TMI Tax Updates - e-Newsletter
April 10, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Exemption u/s. 10(33) - There is nothing in the language of sections 10 or 11 which says that what is provided by section 10 or dealt with is not to be taken into consideration or omitted from the purview of section 11 - the income which in this case the assessee trust has not included by virtue of section 10, then, that cannot be considered under section 11 - HC
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Income Tax:
Reopening of assessment - resort to Section 292B of the IT Act cannot be made to validate an action, which has been rendered illegal due to breach of mandatory condition of the sanction on satisfaction of Chief Commissioner or Commissioner under proviso to sub-section (1) of Section 151 - HC
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Income Tax:
Registration u/s 12AA(3) rejected by CIT(A) - on mere presumptions and on surmises that income derived by the trust or the institution is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any charitable purpose, rejection cannot be made. - HC
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Income Tax:
Acquisition of 3D sesismic data - the provisions of Section 5(2) will not stand on the way of the Authorities insisting on the amount of mobilization advance received by the appellant outside India being included - Section 44BB(2) clearly provides for reckoning the amount received outside India also for calculating the amount. - HC
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Income Tax:
Deduction u/s 10A - unit formed out of splitting up or reconstruction of the business by using the old plant and machinery - the benefit of Section 10A of the Act would also be available even when an existing unit gets converted into a STPI unit. - HC
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Income Tax:
Transfer - Development agreement - unless there is willingness on the part of the Developer to perform his part of the Contract, there cannot be a transfer of capital assets as envisaged u/s 2(47)(v) r.w.s. 53A of the Transfer of the Property Act - AT
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Income Tax:
Disallowance of depreciation on leased assets - As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out - AT
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Service Tax:
Condonation of delay - Inordinate delay of 1085 days - Power of Commissioner to condone delay beyond condonable period - delay which is beyond the statutory period of limitation, cannot be condoned - HC
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Service Tax:
Commercial coaching or training - selling the software - as part of sale they provide advice, consultancy and guidance to its customers/ distributors for operation of the softwares - prima facie cas is in favor of assessee - AT
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Service Tax:
Demand pertaining to outstanding balance regarding Debtors/ Creditors - There is no legal basis for presumption to treat such outstanding balances to be relating to taxable services - prima facie cas is in favor of assessee - AT
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Service Tax:
Business Auxiliary Services - Job work - converting black bars into bright bars - the activity undertaken by the appellant/assessee amounts to manufacture not liable to service tax even though exempted from duty of excise - AT
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Central Excise:
100% EOU - goods were written off - Goods not used for intended purpose - duty cannot be demanded in respect of the goods which had been written off - stay granted - AT
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Central Excise:
SSI Exemption - clubbing of turnover - manufacture of P&P medicines - the value of the clearances to Loan Licensees would not be includible for determining the aggregate value of clearances for home consumption - AT
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Central Excise:
SSI Exemption - Use of logo of other company - demand of duty on traded goods also - orders passed by the lower authorities are absurd orders with zero application of mind - AT
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Central Excise:
Simultaneous availment of modvat credit as well as claiming depreciation under the Income Tax Act - once the assessed claimed depreciation under Income Tax Act, he is not eligible for cenvat credit even if they have filed revised returns. - AT
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VAT:
Denial of input tax credit - Liability of purchasing dealer - If on verification any tax is not paid for the purchase (by the seller), it is open to the authority to levy the tax and the Petitioner is liable to pay - HC
TMI Short Notes
Articles
Notifications
Central Excise-
21/2015 - dated
8-4-2015
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CE
Regarding implementation of Service Export from India Scheme (SEIS) under FTP 2015-2020
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20/2015 - dated
8-4-2015
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CE
Regarding implementation of Merchandise Export from India Scheme (MEIS) under FTP 2015-2020
Customs-
25/2015 - dated
8-4-2015
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Cus
Regarding implementation of Service Export from India Scheme (SEIS) under FTP 2015-2020
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24/2015 - dated
8-4-2015
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Cus
Regarding implementation of Merchandise Export from India Scheme (MEIS) under FTP 2015-2020
Income Tax-
F. No. Q. 22013/1/2014-Ad.IC (AAR) - dated
27-3-2015
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IT
Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015
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120/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Bharat Sevashram Sangha, Kolkata
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119/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Gandhi Bhavan International Trust, Kerala
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118/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Iskcon Food Relief Foundation, Mumbai
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117/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Shri Navjivan Viklang Sevashray, Gujarat
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116/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Bhaorao Deoras Seva Nyas, Uttar Pradesh
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115/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Subhag Mahila Utkarsh Trust, Gujarat
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114/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Bharat Lok Shiksha Parishad, Delhi
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113/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Pujya Tapaswi Sri Jagjeevanjee, Jharkhand
Service Tax-
11/2015 - dated
8-4-2015
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ST
Regarding implementation of Service Export from India Scheme (SEIS) under FTP 2015-2020
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10/2015 - dated
8-4-2015
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ST
Regarding implementation of Merchandise Export from India Scheme (MEIS) under FTP 2015-2020
News
Case Laws:
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Income Tax
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2015 (4) TMI 305
Exemption u/s. 10(33) - whether income forms a part of the income from property held under trust and therefore can only be claimed to be exempt u/s. 11, if applied for charity and not u/s. 10 - ITAT allowed the claim - Whether Tribunal was justified in holding that the entire foundation of section 11 is based on the premise that the income is otherwise chargeable to tax, which is not supported by the provisions of the Act ? - Held that:- The language of the two sections is plain and clear. The provisions, namely, sections 10 and 11 fall under a Chapter which is titled “Incomes Which Do Not Form Part of Total Expenditure” (Chapter III). Section 10 deals with incomes not included in total income whereas section 11 deals with income from property held for charitable or religious purposes. We have not found anything in the language of the two provisions nor was Mr. Malhotra able to point out as to how when certain income is not to be included in computing total income of a previous year of any person, then, that which is excluded from section 10 could be included in the total income of the previous year of the person / assessee. That may be a person who receives or derives income from property held under trust wholly for charitable or religious purposes. Thus, the income which is not to be included in computation of the total income is a matter dealt with by section 10 and by section 11 the case of an assessee who has received income derived from property held under trust only for charitable or religious purposes to the extent to which such income is applied to such property in India and that any such income is accumulated or set apart for application for such purposes in India to the extent of which the income so accumulated or set apart in computing 15% of the income of such property, is dealt with. Therefore, it is a particular assessee and who is in receipt of such income as is falling under clause (a) of sub-section (1) of section 11 who would be claiming the exemption or benefit. That is a income derived by a person from property. It is that which is dealt with and if the property is held in trust for the specified purpose, the income derived therefrom is exempt and to the extent indicated in section 11(1)(a) of the Income Tax Act, 1961. There is nothing in the language of sections 10 or 11 which says that what is provided by section 10 or dealt with is not to be taken into consideration or omitted from the purview of section 11. If we accept the argument of Mr. Malhotra and the Revenue, the same would amount to reading into the provisions something which is expressly not there. In such circumstances, the Tribunal was right in its conclusion that the income which in this case the assessee trust has not included by virtue of section 10, then, that cannot be considered under section 11. When the income from property held for charitable or religious purpose is not a matter covered or dealt with by section 10 that the Tribunal's view cannot be termed as perverse or vitiated by any error or law apparent on the face of the record. The clear language of these provisions enables us to uphold the order of the Tribunal. It is, accordingly, upheld. The Revenue's appeal does not raise any substantial question of law. - Decided against revenue.
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2015 (4) TMI 304
Reopening of assessment - objection to show cause-notice u/s 148 has been rejected by the ITO on the reason that required sanction of Commissioner of Income Tax was not taken due to oversight that assessment of the assessee firm had already been completed under Section 143(3) - It was stated that mistake was committed inadvertently and is curable by recourse to Section 292B - Held that:- Plea is liable to be rejected because when specific provision has been inserted to the proviso to Section 151 (1), as a prerequisite condition for issuance of notice, namely, sanction of the Commissioner or the Chief Commissioner, the assessing officer cannot find escape route for not doing so by relying on Section 292B. The Delhi High Court in CIT Vs. SPL's Siddhartha Limited,[2011 (9) TMI 640 - DELHI HIGH COURT ] has while holding that when a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and satisfaction so recorded should be 'independent' and not 'borrowed' or 'dictated' satisfaction, rejected contention of the revenue that obtaining approval from the authority other than the one who was competent to grant such approval, was mere irregularity committed by the Income Tax Officer. And that it was rectifiable under Section 292B of the IT Act cannot be accepted as such irregularity is not curable under Section 292B. In the opinion of this court also, resort to Section 292B of the IT Act cannot be made to validate an action, which has been rendered illegal due to breach of mandatory condition of the sanction on satisfaction of Chief Commissioner or Commissioner under proviso to sub-section (1) of Section 151. This is an inherent lacunae affecting the very correctness of the notice under Section 148 and is such which is not curable by recourse to Section 292B of the IT Act. - Reopening notice set aside- Decided in favour of assessee.
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2015 (4) TMI 303
Registration u/s 12AA(3) rejected by CIT(A) - activities of the society found non-genuine during the years involved as the funds of the assessee society were being siphoned off by debiting bogus purchase of software - Tribunal allowed registration - Held that:- In case the activities are not genuine and they are not being carried out in accordance with the objects of the trust/society or the institution, of course, the registration can again be refused. But on mere presumptions and on surmises that income derived by the trust or the institution is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any charitable purpose, rejection cannot be made. Commissioner of Income Tax was not justified in passing the impugned order for withdrawing the exemption as admittedly, the respondent-assessee is carrying out educational activities by running a large number of educational institutions all over the country and, therefore, the questions of law sought to be raised do not arise. - Decided in favour of assessee.
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2015 (4) TMI 302
Reopening of assessment - royalty payment claimed as revenue expenditure - Held that:- Assessing Officer and Transfer Pricing Officer were not only aware of the payment of Royalty but had taken the same into consideration at every stage. The Assessing Officer infact expressly called for the said information. It cannot be held, therefore, that the Assessing Officer was not aware of the “Royalty” and had not taken the same into consideration before passing the assessment order under Section 143 of the Act. It is also important to note that proceedings had been initiated under Section 154 of the Act by the issuance of a notice dated 24.3.2011. However, the same were dropped holding that it was a debatable issue which would be apparent from the affidavit filed by D.C.I.T. Dated 20.11.2014 in the present case. The impugned notice under Sections 147 and 148, therefore, are clearly based only on change of opinion which is not permissible. - Decided in favour of assessee.
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2015 (4) TMI 301
Fees from technical services - assessee is foreign company incorporated under the laws of Norway engaged in the activities relating to acquisition of 3D sesismic data under contracts with Reliance Industries Ltd. and ONGC - Tribunal held that the mobilization/demobilization fee received by the appellant on account of services provided/vessel operated outside India were to be included in calculating the aggregate amount referred to in sub-section (2) of Section 44BB - Held that:- As clear from the provision of sub-section (3) of Section 44BB, as sub-section (3) of Section 44BB provides that it is open to the assessee to claim lower profits and gains, if he keeps and maintains such books of account and other documents as required under sub-section (2) of Section 44AA and gets the accounts audited and furnish a report. There is no case for the appellant that the appellant is invoking the aid of sub-section (3) of Section 44BB. In view of the admitted position that the appellant does not claim the benefit of sub-section (3) of Section 44BB, we do not see how the appellant can be heard to argue that the amount which he has received by way of mobilization advance outside India should not be included for the purpose of calculating the income under section 44BB in the teeth of the clear provision contained in sub-section (2) of Section 44BB. On our understanding, the provisions contained in Section 5 (2) of the Act will not stand on the way of the Authorities insisting on the amount of mobilization advance received by the appellant outside India being included. The provisions contained in sub-section (2) of Section 44BB, clearly provides for reckoning the amount received outside India also for calculating the amount. - Decided against assessee.
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2015 (4) TMI 300
Jurisdiction of this Court to decide the case - TPA - selection of comparable - whether the Tribunal was correct in holding that if some profit level indicators of a comparable, out of a set of comparables, is higher than the profit level indicators of the taxpayer, then the transactions reported by the taxpayer is at an arm's length price as contemplated in section 92, 92C and other related provisions of the said Act? - Held that:- Once the assessment at Bangalore was of Motorola India Electronics Ltd. on 27.03.2006 for the assessment year 2003-04, the subsequent merger would not give right to the assessing authorities who had jurisdiction over the successor company and only the AO of the predecessor company would have jurisdiction, which was, admittedly, at Bangalore. The submission that the appeal is the continuation of the proceedings and the subsequent appeals filed by the Revenue, would give the AO of the successor company jurisdiction, cannot, thus, be accepted, in view of the provisions of Section 170 of the Act, also. Accordingly, the present appeal, being not maintainable, is dismissed by holding that this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the AO at Bangalore. Consequently, the appeal is returned to the Revenue for filing before the competent Court of jurisdiction, in accordance with law. - Decided against revenue.
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2015 (4) TMI 299
Deduction u/s 10A - as per AO new unit under which the claim was made would be formed out of splitting up or reconstruction of the business by using the old plant and machinery and therefore, the assessee by furnishing incorrect particulars of income has claimed deduction which is not allowable under Section 10A - ITAT allowed the claim - Held that:- In the instant case, the assessee began operation in the existing company whereas the STP unit was registered on 16.10.2002. The STP authorities could also permit the conversion of an existing unit into a STP unit. The purpose of the STP scheme is to encourage exports and gain valuable foreign exchange for the country. The STP scheme provides the benefit of converting a DTA unit into a STPI unit and the same should also hold good for tax purposes. CBDT Circular No.1 of 2005 dated 6th January, 2005 grants certain benefits under the provisions of Section 10B of the Act. Though the circular is in the context of Section 10B, the ratio of the circular equally applies to Section 10A also. In fact, the Commissioner of Income Tax (Appeals) has referred to various judgments on the point and has come to the conclusion that the benefit of Section 10A of the Act would also be available even when an existing unit gets converted into a STPI unit. In fact, the material on record discloses that no export of computer software was made before 16.10.2002. The export commenced only after 16.10.2002. The invoices produced in the case clearly establish the said fact. In those circumstances, the Appellate Authority as well as the Tribunal are justified in extending the benefit of Section 10A of the Act to the unit of the assessee in question. See CIT and ITO Versus Expert Outsource (P) Ltd. [2011 (3) TMI 1428 - Karnataka High Court] - Decided in favour of assessee.
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2015 (4) TMI 297
Exemption/approval, filed under Section 10(23C)(vi) rejected - Held that:- Whether the issue was correctly decided or not, is not relevant at this stage. The fact is that the order dated 23.03.2009 was set aside by the Division Bench vide order dated 29.01.2010, in its entirety. It is necessary, therefore, for the CCIT to decide the matter afresh including on the question of limitation. In the circumstances, the impugned order rejecting its application for exemption is set aside. We are informed that the matter is, now, to be decided by the Commissioner of Income Tax (Exemption), Chandigarh, afresh, in accordance with the judgment titled Kashatriya Sabha Maharana Partap Bhawan, Kurukshetra Vs. Union of India & another, [2010 (1) TMI 1151 - PUNJAB AND HARYANA HIGH COURT] wherein held that earning profits is not a deciding factor to conclude that an educational institution exists for profit. We reiterate that all the issues including the issue of limitation shall be decided after keeping in mind the principles laid down by the Apex Court M/s Queen's Educational Society Vs. Commissioner of Income Tax, [2015 (3) TMI 619 - SUPREME COURT]
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2015 (4) TMI 296
Appeal dismissed for non-prosecution - Held that:- The appeal was posted for hearing on 06.09.2012, 24.09.2012, 22.01.2013 and 20.08.2014 and in all those hearings, there was no representation for the petitioner. Therefore, the first respondent has rightly passed the order dated 30.12.2014 dismissing the appeal preferred by the petitioner for non-prosecution. When the appellant did not turn up to agitate the appeal on merits, the first respondent can only conclude that the assessee is not interested to prosecute the appeal. Therefore, this Court is not inclined to interfere with the order passed by the first respondent. However, taking note of the fact that the petitioner has no occasion to challenge the validity of the order passed by the second respondent on 24.12.2010 and as the appeal was dismissed by the first respondent for non-prosecution, thus feel that in the interest of justice, one more opportunity shall be given to the petitioner.
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2015 (4) TMI 295
Transfer within the meaning of section 2(47)(i) or section 2(47)(v) r.w.s. 53A of Transfer of Property Act - AO noticed that in terms with the development agreement, the developer has given an advance to each land owner at the rate of 13 lakhs per acre and the total amount received by all land owners put together is ₹ 21,26,15,000. On the basis of the aforesaid facts, the AO was prima-facie of the view that there being a transfer of capital asset under the development agreement, assessee is subject to capital gain - value of consideration received or accruing cannot be determined and thereby the computation of capital gains fails as held by CIT(A) - Held that:- Unless there is willingness on the part of the developer to perform his part of the contract, there cannot be a ‘transfer’ of capital asset as envisaged u/s 2(47)(v) read with section 53A of the TP Act. The ratio laid down in Binjusaria Properties case [2014 (4) TMI 351 - ITAT HYDERABAD] squarely applies to the facts of the present case as the department has failed to controvert the finding of the learned CIT(A) by bringing material on record to show that the developer has taken any steps towards development activity. Further, we may observe, though the AO referring to the development agreement has inferred that possession of the property was handed over to the developer, however, on going through the pleadings and prayer of the plaintiffs in the plaint filed in Civil Court, it appears assessee along with others are still having physical possession over the property. Be that as it may, after careful consideration of facts and materials on record, we are of the view, CIT(A)’s order being well founded and well reasoned needs to be upheld. Another crucial aspect which needs to be commented upon is the CIT(A) has also held that the transaction will not attract capital gain as the asset transferred being an agricultural land is not a capital asset as defined u/s 2(14) of the Act. This finding of the learned CIT(A) remains unchallenged and uncontroverted by the Department. For this reason also, short term capital gain computed by the AO cannot be sustained. In view of the aforesaid, we do not find any reason to interfere with the order of the CIT(A). - Decided in favour of assessee. Unexplained cash credit - Held that:- the assessee in fact has not only established the identity of the creditor, but, has also submitted confirmation letters in support of the loan received. Further, the AO has also observed that funds were transferred from the accounts of the creditor to the assessee. If that is the case, then the AO cannot disbelieve the loan unless there is strong evidence before him to suggest that it is only the assessee’s money, which was routed through the bank account of the creditor. Further, on a perusal of the order passed by the CIT(A) for the assessment years 2006-07 and 2007-08 it appears similar loan received from the same creditor was accepted by the CIT(A) after examining the bank statements and other evidences produced by the assessee. Therefore, if the assessee is able to prove the credit by producing similar evidence as is the case in AY 2006-07 and 2007- 08, then, there will be no reason to treat the loan as unexplained cash credit at the hands of the assessee. In the aforesaid view of the matter, we are inclined to remit this issue to the file of the AO for deciding afresh after examining all facts and materials brought on record and only after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (4) TMI 294
Development agreement entered by the assessee with a developer under the head Long term capital gain - CIT(A) deleted the addition - whether all that ingredients of transfer within the meaning of the section 2(47) of the IT Act and Section 53 of the Transfer of Property Act, 1882 have been fulfilled in the case? - Held that:- The reading of Clauses 1,5 and 6 of the Development Agreement clearly indicate that the assessee had given only the licence to enter into the land for development of the same in terms of the Development Agreement. The Developer neither started the construction nor took permission for construction till the date of the assessment. The property was inspected by the Inspector and it was noticed that there was no development in the land and it remained the same as it existed at the time of the Development Agreement. The possession of the land was not taken by the Developer as he did not initiate any development. The land in question continues to be agricultural land and the assessee has been carrying out cultivation on this land consisting of 1 acre 14 guntas 83 sq. yards. Thus it is very clear that the agreement has not been implemented by constructing flats on the land. Further it is clear that the Developer was not willing to fulfil his part of contract till date. Till date no construction has come up in the property and even the conversion of the land from agricultural land to housing plot has not been done. Provisions of deemed transfer u/s 2(47)(v) cannot be invoked on the facts of the present case and for the A.Y in dispute before us. The assessee has not received any consideration except for refundable deposit of ₹ 3.00 crores and there is no evidence brought on record by the Revenue to show that actually some construction has taken place at the impugned property in the previous year relevant to the A.Y under consideration and the right to receive the sale consideration has actually accrued to the assessee. The assessee is not exigible to capital gains on the entire sale consideration without the accrual of the consideration to the assessee We are also fortified by the decision of the Coordinate Bench in the case of Bhavya Construction Ltd & Others (2015 (4) TMI 295 - ITAT HYDERABAD). The ratio of the decision is that unless there is willingness on the part of the Developer to perform his part of the Contract, there cannot be a transfer of capital assets as envisaged u/s 2(47)(v) r.w.s. 53A of the Transfer of the Property Act. The ratio laid down as above squarely applies to the facts of the present case as the Department has failed to controvert the findings of the ld CIT (A) by bringing material on record to show that the developer has taken steps towards developmental activities. Hence, the capital gain cannot be brought to tax in the year under appeal. - Decided against revenue.
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2015 (4) TMI 293
Disallowance of guest house expenses u/s 37(4)- Held that:- This issue has been decided against the assessee by the Hon’ble Supreme Court in the case of Britannia Industries Ltd. [2005 (10) TMI 30 - SUPREME Court] - Decided against assessee. Disallowance of depreciation on assets leased to REPL - As a sequel of the search operation, conducted by Investigation Directorate in the case of REPL group establishing non-existence of assets and bogus lease transactions entered by the group, the AO disallowed the claim of depreciation on assets leased to REPL - As per assessee proper course of action should be under section 158BD and, therefore, the additions/disallowance made by the AO is bad in law - Held that:- We are inclined to hold that if the department proposed to make an assessment based on searched material, then the course available to it was to proceed as per the provisions of Chapter XIV-B i.e. sec. 158BD read with sec. 158BC of the Act and not u/s 143(3). In case of search material, the same is to be assessed by way of block assessment under Chapter XIV-B. Thus the impugned addition cannot be made in the hands of the assessee on protective basis by taking recourse to sec. 143(3). Thus we set aside the order of Ld. CIT(A) and direct the AO to delete the addition on account of depreciation. See case of Kapil Dev [2012 (3) TMI 397 - ITAT DELHI] - Decided in favour of assessee. Disallowance of depreciation on leased assets to AEL - Held that:- As relying on I.C.D.S Ltd. vs. CIT [2013 (1) TMI 344 - SUPREME COURT ] wherein held that as the entire lease rent received by the assessee is assessed as business income in its hands and the entire lease rent paid by the lessee has been treated as deductible revenue expenditure in the hands of the lessee. This reaffirms the position that lessor i.e. the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out. - Decided in favour of assessee. Addition of broken period interest - CIT(A) deleted the addition - Held that:- As decided in assessee's own case [2014 (8) TMI 119 - BOMBAY HIGH COURT] addition of broken period interest need to be deleted as relying on American Express International Banking Corporation v/s Commissioner of Income Tax [2002 (9) TMI 96 - BOMBAY High Court] - Decided against revenue.
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2015 (4) TMI 292
Penalty proceedings u/s 271(1)(c) - undisclosed income - additions based on seized materials / documents found at the time of search from the premises of assessee’s father - whether additional income was offered by assessee in respect of the projects and property which did not belong to him, but was made only to buy peace of mind and to avoid litigation? - Held that:- From the facts narrated it is seen that the additions which are subject mater of penalty are based on seized materials / documents found at the time of search from the premises of assessee’s father, Shri Anthony Joseph Pathathu, but the said seized material admittedly belongs to the proprietory concern of Shri Anthony Joseph Pathathu, namely, M/s.Pathathu Brothers in which assessee has no interest. Even at the time of search, when statement on oath u/s 132(4) was recorded, this aspect was made clear and it is also amply evident from the statement wherein the assessee has categorically made averment that all the documents, cash, loose papers, etc. does not belong to him but to M/s.Pathathu Brothers. From the cash flow statement as furnished before the Assessing Officer, at the time of offering of the additional income, it is seen that they are out of amount received on various dates for Roshani Project, specifically falling in the financial year 2001-2002 and financial year 2002- 2003. The other amount is on account of rent received. Admittedly, Roshani Project does not belong to the assessee or his company in which he is a Director. The said project belongs to M/s.Pathathu Brothers, wherein the assessee had no interest. Even the rental income does not belong to any of his property, albeit belongs to his father, in which the assessee has no concern. Thus, prima facie, the seized documents revealed that nothing belongs to the assessee but his father. Also that the assessee had reconciled the income and explained each and every entry has not been rebutted at any stage. The amount which was offered for additional income as stated before the authorities below, was to only buy peace of mind and to avoid protracted litigation and to save his aged father from harassment. Nothing has been brought on record by the department that, the assessee had any co-relation with the additional income offered by the assessee as worked out from the seized material which too was properly explained. It is a settled law that considerations, which arises in the penalty proceedings are separate and distinct from the assessment proceedings and the assessee can rely upon the same material and explanation to show that he is not guilty of either concealment of income or furnishing of inaccurate particulars. The assessee’s explanation that no material was found from the possession of the assessee stands unrebutted even upto this stage. Thus, we set aside the order of the CIT(A) and delete the penalty levied for all the aforementioned assessment years.- Decided in favour of assessee.
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2015 (4) TMI 291
Disallowance under section 40(a)(ia) r.w.s 194C - assessee failed to deduct tax under section 194C - it is the case of the assessee that no part of TDS remains to be payable by the end of the financial year - Held that:- Section 40(a)(ia) applies to only those amounts which remains payable only to the end of the previous year [ CIT vs. Vector Shipping Services (P) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. As relying on case of M/s. Vivil Exports P. Ltd. [2015 (4) TMI 255 - ITAT MUMBAI] accepting the proposition following the decision in the case of Vegetable Products Ltd., (1973 (1) TMI 1 - SUPREME Court), in which it has been held that in a case where there can be two views possible, then in that event the one which is in favour of the assessee has to be followed - Decided in favour of assessee. Short charged profit and loss receipt - CIT(A) accepted the contention of the assessee that percentage of the said receipt should be considered for taxation as every receipt has a corresponding expense and it is only the net that is required to be taxed and it would be appropriate if the profit rate of 8% is taken as income earned by the assessee on the said receipts - CIT(A) upheld the addition of ₹ 1,58,610/- in place of ₹ 19,82,630/- done by AO - Held that:- Carefully perusing the vouchers submitted by the assessee in the paper book. We find that except purchase of these items the assessee did not corelate them with the work performed so that it may be ascertained that these expenditure were actually incurred in relation to the receipts which have not been charged to the P&L account. However, in the interest of justice, we consider it just and proper to remand the matter to this extent, to the file of AO for re-adjudication of the same, after giving the assessee an opportunity of hearing and placing all the material on record to justify this expenditure to be incurred to the uncharged receipts to the P&L Account. We direct accordingly. Thus, we set aside the order passed by Ld. CIT(A) on this issue and direct the AO to re-adjudicate the same as mentioned above. - Decided in favour of revenue for statistical purposes.
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Customs
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2015 (4) TMI 310
Penalty u/s 112 - Misdeclaration of goods - held that:- The provisions of Section 127A to 127N of the Customs Act, 1962 deal with the Settlement of cases. It is clear from Section 127B that an importer may make an application in relation to a case disclosing the full and true duty liability before the proper officer. In the present case, we find that the Additional Commissioner has not challenged the deposit of duty made by Shri Sunil Lulla. Therefore he has treated Shri Sunil Lulla as the importer. In other words he has consented that Shri Sunil Lulla is entitled to file an application before the Settlement Commission, as an importer. - The provisions of Section 127A(b) define a ‘case', the provisions of Section 127F give exclusive jurisdiction to the Settlement Commission in relation to the case and Section 127J which provides that every order passed under Section 127C shall be conclusive- all lead to a reasonable conclusion that once a case has been decided in respect of the importer or the applicant by the Settlement commission, it is not open to Revenue to proceed against other co-noticees. - The provisions of Kar Vivad Samadhan Scheme and the provisions of Settlement are similar and therefore the principle laid down in the case of Onkar S. Kanwar (2002 (9) TMI 101 - SUPREME Court) would apply in the present case. - Decided in favour of assessee.
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2015 (4) TMI 309
Rejection of rectification of mistake - benefit of notification No. 64/88-Cus - violation of the post importation condition - Held that:- there is no error apparent on the face of the record in respect of order dated 17-09-2014 passed by us. It is a settled position in law as held by the hon'ble Apex Court in R D C Concrete (India) Pvt. Ltd. [2011 (8) TMI 25 - SUPREME COURT OF INDIA ] re-appreciation of evidence on a debatable point cannot be said to rectification of mistake apparent on record. Mistake apparent on record must be an obvious and patent mistake and mistake should not be established by a long drawn process of reasoning. We are afraid through the present ROM application the appellant is seeking to take a contrary view on a point of law which we have considered and disposed of. Such a course of action is not permissible in law. - Rectification denied.
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2015 (4) TMI 308
Benefit of duty exemption - notification No. 12/2012-Cus dated 17/03/2012 - Classification of coal - Bituminous coal or steam coal - held that:- Court have quoted extensively from the Tribunal's decision in the Maheshwari brother's case only for the reason that the contention of the appellant that GCVmmmf should have been calculated by taking GCV on ARB basis and not GCV on ADB basis is not convincing. From the technical literature cited above, it becomes clear that moisture on ADB approximates to Inherent Moisture while moisture on ARB corresponds to Total Moisture. Therefore, we are of the prima facie view that the Parr formula adopted by the Revenue for computing the GCV on a moist mineral free basis has a logic to it and cannot be faulted. Therefore, at the interim stage of stay application, we do not find sufficient reasons to differ with the view taken by the Revenue and confirmed by this Tribunal in the Coastal Energy and Maheshwari Brother's case [2015 (1) TMI 208 - CESTAT BANGALORE]. - However, in the interest of justice, the time limit for compliance of pre-deposit is extended - Decided partly in favour of assessee.
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Corporate Laws
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2015 (4) TMI 307
Application for approval of Scheme of Arrangement under Section 391-394 of the Companies Act,1956 - Objections received from Sales promotion employees of transferor company and one Unsecured creditor - Observations made by Official Liquidator and Regional Director - Held that:- It was submitted that it does not dispute the locus of employees, who filed the applications. He submitted that it is a small group of 750 employees out of total 13000- 14000. All the rights of the existing employees of the Transferee Company have been fully protected under Clause 13 of the Scheme of Arrangement. It has been specifically mentioned therein. Further submitted that the objector was one of the unsecured creditor to the extent of ₹ 17,86,276.80. A sum of Euro 45,000 were paid to the objector in June, 2014, which cleared entire debt due against the transferor company. Once it was not the creditor of the Transferor Company, it had no locus to file the application. In the report of the Official Liquidator, it has been stated that the Scheme of Arrangement is prejudicial to the interest of revenue and public at large, as the Scheme is designed to set off “Carry Forward and Set Off Accumulated Losses and Unabsorbed Depreciation” of the Transferor Company against profits of the profit making Transferee Company. The Scheme was sent to the Income Tax Department. No comments have been received. In case it is legally permissible for the Transferor Company to carry forward and set off all the losses, it shall be entitled to the benefit in case the law does not put a restriction thereon. In response to observation made by Regional Director it was submitted that scheme has been prepared in terms of Accounting Standard-14. Copy of the Scheme was sent to the Chief Commissioner of Income Tax, Chandigarh. How ever, no comments have been received.Also all legal formalities required shall be complied with by the Transferor Company. A perusal of the order passed by the Commission shows that exhaustive exercise was carried out to find out the effect of merger on the public at large. The Commission has issued comprehensive directions in consonance with the provisions of the Competition Act, which are to be complied with by the Transferor / Transferee Companies.No doubt, the Commission has taken full care of the interest of the consumers of the medicines manufactured by both the companies, however, still as an abundant caution, it is added that during the period the entire process of Divestment is completed, the monitoring agency shall also monitor the prices of the drugs manufactured by the combined entity. For the reasons afore-stated and on consideration of all the relevant facts and the procedural requirements contemplated under Sections 391 to 394 of the Companies Act, 1956 and the relevant Rules the Scheme of Arrangement approved.
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Service Tax
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2015 (4) TMI 322
Condonation of delay - Inordinate delay of 1085 days - Power of Commissioner to condone delay beyond condonable period - Held that:- It is to be noted that under Section 85(3) of the Finance Act, the appeal to Commissioner (Appeals) was to be filed within three months from the date of communication of the order and as per the proviso to Section 85(3), a further period of three months could be granted where sufficient cause was shown. The Commissioner (Appeals) has no power to condone such abnormal delay. - when the scheme of the special law which herein in this case is the Customs Act and the nature of the remedy provided therein is such that the legislature intended it to be a complete code by itself, which alone should govern the several matters provided by it, it is clear that the provisions of the Limitation Act are necessarily excluded, the benefits conferred therein cannot be called in aid to supplement the provisions of the Act, this Court is of the view that the delay which is beyond the statutory period of limitation, cannot be condoned. Court is not inclined to grant the relief sought for in the writ petition and the same are dismissed - Decided against assessee.
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2015 (4) TMI 321
Waiver of pre deposit - demand pertaining to outstanding balance regarding Debtors/ Creditors for services provided/received - Held that:- adjudicating authority has not indicated anywhere as to what are the services on which the service tax has not been paid in respect of the amounts shown as debtors and creditors. Prima facie thus it can hardly be anybody s case that all the outstanding amounts regarding Debtors/ Creditors would be liable to service tax when it is not even indicated as to what are the taxable services they relate to. There is no legal basis for presumption to treat such outstanding balances to be relating to taxable services and therefore the contentions mentioned above, while needing to be examined in detail at the time of final hearing, prima facie, have force. Further the amendment to Section 67 ibid relating to associated enterprises was effective prospectively from 10.5.2008 as has been held by CESTAT in the judgement M/s Gecas Services India Pvt. Ltd. (2014 (7) TMI 410 - CESTAT NEW DELHI). In view of the foregoing and specially the judgment of SAP (India) Private Limited vs. CCE, [2013 (8) TMI 784 - CESTAT BANGALORE] and having regard to fact that the appellants started paying service tax on this transaction under reverse charge mechanisms under Information Technology Software Service w.e.f. 16.5.2008, we are of the view that the appellants have been able to make out a case for waiver of pre-deposit of this component of demand. As regards the component of the impugned demand pertaining to commercial coaching or training, it is seen that the appellants are engaged in selling the software and as part of the same they provide advice, consultancy and guidance to its customers/ distributors for operation of the softwares. They are also receiving the said assistance from their overseas affiliated companies. They (i.e. the appellants) are not recovering/paying any amount separately for such assistance provided/received and were apportioning a portion of the sale proceeds under this head merely for accounting purposes. - VAT has been paid on the entire value of the software as seen from the purchase orders. The appellants contend that utilization of infrastructure does not amount to sharing of infrastructure and therefore they would not get hit by sub-clause (Vii) to Section 65(12) of Finance Act 1994. This point certainly needs a detailed examination which can only be taken up at the time of final hearing but it can hardly be denied that the appellants have an arguable case that this is not covered under Banking & Financial Services and therefore it is only fair that they are not required to make the pre-deposit pending appeal. - overall the appellants have made out a case for waiver of pre-deposit and we order accordingly staying recovery of the impugned liabilities during pendency of the appeal. - Stay granted.
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2015 (4) TMI 320
Demand of service tax - Business Auxiliary Services - Job work - manufacturing of goods were exempted from duty - Held that:- first appellate authority has recorded clearly "besides, appellants are also converting black bars into bright bars by availing Cenvat Credit on the inputs and clearing finished goods on payment of Central Excise Duty. When the process is accepted as a process of manufacture, it is not correct or logical to conclude that the same process when carried on job work basis does not amount to manufacturing" - The submission of the assessee before the first appellate authority has been accepted, as there are not contrary findings and the Revenue's ground of appeal are also not contradicting the said submissions made by the assessee. In the absence of any counter to submissions that the activity undertaken by the appellant/assessee amounts to manufacture and they have discharged the Central Excise duty, the same process if it is undertaken on job work, cannot be held as not manufacturing process. First appellate authority has rightly relied upon the benefit of Notification No. 202/88-CE dated 20/05/1988 which clearly indicates the exemption to certain final products made from the specific products. It is settled law that an exemption from Central Excise duty can be granted only to manufacturer of products. The benefit of Notification No. 202/88-CE is in respect of items manufactured in job work process by the assessee, in this case, it has correctly been held as manufactured products by the first appellate authority. - first appellate authority are correct and the Revenue's appeal has no merits - Decided against Revenue.
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Central Excise
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2015 (4) TMI 315
100% EOU - Waiver of pre deposit - goods were written off - Duty exemption under notification no.52 /03- Cus dated 30.1.2003. and 22/03-CE - Goods not used for intended purpose - penalty under Section 112, 114 A and 117 - Held that:- 100% EOU is a bonded area, in respect of which a private bonded licence is issued. Thus a 100% EOU is bonded warehouse and in respect of the goods stored in the bonded warehouse, the duty liability would arise only when the goods have been cleared from the warehouse. Just because the certain inputs either imported free of customs duty or procured domestically free of central excise duty have not been used for manufacture of the goods, and had been scrapped, the duty liability would arise only when the goods have been cleared by the EOU into DTA . In the show cause notice, there is no allegation that the inputs written off had been cleared by the appellant company into DTA . However, the show cause notice has been issued only on the basis that certain goods procured free of customs duty or free of central excise duty were not used in the manufacture of the goods for export, or but were written off on becoming the obsolete and for this reason, in terms of the provisions of the notification no.52 /03- Cus and 22/03-CE, the duty would be payable on these goods so written off. There is no allegation in the show cause notice that the goods in respect of which the duty has been demanded had been cleared into DTA . In our view, therefore, duty cannot be demanded in respect of the goods which had been written off. The question of payment of duty would arise only when the goods are cleared into DTA or EOU is allowed to be debonded and is converted into DTA unit, at the time of which, the EOU is required to pay duty on the entire stock of duty free raw materials and capital goods and the stock of finished goods, but this is not the case here. We, therefore, hold that the appellant have prima facie case in their favour . Accordingly, the requirement of pre-deposit of duty demand, interest and penalty by the appellant company and the requirement of pre-deposit of penalty by Shri Rakesh Kumar Vohra , Managing Director and Shri Manish Gaur, Manager (Commercial) is waived for hearing of their appeals and recovery thereof is stayed. - Stay granted.
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2015 (4) TMI 314
SSI Exemption - clubbing of turnover - manufacture of P&P medicines on his own account and as a loan licensee under job work for others - user of logo / brand name - Notification No. 9/03-CE - whether in respect of the goods manufactured in the appellant's factory for the loan licensees, the loan licensees are to be treated as manufacturer or the appellant are to be treated as manufacturer - Held that:- Loan Licensee had not been hired any shift or any part of the factory premises of the appellant and similarly the appellant as a Loan Licensee, had not hired any shift or any part of the factory of the other manufacturers. In view of this, it has to be held the appellant had manufactured the goods for Loan Licensees as a job worker only and, therefore, it is the appellant who have to be treated as the manufacturer and since, the goods manufactured for Loan Licensees had been affixed with the Brand Name belonging to the Loan Licensees, and for this reason the same had been cleared on payment of normal duty, in terms of clause 3(a) of the exemption notification, the value of the clearances to Loan Licensees would not be includible for determining the aggregate value of clearances for home consumption. Similarly, in respect of the goods got manufactured by the appellant as a Loan Licensee through other manufacturers, it is the other manufactures, who have to be treated as manufacture and not the appellant more so, when there is no dispute that the duty liability in respect of those goods had been discharged by those manufacturers, Therefore, the value of these clearances also cannot be included for determining the aggregate value of clearances of the appellant for home consumption for determining their SSI exemption - Decided in favour of assessee.
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2015 (4) TMI 313
SSI Exemption - Use of logo of other company - Held that:- The goods in respect of which the duty has been demanded are listed in the Annexure to the show cause notice. On going through the Annexure it is seen that most of the goods are not even the Inj. Moulded plastic articles which are manufactured by the appellant but the duty had been demanded in respect of those goods on the basis that the appellant have sold them by printing the brand name/logo of the customers. Though the appellant had given the break up of the goods purchased from outside and sold from their shop, but this plea had not been considered at all. Even the appellant's plea that they have no facility for printing of the customer's name/logo on the articles and that wherever the printing was done on the customer's request, it was got done from outside has also not been considered. Therefore, in our prima facie view the orders passed by the lower authorities - by the Additional Commissioner as well as by the lower authorities - by the Additional Commissioner as well as by the Commissioner (Appeals), are absurd orders with zero application of mind - the requirement of pre-deposit of duty demand, interest and penalty by the appellant firm and the requirement of pre-deposit of penalty by Shri Pankaj Malik, partner of the appellant firm, is waived for hearing of their appeals and recovery thereof is stayed - Stay granted.
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2015 (4) TMI 312
Denial of refund claim - appellants have not produced proper evidence to substantiate their claim - Held that:- The appellants have not produced the original documents neither before the adjudicating authority nor before the appellate authority. It was found that description of the goods mentioned in the invoices were not tallying with the exporter's invoices and also the goods removed on the strength of consignment notes and not by excise invoices. It is also brought out in the appellate order that let export orders were pre-dated to the date of manufacturer's invoice. - appellants in the past also had not produced relevant original documents before any of the authorities [2006 (10) TMI 334 - CESTAT, CHENNAI] and even in the present appeal, they have failed to submit original documents. I do not find any infirmity in the impugned order - Decided against assessee.
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2015 (4) TMI 311
Simultaneous availment of modvat credit as well as claiming depreciation under the Income Tax Act - lower appellate authority has remanded this aspect to the adjudicating authority for de novo adjudication - Held that:- respondents have not produced any new argument before the Commissioner (Appeals). On perusal of the adjudication order at para 15.4. the adjudicating authority has clearly brought out the facts of filing revised returns for the year 2001-02, 2001-02, 2002-03 & 2003-04. It was clearly brought out that respondent filed declaration under Rule 4 (4) of CCR that they have not claimed any depreciation wherein it has been clearly brought out that respondents have not claimed depreciation in their IT return for the year 2001-02 on that part of the value representing duty on the capital goods. These facts are clearly discussed by the adjudicating authority in his order. Therefore, it is evident that appellate authority remanded the case to the original authority only on the ground that respondents have filed revised returns without any discussion. Hon'ble Karnataka High Court in the case of Suprajit Engineering Ltd. (2010 (3) TMI 414 - KARNATAKA HIGH COURT) clearly held that once the assessed claimed depreciation under Income Tax Act, he is not eligible for cenvat credit even if they have filed revised returns. - Commissioner(Appeals) order to the extent of remanding to adjudicating authority on the issue of simultaneous availment of cenvat credit as well as claim of depreciation relating to the demand of ₹ 14,84,845/- is required to be set aside and the OIO is restored. - Decided in favour of Revenue.
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CST, VAT & Sales Tax
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2015 (4) TMI 319
Denial of input tax credit - Liability of purchasing dealer - According to the Petitioner, his duty is only to show that the purchaser has paid the tax - Held that:- The respondent has filed a counter affidavit and submitted that it is after all a notice and it is for them to produce the purchase tax and admittedly, the Petitioner has not produced the connected documents to prove the tax payments and straightway filed these Writ Petitions and therefore there is no violation of principles of natural justice - Petitioner is directed to produce all the relevant purchase documents for all these matters for verification. If on verification any tax is not paid for the purchase, it is open to the authority to levy the tax and the Petitioner is liable to pay. The Petitioner is directed to treat this as a show-cause notice and directed to give proper explanation to the authorities and on such explanation being made, the authorities are directed to pass appropriate orders on merits and in accordance with law. - Petition disposed of.
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2015 (4) TMI 318
Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - Held that:- Without observing anything on merits and/or without considering anything with respect to the legality and validity of the order passed by the first appellate authority, the learned Tribunal has mechanically passed an order directing the appellant to deposit the amount of pre-deposit as directed by the first appellate authority. When the second appeals were against the order passed by the first appellate authority dismissing the appeal on nonpayment of pre-deposit of the aforesaid amount, the learned Tribunal was required to decide the appeals on merits and was required to consider the legality and validity of the order passed by the first appellate authority directing the appellant to decide the aforesaid amount and dismissing the appeal on non-payment of the amount of pre-deposit. Impugned order passed by the learned Tribunal cannot be sustained and the matters are to be remanded to the learned Tribunal to decide the appeals afresh in accordance with law and on merits so as to enable the learned Tribunal to consider the orders passed by the first appellate authority directing the appellants to pay the aforesaid amount by way of pre-deposit and dismissing the appeals on non-payment of the pre-deposit. While considering the issue of pre-deposit, even the learned Tribunal is required to consider the provisions of the Act, more particularly, section 73(4) of the Gujarat Value Added Tax Act. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 317
Valuation of goods - assessee had purchased raw materials against Form XVII declarations and used the same in the manufacture of chemicals and made export sales in addition to domestic sales - Assessing Officer arrived at the proportionate value of purchases made against Form XVII which were used in the manufacture of chemicals exported and assessed the same at 1% under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 - Held that:- Following decision of Tube Investments of India Ltd. (Formerly known as M/s. TI Diamond Chain Ltd.) Versus The State of Tamil Nadu, represented by the Commercial Tax Officer [2010 (10) TMI 938 - MADRAS HIGH COURT] and The State of Tamil Nadu rep. By Joint Commissioner (CT) Versus Sri Ranganathar Valves (P) Ltd. [2015 (3) TMI 747 - MADRAS HIGH COURT] - no tax can be collected without the authority of law. - Decided against Revenue.
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2015 (4) TMI 316
Validity of order passed - Violation of principle of natural justice - Opportunity of personal hearing not granted - Held that:- It is true that notices have been issued and documents have been given and reply have been given. In the last letter, dated 25.11.2014, the department itself has given the time of one month, as sought for by the petitioner and at the same time, the petitioner made another representation on 01.12.2014, seeking for personal hearing and without giving an opportunity of personal hearing, the impugned orders have been passed on 12.12.2014. If the last time granted is taken into account i.e., on 25.11.2014, the one month time has expired only on 24.12.2014, but even before that time, the impugned orders have peen passed on 12.12.2014. Not only that, the order has been passed without giving a personal hearing. It is mandatory that personal hearing is to be granted under Section 22(4) of the 'Act' and that vital fact has not been taken into consideration. - Matter remnded back - Decided in favour of assessee.
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2015 (4) TMI 298
Violation of principles of natural justice - grievance of the petitioner that though detailed assessment orders have been passed, he was not given an opportunity - Held that:- On the ground of violation of principles of natural justice, the impugned orders of assessment are set aside and the matters are remitted back to the respondent for passing fresh orders. The respondent is directed to accept 10% of the tax amount as determined in the impugned orders, which the petitioner has agreed to pay the same. On receipt of the said amount, the respondent can de freeze the Bank account of the petitioner and the respondent is directed to give an opportunity of personal hearing to the petitioner as provided under Section 22(4) of the Act and decide the matter afresh on merits and in accordance with law. The learned counsel for the petitioner also agreed that the petitioner would appear before the respondent on 04.05.2015 for personal hearing. After hearing the petitioner on 04.05.2015, the respondent is directed to decide the matter on merits and in accordance with law. In case the petitioner fails to avail this opportunity on 04.05.2015, the authority is empowered to pass orders afresh on merits and in accordance with law based on the available records.
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Indian Laws
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2015 (4) TMI 306
Discriminatory conditions in franchisee agreement for sale of premium sports goods - Contravention of provisions of Section 4 of the Competition Act - Denial to collect unsold goods - Held that:- The Commission finds two fundamental flaws in the allegations made by the Informant. Firstly, 'the Agreement' which was termed as unfair and arbitrary was entered into in 2003 when the alleged dominant group had not even come into existence. Secondly, even if the submission of the Informant regarding dominance of the Adidas AG Group is accepted post the formation of group in 2005, the conduct of the Adidas AG Group vis-a-vis the Informant remained same (as 'the Agreement' was said to be continued on same terms and conditions). Further, as per Informant's own submissions, the agreement with M/s Neelkanth Traders was more favourable than the one with it which fact goes against the allegation of abuse by the Adidas AG Group. The Commission further notes that the allegation of the Informant regarding the Opposite Party No. 3 not taking back the dead stock lying in the custody of the Informant which allegedly inflicted financial harm on it, prima facie does not raise any competition concern. Otherwise also, the Informant did not provide any correspondence sent to the Opposite Party No. 3 regarding the dead stock lying at its store between February, 2009 (when the last sale of the Opposite Party No. 3's products from the Informant's Franchise was being made) and 16 January, 2014 when allegedly a request was made to take back the dead stock. Based on the foregoing, the Commission is of the considered opinion that the conduct of the Adidas AG Group, prima facie, does not amount to any contravention of the provisions of Section 4 of the Act. Therefore, even though the Adidas AG Group appears to be a dominant group in the relevant market defined supra, the facts available on record show no violation of provisions of Section 4 of the Act in the present matter. - Case closed down.
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