the Appeal of the Petitioners on merits and decided it in accordance with law. Noncompliance with our direction shall visit the Petitioners with all consequences permitted in law. - Petition disposed of.
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2015 (3) TMI 132
Detention of goods along with the truck - Failure to produce the proof of goods tax - Violation of principle of natural justice - no reason assigned for detention of goods under section 31(6) of the State Act - Inter state Sale or Intra state Sale - Held that:- In view of the findings recorded by the authorities that the goods were loaded at Faridabad and were within the State of Haryana at the time when they were intercepted and moreover when there were two sets of documents, i.e., invoice and GR dated November 23, 2007, the plea of the appellant that the destination of the goods was Bhiwadi outside the State of Haryana, had rightly been rejected by them. The findings of fact cannot be said to be perverse or erroneous in any manner, as the same were recorded not on the basis of the statement of the driver but on the basis of the preliminary enquiry conducted as noticed in the assessment order. In such a situation, no question of law much less substantial arises for consideration in this appeal - Decided against assessee.
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2015 (3) TMI 131
Imposition of the penalty for non-payment of sales tax pertaining to the parts used in the execution of the annual performance of maintenance contract - Bonafide belief of non payment - Held that:- In the decision of COFFEE BOARD, BANGALORE v. JOINT COMMISSIONER OF COMMERCIAL TAXES [1969 (10) TMI 58 - SUPREME COURT OF INDIA], it is held that when the amount of tax is paid by the assessee in advance for the whole year in the aggregate is less than the tax payable for the year or month as finally assessed being more than 15% is the difference in tax, a penalty which shall not be less than one and half of the tax so paid in short but not exceeding one and half times the amount by which the tax so paid falls short of the tax payable for the month or quarter or for the whole year, as the case may be, could be imposed after hearing the assessee. - It is not a case of payment of less tax. It is a case of nonpayment of tax in respect of the contract of FSMA and SSMA. The reason for nonpayment is, it forms part of the service to be rendered and tax is service tax and not the sales tax, for the value of the parts which are used in the services are declared and exemption is sought. The assessee is claiming exemption from 1992 - 93. However, the department is refusing to grant the exemption. - The assessee has gone upto the Supreme Court and it is only on 24.08.2005, the Supreme Court pronounced judgment holding the assessee liable to pay tax and clarifying the conflicts of it's own earlier judgments, which was the cause for bona fide doubts in the mind of the assessee in not paying the tax. Though the returns were filed for the year 2000 - 01, within the prescribed time, no assessment orders has been passed, till the passing of the judgment of the Supreme Court. The assessment order was passed on 21.03.2006, immediately the payment is made. Therefore, this nonpayment of tax along with the returns or at the end of the financial year cannot be said to be willful, deliberate or contumacious and that the assessee was acting deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. This aspect has been completely missed by the authorities while exercising the powers of imposing the penalty. It is settled law that penalty cannot be imposed merely because it is lawful to do so. A discretion is conferred on the authority while imposing penalty. It is a judicious discretion. The law on the point is also well settled. The authorities as well as the appellate tribunal did not keep in mind the settled legal position while imposing the penalty or upholding the penalty which is imposed. In that view of the matter, the order passed by the Tribunal cannot be sustained. The Tribunal proceeded on the basis that the assessee himself has taken a decision not to pay the amount of tax without any judicial support for nonpayment of tax. Assessee was relying on the earlier decisions of the Apex Court for denying the liability to pay tax and therefore, the Tribunal was not justified in the aforesaid observations. The Tribunal was of the view that once the judgment was delivered on 24.08.2005, the assessee should have paid the money immediately thereafter. The same having not been done, it amounts to deliberate noncompliance of the law. We find it difficult to accept this reasoning. On 24.08.2005, the Supreme Court passed the order; on 21.03.2006, the assessment order has been passed and immediately thereafter, the payment has been made. In that view of the matter, in our view, both the authorities committed a serious error in not taking into consideration the facts of this case, the conduct of the assessee prior to the Supreme Court judgment, after the Supreme Court judgment and after the assessment orders in levying penalty which cannot be sustained - Decided in favour of assessee.
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Indian Laws
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2015 (3) TMI 113
Barring the Associate Members from contesting and getting elected - Regulation 114 of the Company Secretaries Regulations, 1982 read with Rule 7 of the Company Secretaries (Election to the Council) Rules, 2006 - Violative of Article 14 of the Constitution of India - Held that:- The right to contest the election to the Regional Councils, being a statutory right created by the Companies Secretaries Act, 1980 and the Rules and Regulations made thereunder, it is subject to qualifications and disqualifications prescribed therein. The law in this regard is well settled. In the case of N.P. Ponnuswami [1952 (1) TMI 20 - SUPREME COURT] & Jagan Nath [1954 (1) TMI 27 - SUPREME COURT] held that “A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a common law right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation.” We may also refer to Supreme Court Bar Association Vs. B.D. Kaushik [2012 (9) TMI 560 - SUPREME COURT], wherein it was reiterated that the right to vote is not an absolute right and the right to vote or to contest elections is neither a fundamental right nor a common law right, but it is a purely statutory right governed by the statute, rules or regulations. It was further held by the Supreme Court in the said decision that the right to contest an election and to vote can always be restricted or abridged, if statute, rules or regulations prescribe so. In the light of the above-noticed settled principle of law, the petitioners can neither claim an absolute right to stand for election to the Regional Councils nor contend that their right to contest the election is defeated by stipulating that the Fellow Members alone are eligible to stand for election to the Regional Councils. Having regard to the admitted fact that the Fellow Members belong to a different class and that even according to the petitioners the Fellow Members are more experienced and knowledgeable, the impugned provisions in making only the Fellow Members eligible to stand for election to Regional Councils cannot be held to be discriminatory and violative of Article 14 of the Constitution of India. The writ petition is, therefore, devoid of any merit and the same is accordingly dismissed. - Decided against the appellant.
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2015 (3) TMI 112
Arbitration & Conciliation Act, 1996 - Suspension of membership - Held that:- The suggestion that the arbitration clauses ceases to operate altogether the moment a member is suspended is unsustainable. It would defeat the rights of the suspended or expelled member's constituent's/client's right to have the disputes between them referred to and decided by arbitration. The right of the non-member (i.e. the suspended member's client) cannot be defeated for the default or wrong doing of the suspended or expelled member. The consequences of accepting Mr.Dwarkadas' submission would be to prevent the non-member such as the suspended member's client being denied the right of having the disputes between himself and the suspended or expelled member referred to and decided by arbitration for no fault of his and indeed only on account of the fault of such member. This would, in many cases, put a premium on the default of the suspended member. In our view, therefore, the disputes and differences can be referred to and decided by arbitration as provided in the rules, bye-laws and the regulations of the exchange even where a member has been suspended or expelled or where the persons membership has been terminated. The provisions in the rules, bye-laws and regulations of the BSE relating to arbitration remain unaffected upon a member being suspended or expelled or his membership being terminated. We are however, unable to agree that mere refusal to permit the appellant to cross examine the respondent would not be a ground for setting aside the award. Nor does it establish that there has been a breach of the rules of natural justice. The respondent was not bound to examine himself. The appellant was not entitled as a matter of right to cross examine him. It was always open for the appellant to contend that his evidence, if any, on affidavit ought not to be taken into consideration or that an adverse inference ought to be drawn on account of respondent not having examined himself or made himself available for cross examination. In these circumstances, the appeal is allowed. The impugned order and judgment is set aside. The Award is set aside. It is however declared and clarified that the arbitration agreement remains unaffected even assuming that the respondents membership was suspended or cancelled and even if the respondent was expelled by the BSE. - Appeal allowed and award is set aside.
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