TMI Tax Updates - e-Newsletter
April 15, 2016
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:
Fact-situation in the present case does not suggest that the computation of price charged in the impugned international transaction done as per Section 92C of the Act is lacking in good faith or due diligence, so as to render the assessee liable for penalty under section 271(1)(c) - AT
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Income Tax:
Interest income received by the club from fixed deposit in bank cannot be form the house property and consequently this income is from other sources - there is no principle of mutuality - HC
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Income Tax:
Suitability of CUP method cannot be rejected because of the commercial outcome of the transaction being in the nature of loss - AT
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Income Tax:
Section 142 of the Act of 1961 allows the assessing officer to make an enquiry before the assessment - AO cannot invoke the provisions of Section 142(1) after an order u/s 143(3)(ii) - HC
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Income Tax:
Noticee is a person covered under the treaty and being an enterprise of the UK, the same has fiscal domicile in the UK where it is based. Its income from operation of ships in international traffic is not exigible to tax under domestic law - HC
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Income Tax:
Appellant is engaged in the manufacture of cane sugar and industrial alcohol and generation of power through windmills and it has rightly claimed the benefit of deduction under Section 80IA - HC
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Income Tax:
Business of yarn and textile brokerage and in the generation of power through windmills rightly claimed the benefit of deduction under Section 80IA - HC
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Income Tax:
Recipient has already paid tax and evidence has been produced before the Assessing Officer as the recipient had claimed refund by filing the return. There is no revenue loss - AT
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Income Tax:
Receipts from Indian entities on account of connectivity charges are not taxable in India. - AT
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Income Tax:
Assessee has sold the chemical unit not as a going concern but itemized sale was made vide agreement and hence, the sale cannot be treated as slump sale - AT
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Income Tax:
Once the expenditure is found to be allowable as revenue expenditure as per provisions of the Income Tax Act,1961, the same are to be allowed as revenue expenditure under the Act while computing income chargeable to tax even if the tax-payer has given different treatment in its books of accounts by capitalizing the same in its books of accounts instead of debiting it to the Profit and Loss Account - AT
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Income Tax:
Assessee has deployed its owned funds for grant of interest free loans hence the additions with respect of interest as ‘income from other sources’ is ordered to be deleted - AT
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Income Tax:
Reimbursement of expenses paid in connection with export consignment shipped from India to Lusaka(Zambia) cannot be disallowed invoking provisions of Section 40(a)(ia) as there is no liability on the assessee to deduct tax at source u/s 194C - AT
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Income Tax:
Eligibility for exemption u/s 54F allowed even though the capital gain was invested in multiple residential units. - AT
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Income Tax:
When the satisfaction was not recorded by AO for initiating proceeding under Section 158BD it cannot be said that there is any concealment of income by the assessee - AT
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Customs:
CBEC issues instruction after the CESTAT had commented adversely, the casual manner in which the matter was handled by the Adjudicating Authority and the Commissioner (Appeal).
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Customs:
Refund claim of 5% additional duty - even if there is no endorsement in the commercial invoices, the SAD of refund should be allowed. - AT
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Customs:
Import duty - When the vessel was manufactured by an Indian company and was sold to another Indian company which was using this vessel, no question of import duty arises - SC
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Customs:
When excise duty is exempted, there is no question of payment of additional duty - SC
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Corporate Law:
Computation of stamp duty and valuation does not make Scheme of Amalgamation alone chargeable to stamp duty - Basically, a scheme/compromise/arrangement between the two companies is never a document chargeable to stamp duty - HC
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Wealth-tax:
Reassessment - addition of alleged urban land - A piece of vacated land cannot be excluded from taxable wealth simply because building has been constructed thereupon subsequently. As for the ‘genuine hardship’ being faced by the assessee, we need not commiserate with the assessee because it is not for us to supply the casus omissus, even if any - AT
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Wealth-tax:
A piece of vacated land cannot be excluded from taxable wealth simply because building has been constructed thereupon subsequently - AT
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Service Tax:
Clarification on issues regarding levy of Service Tax on the services provided by Government or a local authority to business entities - Circular
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Service Tax:
Demand - Activity of collection of order from various stockist, distribution of said goods and collecting them from said stockist would fall under "Business Auxiliary Services" under promotion or marketing or sale of goods produced or provided by or belonging to the client - AT
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Service Tax:
Demand - Activity of arranging the entire transportation, dispatching of goods and supervising the loading and unloading of the goods under Transport Coordination Services would be covered under “Business Support Services” with effect from 1.5.2006 and not under "Business Auxiliary Service" - AT
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Service Tax:
Service tax liability - Undertaking of maintenance or repair services for self and for client do not attract tax liability under Management maintenance and repair service w.e.f. 01-05-2006 - AT
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Service Tax:
Refund claim - Services needs to be reclassified by Revenue should be by issuing a show cause notice as reclassification in a refund claim is an incorrect appreciation of law - Refund allowed - AT
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Service Tax:
Activity of deputation of employees to group companies - No Marketing network services provided to group companies - recovery of expenses in return do not comes under Business Auxiliary Services - not taxable - AT
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Central Excise:
Refund claim under Notification No. 41/2007-ST dated 6.10.2007 was required to be filed within 60 days of a quarter during the relevant period - AT
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Central Excise:
Cenvat credit - Storage tank fully embedded to the ground remain the goods and inputs like TOT/TMT Rods, Cement used in the manufacture of water tank to purify water for use in their Captive Power Plan are classified as inputs - Credit allowed - AT
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Central Excise:
Goods fully exempted as per N/N 5/2006-CE dated 01.03.2006 unconditionally - As per Rule 6(3), when any common inputs are used in the manufacture of dutiable and exempted goods then it is required to pay an amount equivalent to 10% on the value of exempted goods - AT
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VAT:
Seizure of 207 cartons of Raga Shampoo under 'Mal Roko Adesh' - DVAT - What the Court has found in the present case is a complete non-application of mind by the VATO, not only to the facts and circumstances of the case but also to the requirement of the law. - HC
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VAT:
Works contract - a fundamental mistake which is committed by the authorities below is that foundation work or installation work, which is even considered as part of works contract by the Assessing Officer himself, cannot be treated as “goods”. - SC
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VAT:
Can dealer be a sole-proprietor - Merely because the trade name been incorporated or inserted in the notice does not mean that the dealer was prevented from contesting the proceedings or the exercise carried out by the commissioner under sub-sections (5) or (6) of section 33 - Eventually, the dealer must be put to notice - Dealer can be sole-proprietor and vice-versa - HC
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VAT:
Capability of sole proprietor/dealer to tax - within the meaning of section 33(1), a sole proprietor/dealer can be brought to tax and his income can be assessed on the basis of the transactions of sale and purchase of goods undertaken by him/her and the Commissioner is enable to carry on best judgment assessment - HC
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VAT:
The State Police has a jurisdiction to entertain, institute and investigate offences under the Bihar VAT Act especially in view of Section 86(2)(a) read with Section 83 of the VAT Act in absence of a power of an Officer-in-Charge of Police Station - HC
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (4) TMI 531
Validity of reopening of assessment - Held that:- The Hon’ble Bombay High Court in the case of Jet Airways(I)Ltd. (2010 (4) TMI 431 - HIGH COURT OF BOMBAY) had interpreted the provision of Section 147 on first principle and held that as per section 147, upon formulation of a reason to believe u/s 147, and following the issuance of a notice u/s 148, the AO has the power to assess or reassess the income which he has reason to believe has escaped assessment and any other income chargeable to tax. The word ‘and’ used in the section is important and results in an interpretation that it is only along with income which the AO has formed reason to believe has escaped assessments that any other income can be brought to tax. Independently any other income cannot be assessed to tax. In the absence of any addition having been made on incomes which the AO had reason to believe had escaped assessment, no addition of any other income could have been made and that the AO had exceeded his jurisdiction in passing the impugned order u/s 147. The same is liable to be quashed. - Decided in favour of assessee.
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2016 (4) TMI 530
Interest income received by the club from fixed deposit in bank - house property or income is from other sources - Held that:- The principle of mutuality is not available to the assessee. We do not find that any such inference can be drawn from the order of the Supreme Court in Cawnpore Club Ltd. [1998 (2) TMI 591 - SUPREME COURT OF INDIA ] if read along with the order passed in Banikpur Club Ltd (1997 (5) TMI 392 - SUPREME Court). We find that the interest income cannot be form the house property and consequently this income is from other sources. In view of judgment of Gujarat High Court in the case of Sports Club of Gujrat Limited (1987 (10) TMI 21 - GUJARAT High Court ) there is no principle of mutuality between the interest income from the F.D.R. and other activities of the club. - Decided in favour of the Revenue
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2016 (4) TMI 529
Invoking the provisions of Section 142(1) - Could the assessing officer invoke the provisions of Section 142(1) after an order under Section 143(3)(ii) by the appellate forum? - Held that:- Section 142 of the Act of 1961 allows the assessing officer to make an enquiry before the assessment. In the present case the assessment was contemplated under Section 143(3)(ii) of the Act of 1961 prior to the issuance of the notice under Section 142 of the Act of 1961. In fact the appellate authority has also proceeded on the basis of the provisions of Section 143(3)(ii) of the Act of 1961. In such circumstances it would not be permissible for the assessing officer to reopen the assessment for the relevant financial year after having assessed it under Section 143(3)(ii) of the Act of 1961. The contention that, there was a mistake in the order of assessment under Section 143 and, therefore, such mistake was sought to be corrected is not available to the Department particularly in view of the fact that, the appellate forum has also proceeded on the basis that an assessment under Section 143(3)(ii) of the Act of 1961 has taken place in respect of the relevant assessment year. The impugned action of the Department in issuing a notice under Section 142 of the Act of 1961 and all consequential steps taken thereundere are set aside. - Decided in favour of assessee
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2016 (4) TMI 528
Eligibility of deduction under Section 80IA - Held that:- The appellant is engaged in the business of yarn and textile brokerage and in the generation of power through windmills and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.
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2016 (4) TMI 527
Eligibility of deduction under Section 80IA - Held that:- The appellant is engaged in the manufacture of cane sugar and industrial alcohol and generation of power through windmills and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills. [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.
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2016 (4) TMI 526
Reopening of assessment against the partnership firm based in the UK - Indo-UK treaty - whether partners of the firm had fiscal domicile offshore - noticee to be a person covered by the treaty - Held that:- Similar situation was dealt with in P & O Nedlloyd Ltd. & Ors. (2014 (11) TMI 564 - CALCUTTA HIGH COURT ) where this Court held the noticee to be a person covered by the treaty. Applying that decision to the facts of this case the noticee stands covered by the treaty as a person thereunder and being an enterprise of a Contracting State, taxable only in that State. This court is unable to take a different view than the one already taken P & O Nedlloyd Ltd. & Ors. (supra) on this issue as persuaded by the submissions made on behalf of the petitioners. Partnerships are not taxed in the UK, be it a partnership based there or here in India. Only partnerships established in the UK are required to file a return there as noted above. On the other hand, where a partnership based in the UK is treated as a person under domestic law as its income exigible to tax thereunder, it follows that paragraph 2 of Article 3 of the convention is to be given an interpretation so as to benefit such a partnership based in the UK which since not taxed under the laws there might be treated as liable to tax in India. Mr. Chakraborty had fairly submitted that there was a subsequent amendment made to the treaty and duly notified whereby similar issue would not arise in future against the noticee. Thus the noticee is a person covered under the treaty and being an enterprise of the UK, the same has fiscal domicile in the UK where it is based. Its income from operation of ships in international traffic is not exigible to tax under domestic law. Consequently the impugned notices are set aside and the writ petitions disposed of. - Decided in favour of assessee
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2016 (4) TMI 525
Disallowance of e mobilization expenses - revenue v/s capital expenditure - Held that:- Four rigs were acquired as an expansion of the existing business of the assessee company to charter hire the rigs which was admittedly set-up in the earlier years and no new business had been set up with acquisition of these four new rigs nor any new source of income has come to existence as there is a unity of management, control and interlacing in the business of the assessee company , we , therefore, in view of our detailed discussions and reasoning as above hold that the mobilization expenses incurred by the assessee company is to be allowed as revenue expenditure. Once the expenditure is found to be allowable as revenue expenditure as per provisions of the Income Tax Act,1961, the same are to be allowed as revenue expenditure under the Act while computing income chargeable to tax even if the tax-payer has given different treatment in its books of accounts by capitalizing the same in its books of accounts instead of debiting it to the Profit and Loss Account. This is the mandate of the Income Tax Act,1961 which has to be followed as the taxes can only be collected by the authority of law. In our considered view based on our above discussions and reasoning, the addition made by the A.O. and confirmed by the CIT(A) is ordered to be deleted. - Decided in favour of assessee
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2016 (4) TMI 524
TDS u/s 194C - reimbursement of expenses - Held that:- We hold that reimbursement of expenses paid by the assessee to S. Natesa Iyer and company for reimbursement of air freight , insurance charges and postal charges in connection with export consignment shipped from India to Lusaka(Zambia) cannot be disallowed by invoking provisions of Section 40(a)(ia) of the Act as there is no liability on the assessee to deduct tax at source u/s 194C of the Act on these reimbursement of expenses paid by the assessee company. However, payment which was paid to M/s S. Natesa Iyer & Co. vide invoice dated 12-01-2008 for work performed by them for handling custom clearance etc. was subject to deduction of tax at source u/s 194C of the Act but the same was below the threshold exemption limit provided u/s 194C of the Act as per the facts emerging from the records, hence the same stood out of the applicability of provisions of Section 194C of the Act. In our considered view , the order of the CIT(A) is to be set aside and disallowance made by the A.O. and confirmed by the CIT(A) is ordered to be deleted. - Decided in favour of assessee. Addition of notional interest as income from other services - Held that:- Assessee which was outstanding to be receivable to the tune of ₹ 9,86,874.18 as on 31-3-2008 and ₹ 12,33,772.00 as on 31-3-2007 as per audited financial statements submitted by the assessee . The assessee’s total owned interest free funds being owned capital is ₹ 41,93,799.52 as at 31-03-2008 and ₹ 34,89,597.58 as at 31-03-2007 as per audited financial statements and there is a presumption that assessee has utilized its own interest free funds being owned capital for granting interest free loans to employee and his wife who are also relatives of the assessee. As could be observed that the assessee owned capital invested in the concern of ₹ 34.89 lacs as at 31-03-2007 is much higher than the interest free loan advanced of ₹ 12.34 lacs as at 31- 03-2007 , whereby it could be seen that interest free funds of ₹ 34.89 lacs owned by the assessee are much more than the amount of ₹ 12.34 lacs advanced by the assessee as interest free loans and the presumption as laid down by the judgments of jurisdictional Hon’ble High Court of Bombay in the case of CIT v. Reliance Utilities and Power Limited (2009 (1) TMI 4 - BOMBAY HIGH COURT ) and CIT v. HDFC Bank Limited (2014 (8) TMI 119 - BOMBAY HIGH COURT) shall squarely apply that the assessee has deployed its owned funds for grant of interest free loans and hence the additions made by the AO and as confirmed by the CIT(A) with respect of interest as ‘income from other sources’ is ordered to be deleted - Decided in favour of assessee.
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2016 (4) TMI 523
Satisfaction for initiating proceeding under Section 158BD - Held that:- Penalty proceeding is different than the assessment proceeding. The authorities under Income-tax Act are expected to re-appreciate the material available on record and find out whether penalty can be imposed for concealment of income. This Tribunal is of the considered opinion that when the satisfaction was not recorded by the Assessing Officer for initiating proceeding under Section 158BD of the Act, it cannot be said that there is any concealment of income by the assessee. In those circumstances, this Tribunal is of the considered opinion that initiating proceeding under Section 158BFA(2) may not be justified. Even otherwise, there are two views possible in this case. One view is that the partner and partnership-firm are one and the same person, therefore, recording of satisfaction may not be necessary. This view is somewhat similar to that of same officer assessing the income of searched person and the person other than the searched person. The CBDT clarified that even though the Assessing Officer is one and the same for the searched person and the person other than searched person, satisfaction need to be recorded. Similarly, even though the partner and partnership-firm are one and same under common law, they are being assessed separately under Income-tax Act, therefore, recording of satisfaction is mandatory as held by the Apex Court in Manish Maheshwari (2007 (2) TMI 148 - SUPREME COURT OF INDIA ). The CBDT, in fact, instructed to withdraw all the appeals where no satisfaction was recorded. This Tribunal is of the considered opinion that this is not a fit case for levy of penalty under Section 158BFA(2) of the Act - Decided in favour of assessee.
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2016 (4) TMI 522
Computation of capital gain - exemption claimed by the assessee under Section 54F - capital gain was invested in multiple residential units - Held that:- Section 54F of the Act clearly says that the capital gain arising from the transfer of any long term capital, the asset not being residential house, is eligible for exemption, if the assessee, within a period of one year before or two years after the date of transfer, purchased or has within a period of three years after the date of transfer, constructed a residential house in India. The term “constructed a residential house” was amended by Finance Act, 2014 with effect from 1.4.2015 by saying that “constructed one residential house” in India. This amendment was interpreted by Madras High Court in V.R. Karpagam (2014 (8) TMI 899 - MADRAS HIGH COURT ) and found that this amendment is applicable prospectively and based on that the assessee is eligible for exemption even though the assessee invested in multiple residential units. The year under consideration is 2011-12. Therefore, in view of the judgment of Madras High Court in V.R. Karpagam (2014 (8) TMI 899 - MADRAS HIGH COURT ), the assessee is eligible for exemption even though the capital gain was invested in multiple residential units. New house purchased in the joint name of the assessee and her daughter - Held that:- This Tribunal is of the considered opinion that when the assessee purchased a house in the joint name along with her daughter, the assessee is eligible for exemption under Section 54F of the Act. The distinction made by the Assessing Officer on the ground that the assessee before Delhi High Court and his wife are living together may not be relevant consideration at all. What is to be considered is when the assessee purchased a house along with her legal heir for investment of capital gain, whether such investment is eligible for exemption under Section 54F of the Act? This was considered by the Delhi High Court in Kamal Wahal (2013 (1) TMI 401 - DELHI HIGH COURT ). The Delhi High Court held that the assessee is eligible for exemption under Section 54F of the Act under such circumstances. Therefore, the Assessing Officer is not justified in disallowing the claim of the assessee. Assessee is having one house inherited from her father by way of will - Held that:- Proviso to Section 54F says that when the assessee owns more than one residential house other than the new asset on the date of turnover of original asset, the assessee is not eligible for exemption. On the date of transfer of original asset, the assessee owns a property inherited from her father by way of will. Other than that the assessee had no property at all. What is provided is more than one residential house. Other than the new asset acquired, the assessee was owning one more house property which was inherited from her father through will. Therefore, on the date of transfer, the assessee is not owning more than one residential house which was inherited from her father. Therefore, this Tribunal is of the considered opinion that proviso to Section 54F of the Act may not stand in the way of allowing exemption under Section 54F of the Act. In the case before us, both the properties were registered on 28.10.2011. Section 54F clearly says that the new asset has to be purchased within a period of two years after the date of transfer. In this case, the property was purchased on the very same day. The assessee had no other asset other than the house inherited from her father on the date of purchase. Therefore, this Tribunal is of the considered opinion that the proviso to Section 54F of the Act may not stand in the way of allowing exemption. - Decided in favour of assessee
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2016 (4) TMI 521
Transfer pricing adjustment - Addition in respect of payment of royalty to the associated enterprise - rejection of assessee’s benchmarking under CUP method - Held that:- There cannot be an adhoc adjustment in the course of ascertaining the arm’s length price. If the Transfer Pricing Officer was to reject the assessee’s benchmarking on the basis of Reserve Bank of India’s approval under CUP method, the Transfer Pricing Officer was required to decide the correct mechanism of deciding the arm’s length price and compute the arm’s length price on that basis. It was not open to him to simply brush aside the benchmarking done by the assessee and adopt the NIL value. That is not a scientific method of determining the arm’s length price and it cannot meet any judicial approval. In this view of the matter, and also having regard to a series of judicial precedents from the co-ordinate benches holding that even Reserve Bank of India’s approval of royalty can be a reasonable CUP input for determining arm’s length price - Decided in favour of assessee Addition in respect of import of product PTOP from the associated enterprise - Held that:- The quantities and sale instances in the case of the tested party are fewer but that does not lead to the inference that a comparison cannot be made at all. It is only when comparable instances are of relative smaller quantity and based on fewer sale instances that the bonafides of comparable are in the dock. When the quantity and the instances of comparables is much higher vis-a-vis the transaction with AE, issues cannot be raised about the bonafides. So far as CUP comparability is concerned, differences in the size, geographical location etc. cannot be reason enough to discard the comparables, unless it is shown that such factors influence conditions in the market in which respective parties to the transactions operate. There is, in the orders of the authorities below, not even a whisper about the impact, if any, of these factors on the market conditions. It is also important to bear in mind the fact that the imports are of very small quantities which does not even account for one percent of total transactions. In the light of all these factors, and particularly bearing in mind smallness of the amount involved, in our considered view, it was not a fit case for rejection of CUP method, as employed by the assessee. We, therefore, deem it fit and proper to uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned ALP adjustment - Decided in favour of assessee Addition in respect of export of the product IBB to the associated enterprise - Held that:- We have noted that the assessee has incurred a loss on this transaction but when arm’s length price is determined on the basis of CUP, it is wholly immaterial as to whether the assessee has earned profit or incurred a loss. The Transfer Pricing Officer was thus swayed by a wholly irrelevant consideration. The suitability of CUP method cannot be rejected because of the commercial outcome of the transaction being in the nature of loss. - Decided in favour of assessee
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2016 (4) TMI 520
Receipts from Indian entities on account of connectivity charges - Taxation of the receipts as royalty - Held that:- No services are made available in the sense that the recipient of service is enabled to apply the technology, and do the same work without recourse to the service provider. There is no transfer of technology here, and in that sense technical services are not made available. Undoubtedly, the services rendered by the assessee requires technical inputs, but that alone, as we have seen above, does not bring it in the ambit of fees for technical services taxable under article 13 of India UK tax treaty. Thus we are of the considered view that the authorities below were in error in holding that the receipts from Indian entities on account of connectivity charges, are taxable in India. We direct the Assessing Officer to delete the same. - Decided in favour of assessee
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2016 (4) TMI 519
Slump sale u/s. 2(42C) read with section 50B - sale of assets of chemical units - Held that:- Hon'ble Calcutta High Court in the case of Kwality Ice Cream (India) Ltd. v. CIT (2011 (1) TMI 905 - Calcutta High Court ) in which also though the sale of the undertaking was for a lump sum consideration it was held that sec. 50 of the Act in respect of depreciable assets will override all other previsions and for depreciable assets, the value has to be determined in accordance with the principles of block of assets read with sec. 43(6) of the Act. In view of the aforesaid facts and circumstances, we are of the view that sale and transfer of some of the assets of the undertaking for which sale prices had been predetermined and agreed and disclosed in the agreement itself without transferring other assets and without transferring any of the liabilities cannot be treated as slump sale. The assessee has sold the chemical unit not as a going concern but itemized sale was made vide agreement and hence, the sale cannot be treated as slump sale. We reverse the orders of the lower authorities and this issue of assessee is allowed.
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2016 (4) TMI 518
TDS liability - disallowance u/s 40(a)(ia) - Held that:- The recipient has already paid tax and evidence has been produced before the Assessing Officer as the recipient had claimed refund by filing the return. There is no revenue loss. - Decided in favour of assessee
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2016 (4) TMI 517
Assessment u/s. 153 - AAddition on account of excess depreciation - Held that:- CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance / additions can be made in the assessment u/s. 153A of the I.T. Act. As per record, of this case the depreciation claim restricted by the AO is not based upon incriminating material/ documents found in the search operations. Therefore, the additions made by the AO is not sustainable in the eyes of law. Thus, the Ld. CIT(A) has rightly adjudicated the issue in favour of the Assessee and against the Revenue. - Decided in favour of assessee
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2016 (4) TMI 516
TDS u/s 194H - disallowance under section 40(a)(ia) - non-deduction of TDS on payments made to distributors as discount on sale of pre-paid recharge vouchers - Held that:- Once in assessee’s own case, it has been categorically held that, assessee was not liable to deduct TDS on such a trade discount given by the assessee to the Distributors then it cannot be reckoned as a “commission”, and consequentially disallowance under section 40(a)(ia) does not has any legs to stand. There could not be a situation where on one hand, a finding has attained finality that assessee was not liable to deduct TDS on trade discount given by the assessee and cannot be treated as commission payment to the distributors; and on the other hand, a disallowance of expenditure under section 40(a)(ia) is being made on the same amount by holding that that assessee should have deducted TDS. Thus, we do not find any infirmity in the order of the CIT(A) in deleting the said disallowance - Decided in favour of assessee Disallowance u/s 14A - Held that:- Once the assessee has not earned any exempt income then in view of the ratio laid down by the Hon’ble Delhi High Court in the case of Cheminvest Ltd. (2015 (9) TMI 238 - DELHI HIGH COURT ), no disallowance under section 14A can be made. The Hon’ble Delhi High Court after taking the note of Hon’ble Supreme Court in the case of CIT vs Rajendra Prasad Mody, reported in [1978 (10) TMI 133 - SUPREME Court] held that if no exempt income has been earned during the year, then no disallowance can be made under section 14A.- Decided in favour of assessee
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2016 (4) TMI 515
Stay Application on the recovery of outstanding demand - Held that:- Applicant shall deposit a sum of ₹ 50.00 crores on or before 31/03/2016 and recovery of balance of the demand shall be stayed. For the balance of the outstanding demand, the applicant shall provide a corporate guarantee to the satisfaction of the Assessing Officer within four weeks. The Registry shall list the appeal of the assessee on an out of turn basis before the Regular Bench on 08/08/2016. Since the aforesaid date of hearing was announced in the open court, the requirement of issuance of a formal notice of hearing is hereby dispensed with; and, The aforesaid stay shall operate for a period of six months from today or the date of disposal of appeal by the Tribunal, whichever is earlier.
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2016 (4) TMI 514
Penalty under section 271(1)(c) - income arising from an international transaction, having regard to its arm’s length price, as mandated by Section 92(1) of the Act - Held that:- The orders of the authorities below in the quantum assessment proceedings reveal that all information and documents as required by Section 92C of the Act read with rule 10B of the Income Tax Rules, 1962 for the purpose of determination of arm’s length price were furnished by the assessee. Moreover, the addition determined by the income-tax authorities is not on account of any inaccuracy, discrepancy or concealment found in the information and documents furnished by the assessee for determining the arm’s length price of the international transaction with the associated enterprise. The addition is due to the difference in the pricing methodology adopted by the income-tax authorities for determining the expected profits from the associated enterprise. Therefore, in our view, the fact-situation in the present case does not suggest that the computation of price charged in the impugned international transaction done as per Section 92C of the Act is lacking in good faith or due diligence, so as to render the assessee liable for penalty under section 271(1)(c) of the Act r.w. Explanation-7 thereof. - Decided in favour of assessee
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2016 (4) TMI 513
Penalty u/s 271(1)(c) - Held that:- In the present case the Assessing Officer has issued notice u/s. 274 r.w.s. 271(1)(c) of the Act without striking of the clauses which are not relevant. The notice is ambiguous. Further a perusal of penalty order shows that the Assessing Officer has not specified the information concealed by the assessee. Mere mentioning of the phrase that the assessee has ‘concealed income as well as furnished inaccurate particulars of income’ is not sufficient to comply with the provisions of section 271(1)(c). The Assessing Officer has to subjectively explain as to what information assessee has concealed and/or what inaccurate particulars are filed in the return of income. The Assessing Officer in present case seems was not clear at the time of issuing notice as to whether penalty is to be levied for concealment of income or furnishing of inaccurate particulars or both. Thus, in our considered view the notice issue u/s. 274 r.w.s 271(1)(c) in the instant case is defective and the proceedings arising therefrom are vitiated, unsustainable and are liable to be annulled. - Decided in favour of assessee
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2016 (4) TMI 512
Entitlement for exemption u/s.11 - violation u/s.13(1)(d) & 13(1)(c) - Held that:- The investment of ₹ 30,00,000/- during the F.Y.2006-07, in the shares of JFSL, which is within the limits of 15% of the income, is deemed to have been made out of the 15% of the income of the trust exempted u/s. 11(1)(a) of the Act. This is the only investment made in F.Y. 2006-07 and continued during the F.Y.2007-08, which the Assessing Officer treated as a violation u/s. 13(1)(d) r.w.s. 11(5) of the Act. There are no other investments made in violation of sec. 13(1)(d) w.r.s. 11(5), brought on record by the Assessing Officer. Hence the said investments in the shares of JFSL cannot be considered as a violation u/s.13(1)(d) r.w.s. 11(5) of the Act for the purpose of denying exemption of income u/s. 11 of the Act. Therefore the Assessing Officer is not justified in denying exemption of income u/s. 11 of the Act to the assessee on this account. -Decided in favour of assessee Unaccounted loan disbursed - Held that:- Since the advances mentioned in the MIS data base are already reflected in the regular books of the assessee, if the Assessing Officer feels that the loans (based on the blank promotes/ application forms) are actually disbursed as contained in the MIS data base, the said disbursement stands explained and accounted in the books. If the Assessing Officer feels that the amounts in the MIS data base are different loans, then there is no evidence to show that the assessee actually advanced loans to the said SHGs, based on the blank pronotes / application forms. Further, even if it is presumed that there were loans advanced to the said SHGs based on the said blank pronotes/application forms, whether accounted in the books or not, still the same will not amount to violations u/s. 13(l)(c) of the Act as none of the self help groups or SHGs are the persons specified u/s. 13(3) of the Act. Thus, the Assessing Officer in not justified in coming to the conclusion that there were unaccounted loans disbursed to the SHGs etc., and treating the same as a violation u/s. 13(l)(c) of the Act. - Decided in favour of assessee Disallowance of 10% of administrative expenditure - 80% made by the AO - Held that:- Whatever assessee claimed for expenditure, the burden is on the assessee to produce necessary documents to prove the expenditure that was incurred wholly and exclusively for the purpose of carrying out the objectives of the Trust or for the purpose of business of assessee. Since the assessee has failed to produce books of accounts, the AO forced to estimate the disallowance of administrative expenditure at 80%. The CIT(A) reduced to 10% without any basis. The CIT(A) observed that disallowance of 10% is sufficient in view of the facts of the case. In our opinion, this findings of the CIT(A) is not based with any material brought on record and it is appropriate to remit the issue to the file of AO with a direction to the assessee to produce necessary books of accounts and supporting vouchers and bills to prove the expenditure incurred by the assessee and AO would decide the issue afresh.
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2016 (4) TMI 511
Rejection of books of accounts - Held that:- In view of the defects pointed out by the Assessing Officer and ld. CIT(A) in the books of account, we are of considered opinion that the books of account cannot be said to be correct in terms of Section 145(3) of the Act and we find the order of the ld CIT as well reasoned and no interference is required by us, accordingly, we uphold the finding of ld. CIT(A) on this issue in dispute - Decided against assessee Addition on unexplained cash - Held that:- The appellant does not have any explanation for the cash found during the search. Therefore the AO rightly treated the same as unexplained. Even if the books and imaginary huge cash balance built up is rejected as untrue, there has to be some cash belonging to the business of the appellant if judicious view of the issue is taken. We uphold the finding of ld. CIT(A) on this issue in dispute - Decided against assessee Enhancement of unexplained investment in purchase of raw material - Held that:- CIT(A), relying on the evidences of sales found during the course of search and inability of the assessee to explain the corresponding purchases, logically held the amount of ₹ 3,92,700/- after allowing the gross profit @ 15% on sales of ₹ 4,62,000/- as unexplained investment. We find that the decision of the ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in his findings.- Decided against assessee Enhancement of addition on account of net profit - CIT(A) applying the net profit rate of 10% on total sales - Held that:- CIT(A) as taken into consideration all the aspects while arriving at his conclusion including the fact of cash expenditure, the net profit rate declared by the assessee in regular return, net profit rate declared in the books of account prepared subsequently after search and the sales recorded in seized papers as worked out by the assessee including the labour charges. We do not find any infirmity in the order of the ld. CIT(A) and the finding are well reasoned, thus, we uphold the same - Decided against assessee Addition under Section 69 on account of purchase of Kisan Vikas Patra in the joint name of wife of the assessee - Held that:- It is noted that the investment in KVPs (4 numbers of ₹ 10,000 each) was made on 29/4/00. It is also noted that the KVPs stand in joint names of appellant & Mrs. Zahida Khan. The first name is that of appellant. If the amount was out of Mehar received by Muslim women at the time of marriage, it would have been invested in her individual name. It is a kind of her personal property similar to Stridhan for Hindu ladies. Moreover the appellant has not produced any evidence to show that the investment was out of maturity proceeds of earlier KVPs. In view of this the investment in KVPs remains unexplained and accordingly the addition of this amount as undisclosed income is confirmed - Decided against assessee Addition for the purchase of Santro Car - Held that:- The fact that the books were manipulated to inflate the cash balance is proved by the results of test check of books conducted by me personally. During test check it was found that entry of cash receipt of ₹ 16,500 on 16/4/02 in the name of Arifbhai was wrong as there was no such noting in seized diary. Similarly cash receipt of ₹ 47,000 is shown on 23/4/02 from Rehanbhai whereas amount noted in seized dairy is only ₹ 7000. Fictitious loan from one Bano Begum is also shown on 20/4/02. It may therefore be seen that the appellant had made incorrect/fictitious entries in the books just to inflate cash on 25/4/02 the date when cash payment for Santro car was made. No other explanation about the source of cash except reliance on books of account has been given. Accordingly the addition as undisclosed income confirmed - Decided against assessee Addition for unexplained investment in the stock - Held that:- It is evident that the assessee was engaged in sales and purchases of kites which did not appear in the return of income filed and thus certain amount of stock was not as per the trade figure reported in return of income. We are of the considered opinion that the ld. CIT(A) has allowed a reasonable amount of stock towards legitimate stock of business and the additions sustained by him is reasonable and justified. Accordingly, we uphold the finding of the ld. CIT(A) - Decided against assessee Disallowance of initial investment and the profit ploughed back by the assessee in the business - telescoping benefit - Held that:- It may be noted that there is no income (inflow of funds) before the undisclosed investment of ₹ 3,92,700. Therefore this amount cannot be set off with any income. Thereafter there is sufficient income before any other undisclosed investment shown in the table. Therefore income (inflow) and expenditure/investment (outflow) can be set off against each other and only higher of the two is to be taxed. The inflow is ₹ 9,45,485 whereas outflow is ₹ 11,21,770 (Rs 15,14,470 - 3,92,700). Hence investment to the extent of ₹ 9,45,485 can be treated to have been made out of income earned. Hence both income & investment may not be taxed. Investment being higher of the two is only brought to tax. Therefore the total undisclosed income to be taxed therefore works out to ₹ 15,14,470 (Rs 3,92,700 +11,21,770) in view of the telescopic benefit allowed to the appellant. The AO is directed to compute the tax accordingly - Decided against assessee
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2016 (4) TMI 510
Reopening of assessment - deviation from the method of valuation prescribed u/s 145A are duly given in Annexure “D” to tax audit report u/s 44AB - Held that:- The tax audit report u/s 44AB of the Act is an important piece of evidence and is a statutory document u/s 44AB of the Act, which is filed before the A.O. along with the return of income from where the A.O. seeks all the prescribed information which is vital and necessary for framing the assessment. It cannot by any stretch of imagination be said that the A.O. has not gone through the tax audit report while framing assessment u/s 143(3) of the Act and in fact the A.O.is duty bound to go through the same before framing the assessment. The said information was also duly declared and disclosed in the computation of income filed with the Revenue Authorities. The Revenue is seeking reopening of the assessment based on the information received from the revenue audit team. Thus, as per section 147/148 of the Act change of opinion is not permitted as the AO while framing the original assessment u/s 143(3) of the Act vide orders dated 09-03-2008 has duly applied his mind to the issues as detailed above and is now re-opening the assessment merely on the basis of information received from revenue audit team while there is no independent application of mind by the AO before re-opening the assessment which is not permissible and more-so when the AO has passed scrutiny assessment u/s 143(3) of the Act in original assessment and four years have elapsed from the end of the assessment year when the assessment was reopened vide notice u/s 148 of the Act dated 28-03-2012 and the reasons were recorded on 26-03-2012 , and there is no failure on the part of the assessee company to truly and fully disclose all material information in the return of income filed with the revenue and during the course of original assessment proceedings u/s 143(2) of the Act read with Section 143(3) of the Act. Reopening u/s 147 of the Act in the instant case cannot be held to be valid as per the provisions of the Act and the same is liable to be quashed. The CIT(A) has passed a well reasoned detailed order in which we find no infirmity and we uphold the same. Thus addition made by the A.O. vide re-assessment orders dated 23-01-2013 passed u/s 143(3) read with Section 147 of the Act cannot be sustained and the order dated 20-5-2013 of the CIT(A) is upheld and the order dated 23-01-2013 passed u/s 143(3) of the Act read with Section 147 of the Act of the AO is hereby quashed. Since , we have adjudicated the legal issue regarding reopening of assessment u/s 147/148 of the Act and the same is held to be illegal and bad in law and we have already quash the same as detailed above, we are refraining from deciding the issues on merit as the same has become purely academic and infructuous. - Decided in favour of assessee.
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2016 (4) TMI 509
Addition on account of unsecured loans - Held that:- CIT(A) has deleted the said addition by holding that, the said loan was genuine and assessee has prima facie discharged its onus. If the assessee has satisfactorily explained the nature and source of Credit by adducing prima facie all the necessary evidence then onus of the assessee gets discharged and onus shift upon the AO to show / prove that such an explanation is not correct. In absence of any enquiry conducted by the AO even when specific mandate was given by the CIT(A) in the remand proceedings, the Department now cannot plead that the onus cast upon the assessee has not been discharged. None of the evidences filed has been rebutted and accordingly, we do not find any substance in the impugned ground raised by the revenue - Decided in favour of assessee Addition on account advances received from customers which has been treated as unexplained cash credit - Held that:- In the case of the three parties, the amount was appearing as an opening balance as on 01.04.2008 in the accounts of the assessee and hence the same cannot be treated as unexplained credit in the relevant financial year to be added under section 68. Apart from that, the assessee had filed confirmation letter and confirmation of account from these parties along with the PAN, copy of Audited Balancesheet and Profit & Loss account and acknowledgement of return. Once these documents were submitted and remanded to the AO for his comment and examination, then it cannot be held that the nature of advance received from the customers can be treated as unexplained credits, especially when assessee had a regular business activity and dealing with these parties. In absence of any enquiry made by the AO and any adverse material brought on record, we do not find any reason to doubt the genuineness of the credit and accordingly, the finding given by CIT(A) for deleting the addition is upheld. The AO, when was required to look and examine these evidence, had simply chosen to ignore and raise technical objections. Moreover, the evidences furnished merely corroborates the explanation and evidences filed before the AO. - Decided in favour of assessee Addition in respect of capital introduced by the partners - Held that:- The AO instead of verifying the evidences and income-tax records of the partners has chosen to give technical objections. The primary onus of the assessee has been duly discharged once the assessee has filed the confirmation from the partners along with their audited Balance-sheet and income-tax returns. Once, these evidences proving the source of their income and genuineness of the transaction have not been rebutted then without any adverse material on record, the amount received in the form of capital introduction by the partners cannot be doubted. Accordingly, finding given by the CIT(A) on this score is also affirmed.- Decided in favour of assessee Addition on additional cost of material consumed - Held that:- Addition itself is unsustainable especially when no defect has been pointed out either in purchase bills or purchase rates of raw materials consumed or factor of foreign exchange rates and without there being any adverse material coming on record. Hence such an addition as sustained by the CIT(A) is set aside and ground of appeal of the assessee is allowed. - Decided in favour of assessee
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2016 (4) TMI 508
Unexplained investment under section 69 - Held that:- the learned Authorized Representative could not furnish any materials to explain the source of investment of the assessee. Therefore, we do not have any other option but to confirm the order of the Revenue on this issue. Accordingly, we hereby confirm the addition made by the learned Assessing Officer which was further sustained by the learned Commissioner of Income Tax (Appeals). - Decided against assessee Penalty u/s 271(c) - Held that:- Assessee could not advance any arguments for deleting the penalty levied by the Revenue. In these circumstances, we do not have any other option but to confirm the penalty levied by the Revenue. Accordingly, we hereby confirm the penalty levied - Decided against assessee
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2016 (4) TMI 507
Estimation of income at 17% of gross receipts against the additions made on specific grounds - Held that:- CIT(A) directed the AO to adopt a profit percentage of 17% which will take care of the shortage of cash in the cash book and the disallowance u/s.14A. It will also take care of the various other shortcomings in maintenance of books of account. We do not find any infirmity in the order of the CIT(A) on this issue. Admittedly, there are certain defects in the books of account such as non-maintenance of subsidiary ledgers, goods inward and outward register, stock register etc. Therefore, the books of account are not amenable to proper verification. At the same time, if the approach adopted by the AO is accepted, then the construction business gives a profit percentage of more than 64% which is not possible in this line of business especially when the assessee has undertaken construction work for private parties. The Various Benches of the Tribunal are considering profit rate of 8% to 15% in construction business as reasonable. Since the Ld.CIT(A) in the instant case has directed the AO to adopt profit percentage of 17%, therefore, in our opinion, such profit percentage under the facts and circumstances of the case is reasonable and does not call for any interference. We accordingly uphold the order of the CIT(A) - Decided against revenue
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2016 (4) TMI 506
Unexplained cash deposits - CIT(A) deleted the addition on the basis of additional evidence u/Rule 46A of the Rules - Held that:- The perusal of tabulated details filed by the assessee reflected that many of amounts have been received from his father and other amounts which are deposited in cash in Bank of Maharashtra are on account of investment to be made in Shree Om Sainath Car on Rent Pvt. Ltd. Once the assessee has given an explanation that he was receiving these amounts and further made investments, then the Assessing Officer should have made enquiries from the other parties to verify the claim of the assessee. However, we find that the explanation of the assessee has not been considered by the Assessing Officer in proper perspective nor proper opportunity was given to the assessee to furnish complete evidences. Further claim of assessee to have received the amounts from his father have also been not accepted, inspite of various evidences filed. In the above said facts and circumstances of the case, where the assessee before us has furnished several documents / evidences, we are of the view that the principles of natural justice demand that an opportunity of hearing should be allowed to the assessee. Accordingly, we set-aside the matter to the file of Assessing Officer to decide the issue de novo after considering the evidences available with the assessee and after allowing reasonable opportunity of hearing to the assessee. - Decided in favour of assessee and the Revenue for statistical purposes.
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2016 (4) TMI 505
Determination of short term capital gain - Held that:- We find the CIT(A) has observed that the assessee has not submitted anything on the issue of short term capital loss and accordingly confirmed the order of the AO on the said issue. It is the submission of the Ld. Counsel for the assessee that although the balance sheet for the year ending 31-03-2005 and 31-03- 2006 were produced before the CIT(A) and arguments had taken place on different dates, however, the CIT(A) has brushed aside all those details. Considering the totality of the facts of the case and in the interest of justice, we restore the issue of short term capital gain to the file of the AO for fresh adjudication. The AO shall decide the issue as per fact and law after giving due opportunity to the assessee.- Decided in favour of assessee for statistical purposes. Long term capital gain on sale of land - Held that:- As it is the case of the assessee that the land in question was a forest land on the appointed date and therefore the provisions of section 50C are not applicable to the facts of the present case since the assessee is not the owner of the land and it has only a right to claim compensation. Although the assessee had filed various documents to demonstrate that the land of the assessee is a forest land, however, we find the CIT(A) is silent on this issue. The AO in his remand report has also not dwelt upon this issue. It is also a fact that the above claim was not made before the AO although this claim was made before CIT(A) for the first time. Considering the totality of the facts of the case, we are of the considered opinion that the matter requires a re-visit to the file of the AO for proper appreciation of the facts. We therefore deem it proper to restore the issue to the file of the AO with a direction to examine the contention of the assessee that the land in question is a forest land and the assessee is not the owner of the land and it is only entitled to claim compensation. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2016 (4) TMI 504
Addition u/s 68 - Held that:- As find from the order of the ld CIT(A) that as regards to the identity, even permanent account number (PAN) or was balance sheet etc of the assessee were not provided. As regards to genuiness of the transaction, the same was in doubt from the observation of the AO that cash used to be withdrawn after deposit of cheque by the assessee. We find that no documents have been submitted by the assessee in support of the creditworthiness of the creditor. According to us the assessee has failed to discharge its Burdon of proof for requirement of section 68 of the Act regarding the creditor. In view of the facts and circumstances, we are of the opinion that in the interest of justice, the assessee should be provided one more opportunity to discharge its burden of proof in respect of the creditor. Accordingly, we restore the matter to the file of the Assessing Officer for deciding the issue afresh in accordance to law. - Decided in favour of assessee for statistical purpose.
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2016 (4) TMI 503
Disallowance of office expenses - commencement or non commencement of business - Held that:- CIT(A) while deleting the disallowance so made by the AO has considered all the documents placed by the assessee. On verification of the details so placed by the assessee, the CIT(A) found that the assessee had sent an introductory letters to various clients urging for the business and calling for their requirements of the product. The date of letter was August, 21, 2007, which can be taken as date of commencement of the business. The CIT(A) further held that all the earlier activities of the assessee before August, 21, 2007 were regulatory activities and first activity of the business actually started on August, 21,2007 in the A.Y.2008-09. From the above findings of the CIT(A) we found that the business of the assessee was already set up and commenced in assessment year 2008-09, therefore, no disallowance of expenditure upto 8th August, 2008 is warranted. - Decided in favour of assessee Set off and carry forward the business loss - Held that:- We found from the findings of the CIT(A) that the assessee had already commenced its business activities from A.Y. 2008-09, therefore, the assessee should be allowed carry forward of the expenditure from the assessment year under consideration - Decided in favour of assessee
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2016 (4) TMI 502
Taxability of the amount received from the partnership firm - assessee declared the same as capital gains in its return of income and proposed to avail exemption u/s 54F - Held that:- CIT(A) has rightly referred to the provisions of sec. 45(4) of the Act, which provides for manner of taxation in case of dissolution of a partnership firm or other association of persons. We have earlier noticed that the assessing officer has proceeded the to assess the amount of ₹ 2.50 crores as revenue receipt only by rejecting the claim of existence of partnership firm. However, the finding of the Ld CIT(A) that there existed a Partnership firm and the assessee has received the impugned amount of ₹ 2.50 crores on dissolution of the Partnership firm, has not been challenged by the revenue, meaning thereby, the said finding of Ld CIT(A) has attained finality. We do not find any infirmity in the decision of Ld CIT(A) in holding that the assessing officer was not right in law in assessing the impugned amount of ₹ 2,50,00,000/- in the hands of the assessee. - Decided against revenue Taxability of amount received by the assessee from M/s Samarth Erectors & Developers - Held that:- The assessee has spent money in connection with the land belonging to the Society cannot be disputed in this assessment year. Further, what the assessee received from M/s Samarth Erectors & Developers is the reimbursement of expenses already incurred by the assessee. When the said fact is confirmed by M/s Samarth Erectors & Developers in its capacity as the payer in final settlement of the claims of the assessee in respect of the land, we find no reason to suspect the same, particularly in view of the fact that the assessing officer has not brought any material on record to contradict the said claim. In that view of the matter, we are of the view that there is no scope to isolate the receipt of ₹ 1,30,00,000/- from the expenses incurred by the assessee, i.e., it cannot be treated that the receipt of ₹ 1,30,00,000/- as a separate source of income distinct and separate from the expenses incurred by the assessee on the land. It is also an admitted fact that the details of expenses incurred by the assessee are available in the books of accounts of the past years and further the assessee has also furnished the statement of expenses to the assessing officer during the course of assessment proceedings. Hence we are of the view that the Ld CIT(A) was justified in directing the AO to set off the expenses of ₹ 1,37,52,449/- against the receipt of ₹ 1,30,00,000/- - Decided against revenue
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2016 (4) TMI 501
Revision u/s 263 - notice against non-existent company - Held that:- Jurisdiction should be by virtue of operation of the Act and not by the consent of an assessee. A perusal of section 263 would indicate that before taking any action under section 263, the ld.Commissioner has to pursue record and record would include the communication made by the assessee to the AO on 23.7.2013 intimating about the fact of amalgamation. Therefore, we are of the view that the issue in dispute is squarely covered in favour of the assessee by the decision of Hon’ble Gujarat High Court in the case of Khurana Engineering Ltd. (2013 (2) TMI 128 - GUJARAT HIGH COURT ). Since we have arrived at a conclusion that initiation of proceedings against HEPL is void ab inito, therefore, we do not deem it necessary to adjudicate on other issues on merit. No proceedings under section 263 can be taken up against HEPL after its amalgamation with Milestone Tradelinks Pvt. Ltd. Therefore, we allow the appeal of the assessee and quash the order passed by the ld.Commissioner under section 263 of the Income Tax Act. - Decided in favour of assessee.
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Customs
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2016 (4) TMI 490
Additional duty - Import of ship for breaking and for no other use - Appellant pleaded that no excise duty is payable and the product manufactured in India is exempted from excise duty - Held that:- in view of the Judgement of this court in the case of Hyderabad Industries Limited v. Union of India [1999 (5) TMI 29 - SUPREME COURT OF INDIA], when excise duty is exempted, there is no question of payment of additional duty. Imposition of import duty - Purchase of vessel in auction - Held that:- by no stretch of imagination, it can be treated as import when the vessel was manufactured by an Indian company and was sold to another Indian company which was using this vessel. Therefore, the CESTAT has gone totally at a tangent and has held that the appellant shall be liable to pay duty on totally irrelevant consideration. Impugned order of CESTAT set aside and custom duty paid by the appellant shall be refunded within two weeks. - Appeal disposed of
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2016 (4) TMI 489
Revokation of CHA licence - Involvement of appellant CHA in the case of Fraudulent availment of Drawback on exporters in the name of IEC which were obtained on the basis of fictitious addresses at and in the name of non-existent person - Appellant charged under regulation 13 (a), 13(e) & 13(n) of CHALR, 2004 - Held that:- by applying the decision of Tribunal in the case of Baraskar Brothers Versus CC [2012 (6) TMI 466 - CESTAT, Mumbai], the impugned order is unsustainable. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 488
Assessment of duty - Matter of appellant was not considered in its correct perspective - Held that:- this applicant instead of pursuing available legal remedies against our final order, filed various miscellaneous applications which were all disposed of by the tribunal and the last miscellaneous application was also disposed of. This miscellaneous application which has been filed is also vague and is in continuation of various miscellaneous applications filed. Therefore, as the applicant in this miscellaneous application has not been able to bring out any issue for consideration of the bench, the miscellaneous applications are dismissed. - Decided against the appellant
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2016 (4) TMI 487
Refund claim of 5% additional duty - levied under sub-section 5 of section 3 of Customs Tariff Act, 1985 - Goods imported and cleared in terms of Notification No. 102/2007 dated 14.09.2007 - Held that:- the Ld. Commissioner (Appeals) in his impugned order has not discussed the merits of the case and remand the matter back to the lower appellate authority, which is beyond the jurisdiction w.e.f. 11.05.2001 under Finance Act, 2001 as observed by the Tribunal, in the case of CC (Imports), Mumbai Vs. Clestra Modular Systems Pvt. Ltd. [2009 (9) TMI 751 - CESTAT MUMBAI]. Further, the LB of this Tribunal has held that even if there is no endorsement in the commercial invoices, the SAD of refund should be allowed. Therefore, by following the same, the impugned order is set aside. - Decided in favour of appellant
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Corporate Laws
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2016 (4) TMI 482
Amalgamation Scheme - Whether a scheme sanctioned between the two companies under Section 391 and 394 of the Companies Act is one and the same document chargeable to stamp duty regardless of the fact that order sanctioning the scheme may have been passed by two different High Courts by virtue of the fact that the Registered Office of the two companies are situated in different States? - Held that:- A scheme settled by two companies is not a document chargeable to stamp duty. An order passed by the Court sanctioning such a Scheme under Section 394 of the said Act, which effects transfer is a document chargeable to stamp duty. In case if the Registered Offices of the two Companies are situated in two different States, requiring such Orders, sanctioning the Scheme to be passed under Section 394 of the Companies Act by two different High Courts, then in that event, the order of this High Court which sanctions the Scheme passed under Section 394 of the Companies Act will be the instrument chargeable to stamp duty. Whether the instrument in respect of amalgamation or compromise or scheme between the two Companies is such a scheme, compromise or arrangement and the orders sanctioning the same are incidental as the computation of stamp duty and valuation is solely based on the scheme and scheme alone? - Held that:- The orders of the court, sanctioning a Scheme of amalgamation are not just incidental orders even in accordance with the Scheme of the Companies Act laid down by Section 391 r/w, Section 394. Only after the orders are passed by the Court, sanctioning the Scheme of Amalgamation, such a scheme becomes operational and effective. Computation of stamp duty and valuation does not make Scheme of Amalgamation alone chargeable to stamp duty. The order is the instrument. Whether in a scheme, compromise or arrangement sanctioned under Sections 391 and 394 of the Companies Act where Registered Offices of the two Companies are situated in two different States, the Company in State of Maharashtra is entitled for rebate under Section 19 in respect of the stamp duty paid on the said scheme in another State? - Held that:- The answer to this question will be in the negative for the reasons set out in detail herein above. Whether for the purposes of Section 19 of the Act, the scheme/compromise/arrangement between the two Companies must be construed as document executed outside the state on which the stamp duty is legally levied, demanded and paid in another State? - Held that:- Basically, a scheme/compromise/arrangement between the two companies is never a document chargeable to stamp duty, whether such a document is executed in the State or outside the State of Maharashtra. Moreover, in view of our conclusions above, Section 19 of the Act in any event, has no application whatsoever.
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2016 (4) TMI 481
Reduction of share capital - Held that:- There is no legal impediment in the petitioner company seeking a reduction in its share capital, which is to be utilized towards distribution of assets which are in excess of its needs. The RD, in its reply/ report, clearly admits as much by making a specific reference to the fact that reduction in capital may be effected by paying up paid-up capital, which is in excess of one’s needs, and that, this can be achieved either with or without extinguishing or reducing liability qua its shares. The petitioner company had already denied that it would be effecting reduction in share capital either by writing off its long term loan and advances or cash, which is shown in the assets side of the balance sheet. 9.1 Even as per the RD, the petitioner company had no accumulated loss on the date of the preparation of the provisional balance sheet. As to the observation of the RD, that the reduction in share capital is being sought to distribute brought forward profits of the petitioner company, to escape payment of tax on distribution of profits, is an observation which is not backed by any relevant provision of the Income Tax Act, 1961. As a matter of fact, because such an observation had been made by the RD in his reply/ affidavit, the matter was re-listed in court for directions on 29.03.2016. Consequent thereto, an affidavit dated 31.03.2016 has been filed on behalf of the petitioner company. The petitioner company has undertaken via the said affidavit to pay all income tax liabilities, if any, that may arise upon approval of the prayer made for reduction in share capital. Therefore, for all these reasons, the reduction of unwanted paid-up capital against excess assets appearing in the balance sheet of petitioner company, as obtaining on 31.10.2013, is approved in terms of the special resolution dated 19.12.2013 passed in the EOGM of its shareholders.
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Service Tax
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2016 (4) TMI 499
Refund claim - Reclassification - Management Maintenance and Repair Services - Agreement entered in to for operation and maintenance of power plant - Held that:- the contention raised by the ld. Counsel that the reclassification of the services as sought by the Adjudicating Authority in a refund claim filed by the assessee seems to be incorrect appreciation of the law. In our view, if the Revenue authorities were holding a view that the services rendered by the respondent assessee would be correctly classified under “Management Maintenance and Repair Services” they should have issued a show-cause notice for doing it so. Revenue authorities cannot reclassify the services rendered by the respondent assessee in a refund claim filed by the respondent. Therefore, the impugned order is correct, legal and does not suffer from any infirmity. The cross objection filed by the respondent assessee being in support of the said impugned order is also disposed of. - Decided against the revenue
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2016 (4) TMI 498
Demand - Transport coordination Activity - Arrangement of entire transportation, dispatching of goods and supervising the loading and unloading of the goods - Appellant contended that this activity is covered under “Business Support Services” from 1st May, 2006 - Held that:- as per definition of the “Business Support Services” under section 65, it is found that managing distribution and logistics was covered under the said category as one of the goods on which service tax liability arises under “Business Support Services”. Therefore, the activity under taken by the appellant under Transport Coordination Services would be covered under “Business Support Services” with effect from 1.5.2006 and will not be covered under “Business Auxiliary Services” as per agreement. Demand not sustained and set aside. Demand - Business Auxiliary Services - Organized for collection of order from various stockist, distribution of said goods and collecting them from said stockist - Held that:- this activity of the appellant, would fall under the category of Business Auxiliary Services under promotion or marketing or sale of goods produced or provided by or belonging to the client. Therefore, the service tax liability under this head is correctly confirmed by the adjudicating authority. The service tax liability along with interest is upheld. Demand for January 2005 to March 2006 - Goods Transport Agency Services - Appellant contended that the amount of service tax need re-quantification in as much - Held that:- the appellant has not been able to show us the correct figures attributable correctly to inward in words transportation and outward transportation and also amount paid by them for transport of third party in the absence of any such information, so the service tax demand under goods transportation agency fastened on the appellant is correct. To soot out the limited question of quantification of limit of service tax liability, the matter is remitted back to adjudicating authority. Interest - Held that:- Interest liability also arises on the appellant in respect of the service tax liability upheld Imposition of penalties - Section 76, 77 & 78 of the Finance Act, 1994 - Held that:- except for penalty under section 76 ibid, penalties under other sections are unwanted in as much, by invoking the provisions of section 80. They may have had justifiable reasons for not paying the service tax as wordings of the agreement could have created a confusion. Accordingly, the penalty under section 76 is upheld and penalties imposed under section 77 and 78 ibid are set aside. - Appeal disposed of
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2016 (4) TMI 497
Service tax liability - “Maintenance or Repair Services” for the period prior to 01-05-2006 and subsequently under “management, maintenance or repair service” - Undertook operation of Bulk Handling Plant of ONGC and received consideration - Held that:- prior to 01-05-2006, the definition of management maintenance or repair service will not apply as the maintenance or repair service are not for management or repair service, but these are consumed by them for smooth functioning of bulk handling plant. As regards the tax liability for the subsequent period from 01-05-2006, it is found that the bulk handling plant was handed over by ONGC to respondent for operation and completing the contract to ONGC in rendering such activities, the respondent undertakes the maintenance or repair services which are for self and the services of management maintenance or repair are not attracted as the same is not provided to any client. From reading the scope of work as per agreement, principal job entrusted to respondent is in connection with smooth operation of bulk handling plant for obtaining desired results from the bulk handling plant. The agreement between ONGC and respondent does not indicate that respondent was required to provide any service relating to Management, Maintenance or Repair Services to ONGC, nor does the agreement indicate any separate fees is to be paid to respondent for Management, Maintenance or Repair Services. In order to overcome this lacuna, government has enlarged the scope of services under “Business Support Services” w.e.f. 01-05-2011 by including services in respect of “Operational or Administrative assistance in any manner” which may cover the operation of plant. Since these services were taxable w.e.f. 01-05-2011 under ”Business Support Services”, it is not taxable under Management, Maintenance or Repair Services for earlier period but the same is forfeited by one of the Tribunal's order. - Decided against the revenue
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2016 (4) TMI 496
Activity of deputation of employees to group companies - Manufacturer of pharmaceutical products and having their own marketing network - Whether marketing network services provided by appellant to its group companies comes under Business auxiliary Services - Recovery of expenses in return - Held that:- as per the contract, the appellant is only deputing the employees to the group companies and said employees are called back after the job is completed and utilized in the activity of the appellant or deputed to any other group company.So the claim of revenue that such activity would fall under the 'Business Auxiliary Services', has no lows-standing as agreement does not indicate that the appellant is rendering services of promotion or marketing of the goods manufactured by the group companies. Therefore, the impugned order is set aside. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 495
Admissibility of Cenvat credit - wrongly taken by the Head office of the appellant with respect to the services availed by the branch offices situated all over the country under Appellant's head quarters - Held that:- the facts involved in the present case are similar to the facts before CESTAT Ahmedabad in the case of Market Creators Ltd. vs. Commissioner of C.Ex. & S.T., Vadodara [2014 (7) TMI 704 - CESTAT AHMEDABAD]. By following the same, the appellant is not admissible for Cenvat credit. - Decided against the appellant
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Central Excise
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2016 (4) TMI 494
Period of limitation - Refund claim under Notification No. 41/2007-ST dated 6.10.2007 - Held that:- the refund claim filed by the appellant pertain to the quarter January to March, 2008 and the period for filing the refund claim during the relevant clause of notification was 60 days from the end of the relevant quarter during which the said goods had been exported as per clause 2(E) of Notification. The refund claim was filed by the appellant on 30.06.2008 which was beyond the period of 60 days. This period was extended to six months as per Notification No. 32/08-ST dated 18.11.2008. However, this amendment and CBEC clarification dated 12.3.2009 will be applicable only to the quarter April-June, 2008. In the case of the appellant, the period of six months expired much before the issue of Notification No. 32/08-ST dated 18.11.2008. Therefore, the refund claim is time barred. Applicability of period of one year - Section 11B of the Central Excise Act, 1944 - Appellant relied upon Affinity Express India Pvt. Ltd. Vs. Commr. of C. Ex.,, Pune-I case law - Held that:- the relied upon case law duly referred to the time period specified in Section 11B of the Central Excise Act, 1944 and there was no reference to any period specified under Notification No. 5/06-CE during which the refund claim was required to be filed by exporter/assesse. The facts involved in the relied upon cases on the provisions of Notification No. 5/2006-C.E (N.T) are different to the provisions contained in Notification No. 41/07-ST, where refund claims were required to be filed within 60 days of a quarter. Accordingly, the relied upon case laws are not applicable to the facts of the present case. - Decided against the appellant
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2016 (4) TMI 493
Rule 6(3) of the Cenvat Credit Rules, 2004(CCR) - Whether the appellant is required to pay 10% amount when common inputs are used in the manufacture of finished goods which are exempted as well as dutiable - Manufacture of Garden Rakes, Forks, Box Hinges fully exempted as per Notification No.5/2006-CE dated 01.03.2006 unconditionally. Held that:- as per Rule 6(1)ibid, no credit shall be admissible in relation to manufacture of exempted goods. It has not been denied by the appellant that the goods manufactured by them are not unconditionally exempted. Simply by paying duty on exempted goods does not make the goods dutiable. As per the provisions contained in Section 5A of Central Excise Act, 1944, when there is an unconditional exemption Notification then an assessee/manufacturer shall not pay duty of excise on such exempted goods. Further as per Rule 6(3) of the Cenvat Credit Rules, 2004 when any common inputs are used in the manufacture of dutiable and exempted goods then appellant is required to pay an amount equivalent to 10% on the value of exempted goods as demanded by the Department. So far as the provisions contained in Rule 6(6) of Cenvat Credit Rules, 2004 are concerned, the case of the appellant is that even exempted goods are excisable goods, therefore, amount under Rule 6(3) cannot be denied if the goods are cleared without payment of duty. However, it is observed that as per provisions of Rule 6(6)(v) of Cenvat Credit Rules, 2004, amount is not required to be paid under Rule 6(3) when goods are removed without payment of duty for export under bond in terms of provisions of Central Excise Rules, 2002. In the case of theappellant, the goods were not exported under bond, but were cleared on payment of duty, therefore, First Appellate Authority was fully justified in dismissing the Appeal filed by the appellant and this Bench does not find any justification in interfering with the same. - Decided against the appellant
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2016 (4) TMI 492
Admissibility of Cenvat credit - Rule 2(a)(A) of Cenvat Credit Rules 2004 - Inputs like TOT/TMT Rods, Cement used in the manufacture of water tank to purify water for use in their Captive Power Plan - Revenue contended that the said storage tank is fully embedded to the ground and not remain goods - Held that:- by relying on the decision of Karnataka High Court in the case of Commissioner of Central Excise, Bangalore-II vs. SLR Steels Ltd. [2012 (9) TMI 169 - KARNATAKA HIGH COURT] as considered by the First Appellate Authority also which is squarely applicable to the facts and circumstances of the present appeal, the appellant is admissible for Cenvat credit. - Decided against the revenue
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2016 (4) TMI 491
Denial of Cenvat credit and demand of duty - Clandestine removal of goods - Shortage of raw materials - Procurement of Bazar's scrap without cover of invoices - Excess production of finished goods as per private records maintained - Held that:- Revenue cannot deny the CENVAT Credit and simultaneously confirm duty liability on the finished goods. The shortage of raw materials on which CENVAT Credit is proposed to be denied has to be considered as used in the manufacture of finished goods along with Bazar's scrap illicitly procured by the Respondent for the manufacture of finished goods which have been cleared clandestinely and on which duty demand was correctly confirmed by the Adjudicating Authority. The evidences available on record are sufficient to confirm duty with respect to clandestinely removed goods and is required to be upheld by setting aside Order-in-Appeal. Appeal filed by the Revenue is allowed to that extent. However, it is observed from the case records that 25% option of reduced penalty under Section 11AC has not been extended to the appellant with respect to penalty. The same is extended to the appellant if the entire duty amount along with interest and reduced 25% penalty is paid within one month from the date of receipt of this order. Hence, so far as denial of credit is concerned, the demand is set aside and accordingly equivalent penalty imposed is also set aside. - Decided partly in favour of revenue
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CST, VAT & Sales Tax
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2016 (4) TMI 486
Whether the State Police has the jurisdiction to entertain, institute and investigate offences under the VAT Act especially in view of Section 86(2)(a) read with Section 83 of the VAT Act - Held that:- no authority as appointed under Section 9 of the Bihar Finance Act, 1981 (corresponding to section 10 of the VAT Act) has been conferred powers of an Officer-in-Charge of a Police Station for investigation of a cognizable offence as has been brought under CrPC. Further, no notification as published under Section 3(i) of the Bihar Finance Act, 1981 (corresponding to Section 86 (2) (a) of the VAT Act) has been brought to the notice of the court nor has it come to the notice of the court - upon its own inquiry. As argued by the petitioner that in view of section 51 of the Bihar Finance Act, 1981 read with Notifications and the Government Orders published thereunder, the Bureau of Investigation has been conferred with the power of the Officer-in-Charge of the Police Station for investigation of cognizable offence and that the said powers have been saved under Section 94 of the VAT Act and thus the Police Authorities stand divested of the powers to investigate offences which constitute an offence under the VAT Act as well as the IPC. The said argument cannot be countenanced in absence of any notification having been published under Section 51(3)(i) of the Bihar Finance Act, 1981 conferring the Bureau of Investigation with the power of an Officer-in-Charge of a Police Station. The only notification being Government Order No. 2775 dated 20.04.1983, constituting the Bureau of Investigation, also does not support the argument of the petitioners. The claim of the petitioners that the Bureau of Investigation was vested with the powers of the Officer-in-Charge of the Police Station does not stand substantiated in absence of any specific notification issued by the State Government in exercise of its powers as provided under section 51(3)(i) of the Bihar Finance Act, 1981 or under Section 86(2)(a) of the VAT Act. The powers that have been vested with the Bureau of Investigation is the power to investigate offences as provided under Section 49 of the Bihar Finance Act, 1981 and the corresponding Section 81 of the VAT Act but in absence of any power of Officer-in-Charge of a Police Station having been vested with the Bureau of Investigation it would not be possible for the Bureau of Investigation to inquire into the offences that would constitute an offence both under the Indian Penal Code as well as the VAT Act. Whether the institution and investigation by the police can be termed as an abuse of the judicial process - If an FIR can at all be registered for the offences under the IPC where there is an alleged infraction of provision of the VAT Act - Held that:- with regard to Section 4(2) and Section 5 of CrPC that the provisions of Sections 83 and 86 of the VAT Act is to be analysed to see if the same provides for any special procedure for investigation of offences under the Tax law which also or exclusively constitutes an offence under the IPC. A reading of Sections 83 and 86 of the VAT Act along with Government Order No. 2775 dated 20.04.1983 would make it apparent that no power under the special Act vesting them with the powers of a police officer qua investigation of an offence under Chapter XII of the CrPC. A deeper reading of Chapter XII and Chapter XIV of the VAT Act would further show that no procedure of investigation has been prescribed for offences under the VAT Act or such offences which also constitute offence under the IPC to oust the jurisdiction of the police to register and investigate the offence. The VAT Act is silent with regard to the procedure that has to be followed by the Bureau of Investigation while making any investigation with regard to any of the offence and as such it cannot be emphasized that the jurisdiction of the Police Station stands ousted by virtue of Section 4(2) and Section 5 of the CrPC and more so when no power of Officer-in-Charge of a Police Station has been conferred upon any of the officers under section 83 of the VAT Act or upon the Bureau of Investigation under Section 86 of the VAT Act. The contention thus that the Bureau of Investigation constituted under the VAT Act is only competent authority to investigate in respect of any offence under the VAT Act, which means no other authority can carry out investigation or hold inquiry into any case of alleged or suspected evasion of tax as well as malpractices connected therewith cannot be countenanced and more so when the alleged infraction would also constitute a penal offence under any other statute. It is thus evident as a day of light that in absence of a power of an Officer-in-Charge of a Police Station having been vested with the Bureau of Investigation or the designated officer under Section 86(2)(a) and Section 83(2) of the VAT Act, respectively, it is not open to the petitioners to allege lack of jurisdiction in the police to investigate the offence. A mere fact that VAT Act speaks of investigation by the Bureau of Investigation or an officer as designated under Section 83 of the VAT Act and that it does not refer to any investigation by the Police would thus oust the jurisdiction of Police is also not an argument that would pass the muster of the test of legality. Thus the institution of the FIR cannot be urged to be an abuse of the judicial process "Generalia specialibus non-derogant", which means that when there is a conflict between a general and a special provision, the latter shall prevail has been resorted to - Whether the VAT Act being the special Act, having made provisions for institution of offences under the VAT Act, would override and divest the police authority to institute and investigate cases under the IPC - Held that:- the doctrine states is if there is a conflict between a general provision and special provision, it is the special provision that shall prevail. The doctrine is not only applicable vis-à-vis two statutes or provisions within a Statute or even within the legal instruments. But the said doctrine is to be invoked only as to whether there is a special conflict between the two provisions of which one is specific with regard to a subject matter while the other is general and covers the same subject-matter apart from other subject matter. “The general/specific canon does not mean that the existence of a contradictory specific provision voids the general provision. Only its application to cases covered by the specific provision is suspended; it continues to cover all other cases”. Therefore, the argument for quashing the First Information Reports on account of lack of jurisdiction in the police authorities to investigate an offence - which is punishable both under the VAT Act and under the IPC - as the special Act (VAT Act) ousts the jurisdiction of CrPC does not commend to this Court. The reason is simple, there is neither any conflict between the provisions of two statutes nor does there appears to be any attempt to cover the filed of CrPC with regard to investigation. In fact, to the contrary, where there was even an avenue available to cover the said field of grant of police powers to the authorities/ Bureau of Investigation - under the VAT Act has voluntarily and consciously been not taken by the State Government. - Decided against the appellant
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2016 (4) TMI 485
Validity of Tribunal's order - Order proceeds on a complete misconception of law and misread the definitions and substantive provisions of the BST - Manufacturer of nail cutters - Department submitted that if the Tribunal's view is accepted, that would mean that a dealer and who is defined to mean a person cannot be a sole proprietor, none of the transactions of sale and purchase and undertaken by the sole proprietor can be brought to tax and the sole proprietary concern, in any event, has no existence independent of the sole proprietor or sole proprietress. Therefore, notice being issued in the trade name cannot be said to be fatal and such proceedings can never be termed as non-est - Held that:- it is not seen how within the meaning of sub-section (1) of section 33 and in the light of the clear legal provisions, a sole proprietor/dealer cannot be brought to tax. If he can be brought to tax and his income assessed on the basis of the transactions of sale and purchase of goods undertaken by him/her and that section also enables the Commissioner to carry on best judgment assessment, then, merely because the notice under sub-section (6) addressed and sent to the dealer is in the trade name and not the sole proprietress that would not be fatal. The Tribunal has referred, to the definitions and which, according to it, are relevant. Tribunal's order requires a registered dealer to furnish returns and if non filing of returns and non registration of a dealer enable the Commissioner to carry out best judgment assessment, that any notice being addressed and sent in the above manner would be an illegality and of such nature as to be termed as incurable. The Tribunal's opinion is that this is an incurable defect and not a mere irregularity. So, the Tribunal has declared the assessment to be non-est. Eventually, procedural rules and matters of Form cannot be elevated to such a status and position as would make every part or prescription thereof mandatory and incapable of substantial compliance. Such provisions do not mandate strict compliance and are capable of substantial compliance. It cannot be that the trade name is mentioned and not that of the sole proprietor or proprietress that the proceedings can be flawed to such an extent as to term them as incurable. This is not a fundamental flaw or defect going to the root of the case. It will have to be established and proved that there is a prejudice or miscarriage of justice. Merely because the trade name been incorporated or inserted in the notice does not mean that the dealer was prevented from contesting the proceedings or the exercise carried out by the commissioner under sub-sections (5) or (6) of section 33. Eventually, the dealer must be put to notice. The form is not mandatory and the requirement of notice may be such. Therefore, absence of notice by such mis-description would have to be established and proved by the dealer, else it cannot be said that the proceedings suffer from a fundamental or incurable defect and therefore non-est. The proceedings and the orders therein cannot be termed as void ab initio or null from inception. The Tribunal should have noted the basic facts in this case, the context and the backdrop in which the Division Bench concluded that the notice issued under the trade name would not suffice. Pertinently, the Division Bench does not hold that the sole proprietor or the business carried out by sole proprietor is incapable of being brought to tax nor does it hold that the sole proprietor cannot be termed as a dealer though carrying on business of buying and selling of goods. The Division Bench does not hold, as that the definition of the term “person” will not include or take within its import a sole proprietor or a sole proprietary business. The notice ought to be and is to the sole proprietor. Also the Tribunal relied on wrong case in decicind this case. Decided in favour of revenue
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2016 (4) TMI 484
Seeking release of consignment - Seizure of 207 cartons of Raga Shampoo under ‘Mal Roko Adesh’ - Petitioner contended that there was only a stock transfer from the company's branches and that there was no sale as such of the stock - Held that:- it was being asserted by the Petitioner that there was only a stock transfer from the company's branches and that there was no sale as such of the stock. What is surprising is that the impugned order does not even note the said contention much less deal with it. While an effort has been made in the counter affidavit to summarize the statements that were made before the VATO, the impugned order itself does not note any of these contentions. In particular, the assertion now made that at the time when the vehicle was intercepted, it was moving on Shahdara road and not stationary, is not mentioned in the impugned order. In the facts and circumstances, the Petitioner is justified in stating that there was no occasion for the VATO to have seized the vehicle and the goods under Section 61(2) of the DVAT Act. The assertion made by petitioner only meets with the bare denial in the counter affidavit and not a specific denial. It is simply stated “the contents of paras 24 to 26 are wrong and denied. Each and every averment made in these paras are specifically denied”. No attempt has been made to deal with the issue of authorisation enabling the VATO concerned to undertake the exercise of interception of the vehicle in question and to detain the goods. The impugned order of detention and the consequent order of assessment stands vitiated on this score as well. If the Delhi office of the Petitioner was registered under the DVAT Act, and has been regularly filing its tax returns and depositing the VAT and CST since 2006-07, and has been following the same system of receiving goods by way of stock transfer from its Chennai and other branches, the VATO should have in the instant case taken note of the facts and taken the trouble of discussing the circumstances under which the truck happened to be intercepted and the goods detained. What the Court has found in the present case is a complete non-application of mind by the VATO, not only to the facts and circumstances of the case but also to the requirement of the law. Therefore, the impugned detention order dated 10th September 2012 and the consequent order of assessment of tax and penalty are set aside. The amount deposited by the petitioner by way of tax and penalty shall be refunded in accordance with law. - Decided in favour of petitioner
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2016 (4) TMI 483
Levy of Sale tax - Contract entered for installation, erection and commissioning of “Wind Energy Converter” - Held that:- a fundamental mistake which is committed by the authorities below is that foundation work or installation work, which is even considered as part of works contract by the Assessing Officer himself, cannot be treated as “goods”. Even if we proceed on the basis that such work does not fall within the expression “Wind Mill”, still it could not be treated as goods which could be exigible to sales tax under the Act. As the Assessing Officer himself classified such goods involved in execution of works contract. Once this was the opinion of the Assessing Officer and the part of work viz. foundation or erection work related to works contract, on this ground itself, no sales tax could have been charged thereon. Also even the First Appellate Authority proceeded on the basis that the work like foundation work, electrical work, commissioning etc. was “series of activities and further that it was indivisible”. On this finding as well, no further action to levy sales tax was required. - Apex Court decided the case in favour of appellant with consequential relief
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Wealth tax
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2016 (4) TMI 500
Reassessment - addition of alleged urban land - contentions of the assessee to treat the land as “land occupied by any building which has been constructed with the approval of the appropriate authority” and thus excludible from ‘urban land’ exigible to wealth tax - Held that:- We are, however, not persuaded by learned counsel’s submission. The words are clear and unambiguous. A piece of vacated land cannot be excluded from taxable wealth simply because building has been constructed thereupon subsequently. As for the ‘genuine hardship’ being faced by the assessee, we need not commiserate with the assessee because it is not for us to supply the casus omissus, even if any. In the case of Tarulata Shyam vs. CIT [1977 (4) TMI 3 - SUPREME Court ] held that there is no scope for importing into the statute the words which are not there. Such interpretation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation.To us, there appears no justification to depart from normal rule of construction according to which the intention of Legislature is primarily to be gathered from the words used in the statute. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.” Once it is shown that the case of the assessee comes within the letter of law, he must be taxed, however great the hardship may appear to the judicial mind to be. Thus we see no need to resort to any creative interpretation process to read down the provision, even if, as learned Counsel claims, any undue hardship is caused by the plain words of the statute.
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