TMI Tax Updates - e-Newsletter
April 14, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
New Companies going to be incorporated now can seek PAN and TAN numbers while getting incorporated u/s 7 of Companies Act, 2013 - Rule 114 and 114A of Income Tax Rules amended
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Income Tax:
Criminal proceedings - prosecution - non-compliance/non-cooperation to the notices issued u/s 142(1) - discloser of foreign bank account which existed with the HSBC - summoning order set aside - HC
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Income Tax:
Annual Letting Value of the selfoccupied property at Ahmedabad - If the fair rent is less than the standard rent, then, it is the fair rent which shall be taken as annual letting value and not the standard rent. This will apply to both, self acquired properties and general cases where property is let out. - HC
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Income Tax:
Taxability of interest receipt - interest temporarily earned on the grant received from the Government and that too as per the instructions given by the State Government cannot be included in the income of the assessee - HC
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Income Tax:
Revision u/s 263 - income received towards furnitures and fixtures has to be treated as income from house property only as is the case with the rental income from letting out of the premises and cannot be treated as business income. - AT
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Income Tax:
Deemed dividend u/s 2(22)(e) - assessment in pursuance of search action u/s 132(1) - addition on account of deemed dividend u/s 2(22)(e) deleted as same is beyond the scope of assessment u/s 153A - AT
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Income Tax:
Agricultural income - assessee has not maintained separate books of account related to agricultural income - orders of CIT (Appeals) on the issue of estimation of agricultural income sustained - AT
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Customs:
Denial of refund claim - Refund of excess duty paid - assessment not challenged - in case excess duty has been paid on account of clerical error, refund is admissible. - AT
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Customs:
Levy of penalty and redemption fine - benefit of notification No.52/2003 - Import of gold jewellery for the purpose of re-export after repair/remaking - exemption denied in respect of import of marketable commodity being finished ladies gold chain - levy of penalty confirmed - HC
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Wealth-tax:
Tribunal, while exercising the power of rectification, can recall its order, if it is satisfied that on account of mistake, manifest error or omission attributable to the Tribunal, prejudice is caused to the party. The Tribunal can recall its order for rectification of mistake apparent from the record. Else, the Tribunal has no power to recall its order. - HC
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Service Tax:
Refund of cenvat credit - export of non-taxable servcies - Decision in the case of mPortal India Wireless Solutions.(P) Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and [2010 (7) TMI 92 - CESTAT, BANGALORE] distinguished. - Refund denied - AT
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Service Tax:
Levy of penalty - Business Auxiliary Service - Receipt of commission from the financial institutions/banks - The board circular specifically states that there were certain doubts in the mind of the field formation and hence, reference was made - penalty waived invoking section 80 - AT
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Central Excise:
CENVAT Credit - appellant did not reversed cenvat credit while removing the components - credit was reversed later before issue of SCN - SCN invoked the wrong provisions - demand of interest and penalty set aside - AT
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Central Excise:
Classification of Fresubin - Classification as 'food supplement' or 'instant food mix' - Even if, Fresubin is used by patients recovering from illness, it will not cease to be a food mix. - AT
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VAT:
Denial of refund claim - The Explanation, which states that the amount shall not be refunded in any case on the basis that dealer had filed the tax at a higher rate, results in invidious discrimination towards those who have paid the tax at a higher rate, like the appellants, when compared with that category of the persons who were defaulters and have now been allowed to pay the tax at the rate of 1% for the relevant period. - SC
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VAT:
Levy of Entertainments & Advertisements Tax - the MSO is undoubtedly an integral part of the chain of persons or agencies or organization providing such entertainment and since the definition of the "Proprietor" clearly covers such an assessee - HC
Notifications
Customs-
12/2015 - dated
11-4-2015
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ADD
Seeks to extend the validity of Notification No. 98/2010-Customs dated 28-09-2010 for a further period of one year i.e. upto and inclusive of 11-04-2016
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11/2015 - dated
11-4-2015
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ADD
Seeks to levy definitive anti-dumping duty on imports of Electrical Insulators of Glass or Ceramics/Porcelain, whether assembled or un-assembled originating in, or exported from the People’s Republic of China for a period of five years.
Income Tax-
38/2015 - dated
10-4-2015
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IT
Income tax (Fifth Amendment) Rules, 2015
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37/2015 - dated
10-4-2015
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IT
U/s. 80-IA of the IT Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc.
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36/2015 - dated
10-4-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Punjab State Electricity Regulatory Commission” a Commission constituted by the Government of Punjab, in respect of the certain specified income arising to the said Commission.
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35/2015 - dated
10-4-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Haryana Electricity Regulatory Commission” a Commission constituted by the Government of Haryana, in respect of the certain specified income arising to the said body.
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34/2015 - dated
10-4-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Rajasthan State Pollution Control Board” a Board constituted by the Government of Rajasthan, in respect of the certain specified income arising to the said Board
SEZ-
S.O. 763 (E) - dated
12-3-2015
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SEZ
Set up a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at village Attipra, Taluk and District Thiruvananthapuram in the State of Kerala
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S.O. 762 (E) - dated
12-3-2015
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SEZ
Set up a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka
VAT - Delhi-
No. F.14/( 2)/LA-2015/cons2law/40-54 - dated
30-3-2015
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DVAT
Gazette Notification of the Delhi Value Added Tax (1st Amendment) Act, 2015 (Delhi Act 03 of 2015)
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (4) TMI 411
Reopening of assessment - Assessee had gifted the shares without any consideration - Held that:- All that the Revenue desires is verification of certain details and pertaining to the gift. That is not founded on the belief that any income which is chargeable to tax has escaped assessment and hence, such verification is necessary. That belief is not recorded and which alone would enable the Assessing Officer to proceed. Thus, the reasons must be founded on the satisfaction of the Assessing Officer that income chargeable to tax has escaped assessment. Once that is not to be found, then, we are not in a position to sustain the impugned notice. Having reproduced the same and contents thereof being clear, it is not possible to agree with Mr. Gupta that this Court should not interfere at the threshold. We find additionally that in the affidavit in reply the Revenue has stated that the concept of gift prevails between two individual persons out of love and affection, which does not prevail in the case of companies. In the case of companies, the financial transaction exists to earn profit and the transaction of the so called gift made by the Assessee is only for the purpose of avoiding capital gains tax. This is a stand taken in the affidavit in reply but what we find is that the gift without any consideration and as noted in the reasons recorded and supplied has not been termed as one which attracts any tax or which is chargeable to tax and therefore there is any income which has escaped assessment. In other words, the amount of ₹ 1,21,33,429/shown as gift has not been termed as an income and which is chargeable to tax and which has escaped assessment. All that is required from the Assessee is a verification and in terms of section 47(iii) of the IT Act and for enabling it, the Assessee was called upon to appear before the AO. Thus, it is for verification of the value of these shares and whether the computation is on the market rate on the date of such transfer. This, to our mind, would not in any manner enable the Revenue/Respondents to resort to section 147 of the IT Act. The reasons as recorded cannot then be substituted or supplemented by filing an affidavit in the Court. Thus, additional reasons cannot be supplied and on affidavit. The notice under section 148(1) is quashed and set aside. - Decided in favour of assessee.
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2015 (4) TMI 410
Set off of unabsorbed business loss brought forward against the profits of the erstwhile 10A unit - claim for set off disallowed by AO as such claim of set off or brought forward business loss against the profits of the erstwhile 10A unit in the year under consideration, being the first assessment year, after the expiry of the tax holiday period, cannot be allowed - Tribunal allowed the claim - Held that:- Subject to the provisions of section 10A, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the Assessee. We are not as much concerned with the proviso and other subsections, save and except subsection (6). The Tribunal has understood that this subsection contains non obstante clause and therefore, notwithstanding anything contained in any other provision of the Act, in computing the total income of the Assesee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year relevant to any subsequent assessment year, as per clause (ii) thereof, no loss referred to in section (1) of section 72 or subsection (1) or subsection (3) of section 74 insofar as such loss relates to the business of the undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years. In clause (ii) w.e.f. 1st April, 2004, the words “ending before the 1st day of April, 2001” were inserted. It is this insertion which has enabled the Tribunal to hold that if the losses pertain to any subsequent assessment year, then, the understanding of the Revenue as reflected in the Circulars would bind it. That understanding apart, independently, the Tribunal has analysed this provision and found that by virtue of the nonobstante clause and by virtue of wording of sub clause (ii) that the Revenue could not have disallowed this claim of set off. We therefore do not find that in allowing the Appeal of the Assessee, the Tribunal has committed any error of law apparent on the face of the record or acted perversely. - Decided in favour of assessee.
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2015 (4) TMI 409
Criminal proceedings - prosecution - non-compliance/non-cooperation to the notices issued u/s 142(1) - discloser of foreign bank account which existed with the HSBC - Sanction / Authorization granted by the CIT - commission of offence u/s 276D, r/w Section 278E as the details of the account opening and transaction therein the foreign bank account will be specifically in the knowledge of accused who being the account holder will be having the relevant information but he failed to provide the details willfully - Held that:- There is no dispute that if action as per law is required to be taken against the petitioner under the said provision for noncompliance, the said is always available with the respondent who also be entitled to receive all taxes and penalties from the petitioner as per law. In case there is non-compliance of the said notices under Section 142(1) of the Act, the requisite action in accordance with law had to be taken against the petitioner who would be entitled to contest the same in accordance with law. However, it is also a matter of fact that the criminal proceedings have been initiated by the respondent against the petitioner on the basis of the sanction issued by the department on 10th February, 2015 and in case the grounds of the sanction are read, it is evident that the reply sent by the petitioner contains the copy of the bank statement filed for the period has not been mentioned/ discussed in the same. Learned counsel for the respondent / revenue has confirmed to the Court that the statements of bank accounts have already been received for the purpose of assessing the tax, which were not furnished by the petitioner. Thus, it is apparent that while recording the statement of the complainant and passing the summoning order dated 27th February, 2015, all the facts were not available with the trial Court otherwise the Court might have asked the respondent to produce the same and to consider the replies dated 9 th February, 2015 and 11th February, 2015 before passing the summoning order or the respondent ought to have sought prayer for amendment in the sanctioning letter. The same has not happened in the present case. Under these circumstances, the order dated 27th February, 2015 passed in Criminal Complaint whereby the summoning order has been passed, is liable to be quashed on technical reason.
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2015 (4) TMI 408
Rectification of mistake - Whether while calculating the eligible business profits for the purposes of deduction under Section 80I the assessee is entitled to include the amount actually contributed in the assessment year 1992-93 to the Cooperative Education Fund under Section 61(1)(b) of the Multi State Cooperative Societies Act, 1984? - Whether the Tribunal was justified in holding that the contribution to the Cooperative Education Fund was not a cess falling within the purview of Section 43B of the Income Tax Act, 1961?” Held that:- In the present case too, the view canvassed by the revenue is untenable. The CIT(A) had relied upon the Supreme Court’s ruling in Canara (1986 (7) TMI 5 - SUPREME Court) to hold that the relief was, in the circumstances of the case, admissible. Given that this issue as to the admissibility of relief either before the benefit of Section 80-I could be granted or thereafter, was a matter which required debate and some process of reasoning, the decision in T.S. Balaram, ITO (1971 (8) TMI 3 - SUPREME Court) clearly held the field. In other words, the revenue could not legitimately contend that the view expressed by the CIT(A) given effect to by the AO in his initial order of 12.05.1995, was utterly implausible. Such being the case, the issue was debatable. Therefore, recourse to the power of rectification under Section 154 was unwarranted in the given facts of this case. - Decided in favour of the assessee
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2015 (4) TMI 407
Annual Letting Value of the selfoccupied property at Ahmedabad - Standard Rent under the Bombay Rent Control Act v/s Municipal Rateable value in computing the property income u/s. 23 of the I. T. Act, 1961 - Tribunal confirming that the orders of the C.I.T. u/s. 263 holding that the original assessment computing property income on the basis of the Municipal Rateable value was erroneous and prejudicial to the interest of revenue - Held that:- While determining the annual letting value in respect of properties which are subject to rent control legislation and in cases where the standard rent has not been fixed, the Assessing Officer shall determine the same in accordance with the relevant rent control legislation. If the fair rent is less than the standard rent, then, it is the fair rent which shall be taken as annual letting value and not the standard rent. This will apply to both, self acquired properties and general cases where property is let out. While carrying out exercise under section 23(1) of the Act, the departmental authorities shall follow these guidelines reproduced above provided in the Full Bench decision of the Delhi High Court and followed by a Division Bench of this Court in the case of Tip Top Typography (2014 (8) TMI 356 - BOMBAY HIGH COURT). Reference will also have to be made to a decision of this Court in the case of Smt. Kokilaben D. Ambani vs. The Commissioner of Income Tax [2014 (9) TMI 763 - BOMBAY HIGH COURT] wherein, we have dealt with the aforesaid questions and the guidelines set out in the various Judgments have been referred to therein. Appeal is allowed and the impugned order dated 20th October, 1999 is set aside. The matter stands remanded for consideration in accordance with the aforesaid norms.
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2015 (4) TMI 406
Validity of the order u/s 158BD read with section 158BC - precondition for invoking section 158BD is not satisfied as accepted by Tribunal - Held that:- The Tribunal applying the language of the sections concerned and the Judgment of Manish Maheshwari vs. Assistant Commissioner of Income Tax [2007 (2) TMI 148 - SUPREME COURT OF INDIA] concluded that the principal condition for invoking the provisions was not satisfied. These conclusions holding that the block assessment under section 158BD read with 143(3) of the Income Tax Act, 1961 is void ab initio do not raise any substantial question of law. We are not in agreement with Mr. Pinto that the revised questions of law would arise because the Tribunal has refrained from expressing any opinion on merits. It has not set aside the addition made by the Assessing Officer in the case of the Assessee before us nor sustained it. It has simply quashed the proceedings for want of jurisdiction and based on the satisfaction which has to be arrived at as a principal condition within the meaning of section 158BD of the Income Tax Act, 1961. Therefore, the Tribunal's conclusion has not, in any manner, prejudiced the Revenue nor affected the other remedies and powers available to it under the Act. It can bring the amounts, if any, to tax and in the case of the present Assessee by taking recourse of law. Therefore, all the more we do not think that the Tribunal's conclusions, which are otherwise not perverse or vitiated by any error of law apparent on the face of the record need to be interfered with by us. No substantial question of law. - Decided against revenue.
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2015 (4) TMI 405
Penalty u/s 271(1)(c) - interest payment on the borrowings disallowed - Held that:- Here, the assessee may not be successful in substantiating their claim, but that by itself does not mean penalty follows. Eventually for withholding a imposition of penalty whether the particulars of income or furnishing of inappropriate particulars of income is an element present and with regard thereto any explanation is offered or not or if offered whether the same is false or an offer of such explanation which the assessee is unable to substantiate and it is lacking in bona fides that the penalty can be imposed. All these ingredients in the present case are absent according to the Tribunal. The view taken by the Tribunal and from paragraphs 5 to 8 of the impugned order is imminently possible given the factual background. Such a view cannot be termed as perverse or vitiated by an error of law apparent on the face of the record. - Decided against assessee.
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2015 (4) TMI 404
Taxability of interest receipt - ITAT held that the interest receipt is not taxable in the hands of the assessee - whether the interest income can still be taxable under Section 56 of the I.T. Act in the case of government companies where there is no profit motive? - Held that:- The issue involved in the present Tax Appeal and the proposed substantial questions of law in the present Tax Appeal is squarely covered against the revenue in view of the decision of the Division Bench of this Court in the case of General Motors India P. Ltd. Vs. Deputy Commissioner of Income-tax reported in [2012 (8) TMI 714 - GUJARAT HIGH COURT] as well as another decision of this Court in the case of Sar Infracon Pvt. Ltd (2014 (3) TMI 728 - GUJARAT HIGH COURT). In the identical facts and circumstances of the case, in the case of Gujarat Power Corporation Limited Vs. Income Tax Officer reported in [2012 (11) TMI 181 - Gujarat High Court] as well as in the case of Sar Infracon Pvt. Ltd (Supra) have held that the interest temporarily earned on the grant received from the Government and that too as per the instructions given by the State Government cannot be included in the income of the assessee. - Decided in favour of assessee.
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2015 (4) TMI 403
Entitlement to exemption u/s 54F - computation of capital gain - It is submitted that the assessee purchased one plot which was divided in two plots having different numbers, those plots were sold to two different persons through separate sale deeds but the exemption u/s 54F has been allowed by the Department in respect of one plot only. - Held that:- The time of purchasing the new residential house for a sum of ₹ 21,10,500/-. The assessee was having only one residential house which was earlier purchased on 10.05.2008. Therefore, the assessee was entitled for exemption u/s 54F of the Act in respect of this house also as per the provisions contained in proviso (a)(i) to sub- section (1) of section 54F of the Act. The sale consideration of ₹ 47,42,255/- relating to Plot No. 11A was utilized by the assessee for purchasing the new house for a sum of ₹ 21,10,500/-, therefore, the exemption u/s 54F was allowable for a sum of ₹ 20,79,938/- (21,10,500 × 46,73,582 ÷ 47,42,255) and taxable Long Term Capital Gains worked out to ₹ 26,62,317/- (Rs. 47,42,255/- - ₹ 20,79,938/-). We, therefore, considering the totality of the facts as discussed here in above are of the view that the ld. CIT(A) was not justified in directing the AO to sustain the addition on account of Long Term Capital Gains for a sum of ₹ 46,63,324/-. Accordingly, we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee Entitlement to deduction u/s 80C - in the absence of complete documentary evidences AO allowed the deduction in part - Held that:- Considering the submissions of both the parties and the material on record, we deem it appropriate to remand this issue back to the file of the AO for verification and if it is found that the assessee invested ₹ 88,341/- in LIC and the tuition fees of the children then the claim may be allowed in accordance with law.- Decided in favour of assessee for statistical purposes.
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2015 (4) TMI 402
Valid jurisdiction u/s 153A - additional ground raised - Held that:- Assessment on amalgamating company is a legal nullity and that participation by amalgamating company is irrelevant. There is no estoppel against a statute. We are thus urged to quash the assessment as legal nullity. The assessment in substance and effect has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company alongwith the name of amalgamating company in the body of assessment against the item "name of the assessee" is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. As regards learned Departmental Representative’s objection that the assessee could not have taken up the additional ground since it does not arise out of the order of the CIT(A) and has not been adjudicated upon by the CIT(A), we are unable to see legally sustainable merits in the same. The law is fairly well settled in this regard. As long as it is a legal issue, and particularly when it does not require any further investigation of facts, it can be taken up even at the stage of the Tribunal for the first time. The authority for this proposition is contained in Hon’ble Supreme Court decision in NTPC vs. CIT ( 1996 (12) TMI 7 - SUPREME Court). The rights of the appellant and the cross objector are essentially similar and what can be raised in the appeal for the first time before the Tribunal can also be taken up for the first time in the cross objection as well. Thus we uphold the grievance so raised in the cross objection. Accordingly, we hold that the impugned assessment was legal nullity. - Decided in favour of assessee.
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2015 (4) TMI 401
Revision u/s 263 - Notional interest interest free security deposit should have been considered while determining the annual letting value of the property - The income from letting out of furniture and fixtures has to be assessed under the head ‘other sources’ - Held that:- various Courts have held a consistent view that notional interest cannot form part of actual rent. Hence, there is no justification to take a different view than what has been stated in Asian Hotels Ltd [2007 (12) TMI 274 - DELHI HIGH COURT] . As far as the valuation of GHMC is concerned, on a perusal of the order makes i very much clear that valuation arrived at by the GHMC at ₹ 97,34,832 is for an area of 2,34,423 sq.ft. whereas as per lease agreement area leased out by assessee to lessee is 1,35,000 sq.ft.. Therefore, unless, it is established on record that area leased out to lessee is 2,34,423, the value of ₹ 97,34,832 has fixed by GHMC cannot be applied for computing ALV. As the exact area leased out by assessee has not been verified either by AO or by ld. CIT, we are inclined to remit the issue back to the file of AO with a direction to verify the exact area leased out to lessee and thereafter compute ALV by proportionately applying rate fixed by GHMC in order dated 25/05/07 for different floors. Accordingly, this issue is remitted to file of AO. AO was not correct in treating the income received towards rent on furnitures and fixtures as business income. There is no dispute that assessee as the owner of property was exploiting it by letting it out and in the process realizing income by way of rent and such rental income is assessable as income from house property. In the process of letting out the property certain assets are also let out to the tenant. However, letting out of such assets are incidental to the letting out of the property. Therefore, the rent received from letting out of furniture and fixtures assume the same colour as the rent received from the building. In these circumstances, income received towards furnitures and fixtures has to be treated as income from house property only as is the case with the rental income from letting out of the premises and cannot be treated as business income. Similar view has been expressed by coordinate bench in case of Smt. G. Prameela Devi Vs. ITO,[2014 (12) TMI 343 - ITAT HYDERABAD]. Therefore, we direct AO to treat the amount received towards furnitures and fixtures as income from house property and not as business income. The directions of the CIT u/s 263 modified to that extent. - Decided partly in favour of assessee for statistical purposes.
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2015 (4) TMI 400
Income from letting of a property - Income from house property or profits and gains of business and profession - Held that:- Undisputedly in the earlier assessment years, coordinate benches have held that the income from letting out is in the nature of income from house property. Once there are categorical findings to this effect, and there is no dispute on that fact, it is not open to the lower authorities to still hold that the income can be taxed as business income because that aspect of the matter was not examined. The reason of consistency in approach and bound by the judicial precedent by the coordinate bench also, we hold that the income from letting out the property ought to have been taxed under the head ‘income from house property’. Thus we uphold the plea of the assesse and direct the Assessing Officer to tax the rental income of ₹ 6,59,36,930 under the head ‘income from house property’ and allow the deduction under the scheme of taxability of income under this head. - Decided in favour of assessee. Disallowance of brand building expenses - CIT(A)deleted the addition - Held that:- what the Assessing Officer has overlooked is that even under the mercantile method of accounting, the expenses are booked at the point of time when the liability to pay crystallizes and irrespective of whether the benefit are wholly in the current year, or partly in future year as well, a revenue expenditure is allowed as a deduction in the year in which it is incurred. The contribution pertains to the current year and is based on the revenues of the current year. It is undisputed that that it covers the period related to the relevant previous year. There is no dispute that expenditure is a revenue expenditure, there is no dispute that the expenditure is incurred in the present year, there is no dispute that all along even the increased contributions have been allowed as revenue expenses in the year in which the contributions have been made and to which contributions pertain. In such circumstances, a purely adhock disallowance on the basis that the benefits of this contribution will also be available in a subsequent period, is wholly uncalled for. We are unable to see any merits in this same.We have also noted that the expenses are partly allowed as deduction. Therefore, genuineness, revenue nature and business expediency of these expenses is accepted by the Assessing Officer himself. - Decided in favour of assessee.
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2015 (4) TMI 399
Deemed dividend u/s 2(22)(e) - assessment in pursuance of search action u/s 132(1) - addition made while passing the assessment order u/s 153A - Held that:- In this case, the assessment for the A.Ys. 2002-03 and 2004-05 had attained finality and admittedly there being no incriminating material found during the course of search relating to the addition made on account of deemed dividend, therefore, such an addition de hors any material found during the course of the search, cannot be roped in the assessment made u/s 153A by the assessing officer. Accordingly, the addition on account of deemed dividend of ₹ 1,69,68,750/- in the A.Y. 2002-03 and addition of ₹ 4,62,91,123/- on account of deemed dividend u/s 2(22)(e) is deleted as same is beyond the scope of assessment u/s 153A. - Decided in favour of assessee.
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2015 (4) TMI 398
Agricultural income - CIT (Appeals) restricting the addition as the assessee has not maintained separate books of account related to agricultural income and did not furnish any evidence to the satisfaction of the Assessing Officer in support of the claim of expenditure - Held that:- As from a perusal of the impugned orders of the CIT (Appeals) that in estimating the assessee's agricultural income for the assessment years in question, the learned CIT (Appeals) has considered the Assessing Officer’s estimation and also the fact that other commercial inter crops like pepper, vanilla, plantations, etc. have been cultivated. It is in this context we find that the learned CIT (Appeals) has sustained the additions made by the Assessing Officer to ₹ 1,00,000, ₹ 5,00,000, ₹ 5,00,000 and ₹ 1,00,000 respectively for Assessment Years 2006-07 to 2009-10. In the factual matrix of the case as discussed above, we find that except for raising the grounds challenging the impugned orders of the learned CIT (Appeals) on the issue of estimation of agricultural income, revenue has neither been able to controvert the estimation made by the learned CIT (Appeals) nor to establish with any material evidence that the orders of the Assessing Officer in estimating the agricultural income were factually correct. In this view of the matter, we uphold the impugned orders of the learned CIT (Appeals) on the issue of estimation of agricultural income in the given facts and circumstances of the case - Decided against Revenue.
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2015 (4) TMI 397
Reopening of the assessment - beyond 4 years but within 6 years after the original assessment under section 143(3) was completed - additions made on account of interest on the Non Performing Assets under the provisions contained in section 43D read with Rule 6EB - Held that:- Nowhere in the reasons do we find that in the reopened proceedings, the AO had unearthed anything which was materially concealed by the assessee. The ground for reopening after four years and after completion of regular assessment u/s 143(3), the department has to prove that in the intervening period, they were able to generate something, which was not described by the assessee either in its return or explanation. This fact has not been broken by the revenue authorities. Hon’ble Bombay High Court in the case of Sitara Dramond Pvt Ltd vs ITO, [2013 (9) TMI 571 - BOMBAY HIGH COURT] held that the department has to bring out something to prove that any particular of income was concealed. In fact, we find that even in the accounts, as submitted along with the ROI, all details had been disclosed. Thus the reassessment proceedings are bad in law. We, therefore, cancel the notice u/s 148 dated 02.03.2011 and as a consequence, all consequential proceeding are annulled. - Decided in favour of assessee Additions made on account of expenditure incurred by way of interest under section 14A - Held that:- In the case of the assessee in preceding year, we are of the opinion, that a consistent view taken by the revenue authorities on the submissions made by the assessee involving the factual aspects. We, therefore, set aside the order of the CIT(A) and restore the issue to the AO to ascertain the fact, as to when the investments were made and whether any investments, giving tax free income in assessment year 2008-09 and with a direction to verify and examine the necessary facts. - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (4) TMI 417
Denial of refund claim - Refund of excess duty paid - Denial on the ground that without challenging the assessment, refund could not have been sanctioned - Held that:- there is no dispute about the classification or rate of duty applicable. It is a pure and simple mistake of declaring a wrong currency which resulted in payment of excess duty which has been rectified by the adjudicating authority. Therefore, the question of applying the ratio of Priya Blue case [2004 (9) TMI 105 - SUPREME COURT OF INDIA] does not arise at all. On the contrary, in a large number of decisions cited by the Counsel for the appellant, this Tribunal has held that in case excess duty has been paid on account of clerical error, refund is admissible. Following the ratio of these decision, I hold that the appellant is rightly entitled to the refund of excess duty paid. - Decided in favour of assessee.
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2015 (4) TMI 416
Waiver of pre deposit - Fraudulent import of the electronics items - Misdeclaration and undervaluation of goods - Lifting of corporate veil - Held that:- Prima facie it appears that contemporaneous evidence gathered by DRI proved under valuation of goods imported and mis-declaration came to light. He had connived with the exporters and failed to adduce evidence to defend against the allegations made in Show Cause Notice. NIDB data used against the appellants brought out mis-declaration of value. Revenue also found that Shri K.S. Sultania had fabricated invoices with the abetment by exporters to cause evasion. He was involved in hawala deal. K.S. Sultania being proprietor of Ms/ Pearly Electronics and other 3 firms were created by him making benamidars proprietor thereof, Revenue lifted corporate veil in para 7(Vii) of Show Cause Notice at page 17 thereof. Duty was imposed on Pearl Electronics on its own imports as well as imports made in the name of other 3(three) dummy firms created by him, treating K.S. Sultania as the owner thereof. Penalty of ₹ 15.00 lakhs was imposed on Shri K.S. Sultania for contravention of provisions of law and penalty of ₹ 10.00 lakhs was also demanded from M/s Sultania & Co. finding involvement of his son in that firm. Appellants contention that joint and several liability is not permissible does not appeal to have basis. At this stage when corporate veil was lifted as stated above, there is no scope of grant waiver of pre-deposit. So also mis-declaration was based on evidence gathered by investigation. - Partial stay granted.
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2015 (4) TMI 415
Imposition of penalty and redemption fine - benefit of notification No.52/2003 - Import of certain quantity of gold jewellery for the purpose of re-export after repair/remaking - exemption denied in respect of import of marketable commodity being one weighing 3197.200 gms finished ladies gold chain (twisted rope type), normally worn with pendants - Held that:- The importation of old gold/platinum/silver jewellery, if imported for repair or remake for re-export, is exempted from payment of custom duty. The appraiser report - which does not appear to have been challenged in the present instance, clearly points out that 3197.200 gms gold chain, were “finished” and compared with the other items imported - concededly three of them were not marketable. The appellant urges that one of the items allowed to be imported, described as "assorted gold bangles of different designs/sizes, appears to be old but not used", like subject goods were finished products. However, this Court notices that the description itself facially suggests that these items were lacking in lusture and further processing such as polishing would enhance the lusture to make the product for marketable. The exercise of appraisal not having been challenged, the terms of the notification itself permit a certain element of discretion with the customs authority, who after taking into account the nature of the goods could permit them to be imported as items prescribed or determine the duty. - discretion having been exercised in the first instance and the appellant having been given a hearing at the show cause stage, this Court does not see any question of law which can be termed as substantial to engage attention. - Decided against the assessee.
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Corporate Laws
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2015 (4) TMI 414
Appeal against order of high court to quashed the proceedings - Power of Special Courts - Cognizance of the offences under Sections 120B and 420 of the IPC or Section 621 of the Companies Act - Multiplicity of proceedings - Held that:- AS can be seen from the complaint the allegations are that the accused conspired with each other to cheat the complainant and a series of transactions gave rise to offence under Section 120B read with Section 420 of the Indian Penal Code as also Section 628 of the Companies Act. It is, therefore, clear that if the Special Court has jurisdiction to try offences under both the aforesaid Acts then the trial can certainly continue in respect of the offences which do not require the complainant to belong to the categories specified under Section 621 of the Companies Act. Thus the trial could certainly continue against those accused under the IPC. The High Court completely overlooked the fact that the complaint made allegations against the accused A4, A5, A6, A9 and A10 only in respect of Section 120B and 420 of Indian Penal Code and there was no reason in law to quash a complaint against them on the ground that they were immune from prosecution under Section 628 of the Companies Act by virtue of Section 621 of that Act. At this stage, it may be noted that the Special Court is empowered to try the offences under the Companies Act along with other Acts by virtue of a notification issued by the erstwhile Government of Andhra Pradesh dated 13.3.1981 which empowers such special Courts to try offences under specified enactments such as The Companies Act, 1956, The Income-tax Act, 1961, The Wealth-tax Act, 1957 etc.The said notification reproduced in the case of Kannur Abdul Kader Mohammed Habbefa [2015 (1) TMI 978 - ANDHRA PRADESH HIGH COURT]. Thus, even if a number of persons are accused of offences under a special enactment such as ‘the Companies Act and as also the IPC’ in respect of the same transaction or facts and even if some could not be tried under the special enactment, it is the special court alone which would have jurisdiction to try all the offences based on the same transaction to avoid multiplicity of proceedings. We make this observation because at some stage in the hearing learned counsels addressed us on this point. We make it clear that in the present case all the accused are liable to be tried by the special court in respect of the offences under the IPC as well as the Companies Act as alleged in the complaint. - Decided in favour of appellant.
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2015 (4) TMI 413
Recovery proceedings against the erstwhile non executive director of a company - Attachment of bank accounts / Demat accounts - Notice under Rule III and Part I of second Schedule to the Income Tax Act 1961 r/w Section 28A of the Securities and Exchange Board of India, 1992 - Alternate remedy - writ jurisdiction - power to arrested - Held that:- It is well settled that the alternative remedy does not serve as an absolute bar for exercising writ jurisdiction. The writ Court can, depending on the facts and circumstances of the particular case, entertain the writ petition notwithstanding availability of alternative remedy. In the case of Gujarat Ambuja Cement Ltd.[2005 (7) TMI 353 - SUPREME COURT OF INDIA],the Apex court has reiterated the parameters for exercise of such discretion. It can be said that despite an alternative remedy, the writ petition can be entertained in appropriate cases where there is violation of principles of natural justice, or procedure required for decision has not been adopted or there is an allegation of infringement of fundamental rights, or where the orders or proceedings are wholly without jurisdiction or the virus of an Act is challenged or when it is shown that it would be a case of palpable injustice to the petitioner to force him to adopt remedies provided by the statute. Refered case 2005 (7) TMI 353 - SUPREME COURT OF INDIA In the present case, the petitioner has claimed that he has been detained in a summary and arbitrary manner. The petitioner has claimed that his arrest is illegal and is in contravention of principles of natural justice. The petitioner, in short, has made an allegation of infringement of fundamental rights. In the light of such challenge, this Court is not precluded from examining the legality and propriety of the impugned order notwithstanding availability of alternative remedy. In the instant case, the Tax Recovery Officer had not recorded his satisfaction with reasons in writing, as regards the existence of two situations, which are specified in Clause (a) of Rule 73(1). The Tax Recovery Officer has not detained and arrested the petitioner on the ground that he had transferred, concealed or removed any pat of his property. The respondent had stated in the affidavit that upon issuance of the attachment orders, none of the banks have reported any accounts in the name of the petitioner, except Punjab National Bank at Mira Road (E) branch and only an amount of ₹ 5160.82 was recovered by the respondent Board. By these averments, the respondent has sought to justify the arrest. Needless to state that having failed to record the reasons as regards existence of the situation in clause (a), the respondent cannot rectify the lacuna by stating the reasons in the reply. As stated earlier, the arrest and detention of the petitioner is illegal, hence, he is entitled to be released forthwith. The apprehension of the respondent that the petitioner may go abroad if released, can be alleviated by imposing appropriate conditions and or securing an undertaking that he will not leave the country during the pendency of the proceedings. Learned Counsel representing the petitioner has also stated that the passport of the petitioner is already attached by the E.O.W. Crime Branch, Mumbai and there is no possibility of the petitioner leaving the country. - Writ petition allowed.
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Service Tax
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2015 (4) TMI 430
Refund of cenvat credit - export of non-taxable servcies - Notification No. 5/2006-CE (NT) - information technology software service - Service became a taxable service from 16/5/2008 and therefore prior thereto no credit in respect of that service was admissible and no refund was admissible - Held that:- under Rule 5 ibid refund of Cenvat credit is allowed only in respect of input services used in providing output service which is exported. Output service during the relevant period was to mean a taxable service as per definition under Rule 2 (P) ibid. Thus it is evident that prior to 6.5.2008 the appellants were not exporting any output service and therefore Rule 5 itself is not applicable in their case. Decision in the case of mPortal India Wireless Solutions.(P) Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and [2010 (7) TMI 92 - CESTAT, BANGALORE] distinguished. Cenvat credit is governed only and only by Cenvat credit Rules and therefore the above observation of CESTAT that this benefit is apparently not limited by provisions of Cenvat Credit Rules is devoid of any basis at all. In any case, as CESTAT itself observed that this plea was not taken by the appellant and having regard to the fact that CESTAT also gave this finding rather tentatively, as is evident form the word apparently appearing in that sentence, it can not be inferred that CESTAT laid down any ratio to be followed as a precedent. - impugned order does not suffer from any legal infirmity and therefore the same is sustained - Decided against assessee.
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2015 (4) TMI 429
Business Auxiliary Service - Receipt of commission from the financial institutions/banks - Imposition of penalty and penalty - Held that:- assessee did not contest the issue on merits before the adjudicating authority. - appellant having not contested the issue on merits before the adjudicating authority, cannot do so before us Amounts which have been received by them from financial institutions/banks as commission are lump sum amounts and the said amounts, can be considered as cum tax amount and the service tax liability needs to be reworked. Claim of the appellant is correct and needs to be considered as cum tax amount; upholding the service tax liability has having been conceded before the adjudicating authority, we direct the lower authorities to rework out the service tax liability and the interest thereof. CBE&C vide Circular No. 87/05/2006-ST dated 06/11/2006 has clarified that the amounts received as commission from the financial institutions/banks would be taxable under BAS. The said board circular specifically states that there were certain doubts in the mind of the field formation and hence, reference was made. We are of the considered view that if the field formation or the tax collectors were themselves in doubt and clarification has to be issued by the Board and the period involved in this case being prior to 06/11/2006, the appellant has made out a case for invoking the provisions of Section 80 of the Finance Act, 1994; accordingly, we invoke the provisions of Section 80 and set aside the penalties imposed on the appellant - Decided partly in favour of Revenue.
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2015 (4) TMI 428
Waiver of pre deposit - Construction of complex - Commercial or industrial Construction Service - Imposition of penalties and interest - services provided to public authorities - held that:- No co-operation of the appellant, the authority was in dark to consider the submission of the appellant. He passed exparte order basing on the materials available on record. The manner appellant has acted before law, throws light that it had defiant attitude toward law which is patent from the adjudication order - Keeping in view the prima facie case suggesting balance of convenience tilting in favour of Revenue and appreciating no undue hardship may be caused by this order to the appellant, as an interim modality, we direct the applicant to deposit ₹ 4,00,00,000 within 4 weeks from receipt of the order - Partial stay granted.
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Central Excise
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2015 (4) TMI 423
Waiver of pre deposit - Whether in the instant case the direction of the CESTAT to deposit ₹5 crores as pre-condition for the hearing of the appeal was justified - interdependent and integrated plants for manufacturing sugar and alcohol. - availing cenvat credit while availing exemption in respect of Rectified Spirit (RS), Absolute Alcohol (AA) Extra Neutral Alcohol (ENA), all conforming to the alcohol volume in excess of 95%. - Held that:- As noticed by the Bombay High Court in its rulling in Niphad Sakhar (2014 (1) TMI 1384 - BOMBAY HIGH COURT) , all the tariff entries w.e.f. 01.03.2005 and the consequent exemption notification have resulted in a different regime. Even otherwise the submission made by the revenue to the effect might be startling, consequent prima facie on the logic which appeals to the Bombay High Court comment for acceptance of this Court. As a result the impugned direction to deposit ₹5 crores is hereby set aside - Decided in favour of assessee.
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2015 (4) TMI 422
Demand u/s 11A - Condonation of delay - Section 35(1) - Held that:- Petitioner keeping eyes open allowed the period for preferring the appeal as well as that of for condonation of delay allowed to expire and thereafter he approached. In other words, the petitioner had fitter away its own remedy. Therefore alleged situation of remediless is its own creation. According to us, the provision of Section 35(1) of the Act is absolutely rigid and cannot be extended either directly or indirectly by the Court of law. - It is specific mandate that even Section 5 of the Limitation Act, 1963 by virtue of Section 29(2) thereof, will not be applicable beyond 90 days. We are further of the view that once this period is allowed to expire intentionally or unintentionally, then remedy is absolutely barred and no Court of law can entertain the matter. However, the petitioner availed alternative remedy unsuccessfully, so we are not considering this aspect in great detail. - Decided against assessee.
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2015 (4) TMI 421
Imposition of penalty - Bar of limitation - Revenue contends that CESTAT was not justified in remanding the matter providing an opportunity to the respondent to cross-examine the witnesses - Held that:- Appellant has vehemently contended that the CESTAT was not justified in doing so, on giving our consideration to that aspect of the matter, we are of the opinion that in the circumstance where an opportunity is granted to the respondent, if the respondent establishes that the notice/orders had not been served, all that would flow is that the appellate authority would have to thereafter consider the appeal on its merit rather than dismissing it for delay. On the other hand, even after an opportunity for cross-examination, if the appellate authority finds that the notice/orders served was in accordance with law and the mahazar was drawn as per the procedure, the appellate Tribunal would only reiterate its consideration based on the evidence that would be available. - no reasons to interfere with the order impugned herein. - Decided against Revenue.
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2015 (4) TMI 420
Imposition of penalty - Denial of CENVAT Credit - Held that:- availment of cenvat credit on the part of the present appellant is a clear case of fraud committed by M/s Ankit Textiles. The fraud vitiates entire transaction. When M/s Ankit Textiles cannot be held valid to enable credit by the dealer as it itself fictitious because the present dealer has purchased from M/s Ankit Textiles who is no more in existence and fictitious firm and, therefore, the present appellant could not have availed cenvat credit and, therefore, the authorities below as well as learned Tribunal have rightly confirmed ultimately by reducing the amount of penalty from ₹ 7,36,707/- to ₹ 2,00,000/- which, in our view, is in consonance with the allegations levelled against the present appellant and proved fact in view of the clear provisions of the Cenvat Credit Rules, 2002. - Decided against assessee.
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2015 (4) TMI 419
CENVAT Credit - removal of inputs as such - appellant having availed CENVAT Credit of Special Additional Duty (SAD) did not reversed the same while removing the components to their co-makers. - credit was reversed later before issue of SCN - demand of interest and penalty - Held that:- show-cause notice had invoked wrong provisions to recover the short paid SAD. The impugned order confirmed the proposal to demand irregular cenvat credit taken by the assessee. The amount involved is not irregular credit nor so utilized. We find that the demand of duty of ₹ 2,12,40,288/- and penalty imposed are not in accordance with law, since the same has been ordered invoking inapplicable provisions. We vacate the demand of so called irregular cenvat credit availed by the assessee. Consequently, demand of interest also stands vacated. Reliance placed on the case of LG Electronics Pvt. Ltd. (2010 (3) TMI 536 - CESTAT, MUMBAI) is correct. On reading of the entire case as reported we find that the facts are identical to the facts and issue in hand. It is to be noted that in the case of LG Electronics Pvt. Ltd. (2010 (3) TMI 536 - CESTAT, MUMBAI) the demand was raised under the same proviso i.e. Rule 14 of Cenvat Credit Rules, 2004 read with the provisions of Section 11A(1) of the Central Excise Act, 1944 invoking extended period by alleging suppression of facts with intention to evade duty. - In yet another case of Cosmo Films Ltd (2009 (10) TMI 300 - CESTAT, MUMBAI), the same issue of non-discharge of 4% of CVD was in dispute. The assessee in that case has pleaded that the mistake was bonafide and credit was available to the sister unit hence the issue is of revenue neutral situation. - impugned order is unsustainable and is liable to be set aside - Decided in favour of assessee.
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2015 (4) TMI 418
Classification of Fresubin - Classification as 'food supplement' or 'instant food mix' - duty exemption under Notification no. 3/2006 dated 01.03.2006 - Held that:- appellant had categorically stated that "Fresubin" is made from, or mixture of the basic food ingredients namely, corn starch, sucrose, milk protein and vegetable oil of required level/percentage, with the addition of minerals and vitamins for food enrichment. It has also been stated that the said food ingredients are mixed, cooked and dried into powder and that when the said powder is mixed with water, a ready to consume food/diet is made, which is known in the commercial dialect as "Instant Food Mix". The said submissions of the appellant before the departmental officers have also been endorsed by the authority on the subject i.e. The Institute of Chemical Technology, University of Mumbai, vide certificate dated 16.05.2007, wherein while mentioning the food ingredients contained in "Fresubin", it has been certified that since the said product is to be used as liquid food/diet by just adding water, the same should be termed as 'Instant Food Mix'. The reason assigned in the impugned order for non-consideration of the said certificate are that there is no mention of drawl of samples from the disputed goods, and that there is no disclosure regarding the name or authority on whose initiative the same had been issued. We are of the opinion that the competency of the said institute in furnishing the certificate cannot be questioned by the revenue, especially in absence of a contrary certificate being obtained from a recognized agency of repute. Moreover, when the lower authorities have accepted the classification of "Fresubin" under sub heading 21069099 of heading 2106", as food preparations not elsewhere specified" and the goods, in question, can be consumed simply by mixing with water, the same have to be treated the "food mixes" including 'Instant food mixes' to the purpose of notification No. 3/06-CE. Even if, Fresubin is used by patients recovering from illness, it will not cease to be a food mix. Where S. No. 30A covers all kind of food mixes including "instant food mixes" of sub heading 210690, for the purpose of this entry, no distinction can be made between food mixes specially designed for sick people and the food mixes for others and there would be no justification for treating the same as not covered by this entry. - impugned orders are set aside - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (4) TMI 427
Classification - Whether Tribunal was right in law in holding that the appellant's works contract for fabrication and installation of air-conditioning plants falls under Entry 2 and, therefore, taxable at the rate of 15% and not under Entry 5 under which it is taxable at the rate of 5% of the Schedule to the notification dated 18.10.93 issued under Section 55A of the Gujarat Sales Act, 1969 - Held that:- The competing entries requiring scrutiny to ascertain the correct composition rate of tax payable vis-`-vis the works contract involved are engrafted admittedly in the Notification issued by the Government of Gujarat in exercise of powers conferred by Section 55A of the Act. Logically thus, the interpretation necessitated by the rival orientations ought to be in furtherance of the underlying objective of the said provision. A plain perusal thereof would attest that thereby, in the circumstances to be prescribed, a dealer can be left at his option to pay in lieu of the amount of tax payable, a lump sum by way of composition, at the rate or rates as may be fixed by the State Government having regard to the incidence of tax on the nature of the goods involved in the execution of total value of the works contract. Unmistakably, therefore, the State Government while fixing the composition rate of tax has to be mindful of the nature of the works contract executed and by no means can be oblivious thereof. Further, a composition rate of tax is in lieu of the amount of levy otherwise payable by the dealer under the Act. Work order in clear terms did enjoin that the design parameters pertaining to tonnage of refrigeration, final temperature of the water to be made available for the process of manufacturing pigments and the quantity of the chilled water essential therefor were indispensable and were in addition to the other specifications as offered by the appellant. The rigour of the insistence for the adherence to the design parameters is patent also from the request of the customer requiring the appellant to provide it with the lay out detail, foundation drawing and other necessary information essential for the erection of the water chilling plant. The exercise as a whole as contemplated by the work order thus was neither intended nor can be reduced to mere installation of the finally emerging apparatus. The work order noticeably did not refer to any readymade or instantly available devices, meeting the requirements of the customer so much so to be only installed at its factory. Instead, the work order had been apparently tailor-made to the requirements from which no departure was intended or comprehended. It is in this perspective that the word "fabrication" appearing in Entry No.5 of the Notification assumes a decisive significance. In the overall legal and factual perspectives as obtained herein, any endeavour to drag the works contract involved within the framework of Entry No.2 would be repugnant to the basic principles of interpretation of statutes and subordinate legislations like the statutory Notification under Section 55A of the Act. To exclude the work of fabrication from the works contract as per the work order would render it (works contract) truncated to a form not intended by the customer. This would strike as well at the root of the mandate of correlation of a works contract and the corresponding composition rate of tax as envisaged by Section 55A of the Act and the Notification issued thereunder. - the inescapable conclusion is that the appellant's works contract for fabrication and installation of water chilling plant at the factory of Anupam Colours and Chemicals at Vapi would fall under Entry 5 of the Schedule to the Notification dated 18.10.1993 issued under Section 55A of the Act and would be taxable at the rate of 5% as prescribed thereby. The impugned decision of the High Court of Gujarat at Ahmedabad in [2006 (9) TMI 519 - GUJARAT HIGH COURT] and other determinations as are contrary to the views expressed herein are hereby set aside. - Decided in favour of assessee.
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2015 (4) TMI 426
Denial of refund claim - Reduction of entry tax - presumption for unjust enrichment - Denial on the premise of explanation added to Notification No. A-3-80-98-ST-V (49) dated 4.5.1999 to deny the refund to tax paid at higer rate - Held that:- The Explanation attached to Notification dated 4.5.1999, or for that mater the Notification dated 5.7.1999, which states that the amount shall not be refunded in any case on the basis that dealer had filed the tax at a higher rate, results in invidious discrimination towards those who have paid the tax at a higher rate, like the appellants, when compared with that category of the persons who were defaulters and have now been allowed to pay the tax at the rate of 1% for the relevant period. There is no basis for creating these two classes and there is no rationale behind it which would have any causal connection with the objective sought to be achieved. It would be pertinent to mention that on repeated query made by this Court to the learned counsel for the respondents, he could not explain or show from any material on record as to what led the authorities to provide such an Explanation. While adding Explanation given in [2008 (11) TMI 387 - SUPREME COURT OF INDIA] the Government had kept in mind the principle of unjust enrichment. Presumably because of this reason, the High Court also referred to the judgment in the case of Indian Oil Corporation (1992 (10) TMI 252 - PUNJAB AND HARYANA). However, on such a presumption alone, there cannot be any justification for adding the Explanation of the nature mentioned above. In order to determine as to whether a particular dealer is in fact entitled to refund or not, the Government can go into the issue of unjust enrichment while considering his application for refund. That would depend on the facts of each case. It cannot be presumed that the burden was positively passed on to the buyers by these dealers and, therefore, they are not entitled to refund. - impugned Explanations in the Notifications dated 4.5.1999 and 5.7.1999 are unconstitutional - Decided in favour of assessee.
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2015 (4) TMI 425
Imposition of penalty u/s 64 & 64 of RST Act - Errornoeus 100% exemption claim on purchase of raw material - assessee has submitted that it never intended to evade its tax liability and 100% exemption was claimed by it under the bonafide belief in construing the Notification dated 13th of June 1994 - Assessing officer made provisional assessment while deleting penalty - Commissioner invoked its jurisdiction to impose penalty - Held that:- Where both expressions "appeal" and "revision" are employed in a statute, obviously, the expression "revision" is meant to convey the idea of a much narrower jurisdiction than that conveyed by the expression "appeal". The use of two expressions "appeal" and "revision" when used in one statute conferring appellate power and revisional power, we think, is not without purpose and significance. Ordinarily, appellate jurisdiction involves a re-hearing while it is not so in the case of revisional jurisdiction when the same statute provides the remedy by way of an 'appeal' and so also of a 'revision'. If that were so, the revisional power would become co-extensive with that of the trial Court or the subordinate Tribunal which is never the case. The classic statement in Dattonpant that revisional power under the Rent Control Act may not be as narrow as the revisional power Under Section 115 of the Code but, at the same time, it is not wide enough to make the High Court a second Court of first appeal, commends to us and we approve the same. In view of legal position emerged out, and upon examination of the materials available on record in conjunction with Section 87 of the RST Act, learned Commissioner has over-stepped its jurisdiction in finding fault with the orders passed by the Assessing Authority for non-imposition of penalty. As a matter of fact, there is nothing on record to show that the Assessing Authority has exercised its discretion arbitrarily or capriciously and therefore interference with the discretionary orders of the Assessing Authority by the learned Commissioner is per-se a decision based on mere ipse-dixit or change in the opinion. While upholding the said order, the learned Tax Board has not at all cared to examine the nature of powers of the revisional authority under Section 87 of the RST Act rendering the said order too vulnerable. The folly, which is apparently clear from the order passed by the learned Commissioner under Section 87 of the RST Act, has been further perpetuated by the Assessing Authority after the remand order, inasmuch as the Assessing Authority has also not cared to issue any notice to the assessee before imposing penalty under Section 64 of the RST Act. It is clearly apparent that after remand order, all the assessment orders were passed by the Assessing Authority castigating the assessee for violation of declaration exposing it for the penalty envisaged therein without affording opportunity of being heard. Non-observance of principles of natural justice in the backdrop of facts and circumstances of the instant case has not been properly addressed by the first appellate authority as well as by the learned Tax Board and this vital issue has been dealt with in an absolutely casual and cavalier manner. Section 69 of the Act of 1994 also opens with non-obstante clause that no penalty under this Act shall be imposed unless a reasonable opportunity of being heard is afforded to the dealer or the person concerned. In this view of the matter, even on the touchstone of RST Act, observance of principles of natural justice is to be adhered to mandatorily before imposition of penalty against an erring assessee - use of the expression “falsely represents” is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10-A of the Act, burden would be on the Revenue to prove the existence of circumstances constituting the said offence. Furthermore, it is evident from the heading of Section 10-A of the Act that for breach of any provision of the Act, constituting an offence under Section 10 of the Act, ordinary remedy is prosecution which may entail a sentence of imprisonment and the penalty under Section 10-A of the Act is only in lieu of prosecution. In light of the language employed in the section and the nature of penalty contemplated therein, we find it difficult to hold that all types of omissions or commissions in the use of Form C will be embraced in the expression “false representation”. In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A of the Act. The learned Tax Board, while rejecting the contention of the assessee, has simply referred to Rule 34 of the Rules of 1995 without discussing the point in issue threadbare. The rival parties have joined issue on this question and requisite material is also available to embark on this question. I have also made endeavor to examine this question de-novo on the touchstone of relevant provisions governing the said province. Insofar as Assessment Years 1997-98 and 1998-99 are concerned, the Assessing Authority has passed the order on 11th August 2000 and revision under Section 87 is admittedly laid by the Assessing Authority to the learned Commissioner prior to expiry of five years. The revision petition is decided by the learned Commissioner on 10th of August 2005. Therefore, in terms of sub-sec.(2) of Section 87 of the RST Act, revisional power has been exercised by the learned Commissioner within five years. A plain reading of sub-sec.(2) of Section 87 makes it crystal clear that learned Commissioner can exercise revisional powers under sub-sec.(1) of Section 87 within a period of five years from the date order sought to be revived was passed. The order passed by the learned Commissioner speak volumes about the fact that the same was passed on 10th August 2005 and therefore I am not persuaded to hold that it has exercised powers of revision vis-ŕ-vis two assessment year after expiry of period of limitation. - Decided partly in favour of assessee.
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2015 (4) TMI 424
Levy of Entertainments & Advertisements Tax - Whether the assessee M/s Sky Media (P) Ltd. Jodhpur, a Multi System Operator (MSO), falls within the definition of `Proprietor' and the charging provision of the Rajasthan Entertainments & Advertisements Act, 1957 and is liable to pay entertainment tax on the satellite signals or electronic TV signals provided to the cable operators, who further transmit the same to the viewers/consumers for entertainment by exhibition of films & videos etc. - Held that:- there is no separate definition of the Multi System Operators like the present assessee, cable operators, sub-cable operators are found in the Rajasthan Entertainment & Advertisement Tax Act, 1957 but equally it is beyond any doubt that the MSO with the nature of work it does of receiving the satellite signals and transmitting the same to the cable operators is nothing but a work of cable operator as defined under the West Bengal Act, which was subject matter of the controversy before the Supreme Court in the case of M/s Purvi Communication (supra) and it would be of great value to quote para 34 and 35 of the said judgment to explain the aforesaid proposition that MSO is nothing but a cable operator as defined in the West Bengal Act read with the provisions of the Cable TV Network Regulations, 1995. Multi System Operator, will clearly fall within the ambit and scope of the definition `Proprietor' read with the charging provision of Section 4AA of the amended law, irrespective of the fact that there is no separate definition of such MSO, cable operator or sub-cable operator in the Rajasthan Act. A closer scrutiny of the definition of `Proprietor', who falls within the tax net under the said law would reveal that even MSO like the present assessee is undoubtedly a person connected with the organization of entertainment. He may or may not be a last person providing such entertainment in the chain to the ultimate subscriber/viewer and there may be one or more agency in between like cable operator or sub-cable operator in the present case. But, it is undoubted that without the transmission of satellite signals or electronic signals by the MSO to the cable operators or sub-cable operators, the ultimate consumer or viewer cannot view the entertainment. Thus, the MSO is undoubtedly an integral part of the chain of persons or agencies or organization providing such entertainment and since the definition of the "Proprietor" clearly covers such an assessee, therefore, it cannot be contended, as has been contended by the assessee, that in the absence of a specific definition in the definition clause of cable operator or Multi System Operator, they would not fall within the tax net. The controvery is squarely covered on all fours by the aforesaid judgments of Hon'ble Supreme Court in the case of M/s Purvi Communication (2005 (3) TMI 438 - SUPREME COURT OF INDIA), Indusind Media (2013 (3) TMI 110 - SUPREME COURT) and the amended provisions of the Rajasthan Entertainment & Advertisement Tax Act, 1957 and the orders passed by the assessing authority in the present cases deserve to be upheld while the orders passed by the two higher appellate authorities, namely; Deputy Commissioner (Appeals) and the Rajasthan Tax Board, deserve to be quashed and set aside. - M/s Sky Media Pvt. Ltd. would fall within the scope of charging provision of the Rajasthan Entertainments & Advertisements Tax Act, 1957 and under the retrospectively amended provisions of the Act and the present assessee would fall within the definition of `Proprietor' as defined under Section 3(8) of the Act and is liable to entertainment tax under the charging provision of Section 4AA of the said Act of 1957. - Decided against assessee.
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Wealth tax
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2015 (4) TMI 412
Recall of previous order - Power of Tribunal to recall its final order - Whether in a case of wealth tax, the Tribunal has power to recall its order in the guise of rectification of mistake contrary to the provision under Section 35 of the Wealth Tax Act - Held that:- Power under Section 35(1)(e) of the Wealth Tax Act extends only to rectify the mistake apparent from the face of the record. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn out process of reasoning. Under the garb of rectification of mistake, it is not possible for a party to take further chance of rearguing the appeal already decided. What can be rectified under Section 35(1)(e) is a mistake which is apparent and patent. A patent, manifest and self-evident error, which does not require elaborate discussion of evidence or argument to establish it can be said to be an error apparent on the face of the record. A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. Tribunal at the first instance had given benefit to the assessee and thereafter, the Department filed Miscellaneous Petitions to recall the order on the legal plea that the benefit of exclusion of asset would not apply in terms of Section 2(ea) of the Wealth Tax Act. This issue, according to us is a legal issue, which the Department, if aggrieved would have to canvass in appeal. The Department cannot be allowed to raise this issue in a petition filed for rectification that is not raised in appeal. The Tribunal in this case exceeded its jurisdiction in invoking the power under Section 35(1)(e) of the Wealth Tax Act to recall the final order dated 13.3.2012 in the guise of rectification. - Tribunal can only exercise its jurisdiction under Section 35(1)(e) of the Wealth Tax Act in the manner indicated in the provision and, de hors the provisions in the Act, it has no jurisdiction to recall its final order passed on the merits of the case. - Tribunal, while exercising the power of rectification, can recall its order, if it is satisfied that on account of mistake, manifest error or omission attributable to the Tribunal, prejudice is caused to the party. The Tribunal can recall its order for rectification of mistake apparent from the record. Else, the Tribunal has no power to recall its order. - Decided in favour of assessee.
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