TMI Tax Updates - e-Newsletter
April 16, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Deduction u/s 80IA - Merely because the license was obtained for procuring the raw material for manufacturing finished products for its exports, does not mean that the sale of advance license has nexus with the business of manufacturing and sale of finished product. - HC
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Income Tax:
Deduction of Provision for contingency - Ascertained liability - the system of accounting, followed by the assessee, is mercantile and any expenditure, not paid by the close of the year, is as it is allowable and in-fact, even in a mercantile system of accounting, while income is also to be included, which has accrued to the assessee, so also the expenditure is to be allowed in similar fashion. - HC
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Income Tax:
Taxability of contributed to the conducting of events by way of sponsorship - principles of mutuality - no intention to earn income - contributing companies are nonmembers - contribution is not taxable - AT
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Income Tax:
Computation of capital gain - Application of Section 50C - A mere report of the DVO estimating higher value of the property cannot be considered as an evidence of the actual full value of consideration received or accruing as a result of the transfer of capital asset. - AT
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Customs:
Valuation of import - inclusion - The price paid by the appellant for drawings and technical documents forming the subject-matter of contract MD 301 can by no stretch of imagination fall within the meaning of “an obligation of the seller” to a third party. There was also no payment made as a condition of sale of imported goods as such - SC
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Service Tax:
Renting of immovable property services - Jurisdiction of central government - Service tax would apply even in respect of services rendered by a State Government, unless the services fall under the negative list of services under the Statute - HC
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Service Tax:
Show-cause notice though does not mention the specific clause of Section 65 (19) of the Finance Act, 1994, the definition of BAS, however, is clearly spelt out in the impugned show-cause notice alleging that the Applicant has provided aforesaid services for and on behalf of their clients - prima facie case is against the assessee - AT
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Central Excise:
Waiver of pre deposit - appeal were filed before the amendment - it cannot be interpreted that as per the amended Section 35F now the appellant can file the appeal without any deposit - as per Section 35F of Central Excise Act, 1944 and Section 129E of Customs Act, 1962, the appellant is required to deposit 7.5% of duty amount before filing of appeal - AT
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Central Excise:
CENVAT Credit - garden tools fully exempted from payment of duty had been exported under letter of undertaking and, therefore, in terms of Rule 5 of Cenvat Credit Rules, the input duty credit availed in respect of inputs used in the manufacture of such garden tools can be utilized by the manufacturer for payment of duty on final products cleared for home consumption or for export on payment of duty. - AT
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VAT:
Validity of assessment order passed - if the Revenue authorities decide not to exercise the power conferred under Section 41(2) of the OVAT Act read with Rule 41(2) of the OVAT Rules to make audit assessment for particular tax period and choose to proceed to complete the assessment under Section 43 of the OAVT Act, it is thereafter not permissible to assess the petitioner under Section 42 of the OVAT Act. - HC
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VAT:
Valuation - Determination of sale turnover - Inclusion of value of freight - it was the duty of the assessee to deliver the goods at the destination - transportation charges / freight is includable in the sale price - HC
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VAT:
Disallowance of for tax exempted sales of agricultural implements - Tractor trailers were ultimately intended to be used for agricultural purpose. It was immaterial whether these were sold directly to the agriculturists or to the agriculturists through dealers/distributors - exemption allowed - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2015 (4) TMI 481
Addition u/s 68 - Onus of proving the identity and credit-worthiness of the share subscriber - Genuineness of subscription - Supreme Court after condoning the delay, found no merit in the special leave petition filed by the assessee against the decision of Delhi High Court [2014 (8) TMI 905 - DELHI HIGH COURT] wherein Delhi High Court held that assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the AO from the concerned bank, the AO has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions.
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2015 (4) TMI 480
Deduction u/s 80IA - Sale of advance licenses issued under Chapter-VII of the Import Export Policy for asst. year 1993-94 - treatment as Income derived from industrial undertaking for calculating allowance u/s.80IA of the I.T. Act - Held that:- Section 80-IA provides that the gross total income of an assessee would include any profits and gains derived from any business of an industrial undertaking and not from industrial undertaking as provided for in Section 80HH. In our opinion, the gross total income of an assessee, so far as Section 80-IA is concerned, means any profits and gains derived from any business of an industrial undertaking. By making the slight change in the language, the Legislature, as a matter of fact, has widened the scope of Section 80-IA than Section 80 HH, but while reading the expression the gross income derived from any business, in our opinion, cannot be read to mean and include the income having no nexus with the business of an undertaking or the income that cannot be attributable to the business of an undertaking. There must be, for the application of the words derived from, direct nexus between the profits and gains and the business of an industrial undertaking. In the instant case, the profit derived from sale of the license could be, at the most treated as incidental and not direct. In the present case, it is not the case of the assessee that sale of the license is their business. If the assessee has derived any profits/gains from the sale of license, it at the most could be treated as income from sources other than the actual conduct of the business and the same, in any case, cannot be treated as a part of gross total income from their business of manufacturing rubber moulded goods such as rubber rings and sale of the same. The submission that the sale of license has direct nexus/connection with the business of the undertaking must be rejected. Merely because the license was obtained for procuring the raw material for manufacturing finished products for its exports, does not mean that the sale of advance license has nexus with the business of manufacturing and sale of finished product. - Decided against the appellant.
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2015 (4) TMI 479
Appeal against cancellation of order passed under Section 263 of the Income Tax Act, 1961 - Relevant enquiry was not undertaken - Held that:- The power under section 263 of the Act can be exercised where the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. When an order is erroneous, then the order is also deficient and in order to remedy the situation, power under section 263 of the Act has been given. Therefore, the view that the power could not have been exercised to allow the Assessing Officer to make up the deficiency is altogether an incorrect impression of the law. It is not the law that the assessing officer occupying the position of an investigator and adjudicator can discharge his function by perfunctory or inadequate investigation. Such a course is bound to result in erroneous and prejudicial orders. Where the relevant enquiry was not undertaken, as in this case, the order is erroneous and prejudicial too and therefore revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted. In a different context the Apex Court observed "contra veritatem lex nunquam aliquid permittit: implies a duty on the Court to accept and accord its approval only to a report which is the result of faithful and fruitful investigation". - Decided in favour of appellant.
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2015 (4) TMI 478
Deduction of Provision for contingency - Ascertained liability - Allowable deduction - Held that:- The ITAT has come to a correct conclusion that the liability was ascertained and it has been an admitted fact that the work had been completed at the Dam namely; Right Bank Dam Division, Hidkal Dam and the provision was made only for supplies. Though it may be that the assessee made a provision at the rate of 6 ˝ % of the supplies for possible loss due to deduction made by the Government for not keeping the supplies to the satisfaction of the department which, in-fact, had been deducted by the Government @ 10 %. However, to be on the safer side, the assessee made a provision @ 6 ˝ % only. It is an admitted fact that the provision, if any made, was to make over the deficiencies, in respect of the work done as per direction of Government by which 10% deduction was made. Admittedly, the entire amount was included by the assessee in the total receipts and once entire receipt has been shown, the expenditure ought to have been allowed and therefore, this was an allowable deduction. In our view, the assessee has to ensure an expenditure and if not paid on or before close of the financial year, it certainly deserves allowance. Admittedly, the system of accounting, followed by the assessee, is mercantile and any expenditure, not paid by the close of the year, is as it is allowable and in-fact, even in a mercantile system of accounting, while income is also to be included, which has accrued to the assessee, so also the expenditure is to be allowed in similar fashion. In the light of the opinion of the Hon'ble Apex Court in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME Court]and Rotork Controls India (P.) Ltd. [2009 (5) TMI 16 - SUPREME COURT OF INDIA], and Calcutta Co. Ltd. [[1959 (5) TMI 3 - SUPREME Court]] in our view, the ITAT was correct and justified in allowing the amount of ₹ 87,224/- which was an ascertained liability on account of the allowable deduction. - Decided against the revenue.
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2015 (4) TMI 477
Disallowance of expenses made u/s 14A - held that:- Provisions of Rule 8D are applicable for this assessment year for making any disallowance under Section 14A of the Act. However, the provisions of Section 14A are triggered when the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of expenditure claimed to have been incurred in relation to income, which does not form part of the total income under the Act. Section 14A(2) categorically provides that the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, "if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act". No satisfaction was recorded to satisfy the mandate of sub-sections (2) and (3) of Section 14A. The position continued to remain same before the learned CIT(A) as well, who also simply upheld the view taken by the Assessing Officer without making good the deficiency left by the Assessing Officer. The position which, therefore, emerges is that neither the Assessing Officer nor the learned CIT(A) recorded the requisite satisfaction as required under Section 14A. In the absence of such satisfaction, there can be no disallowance as per Section 14A. In these peculiar facts when there is a deficiency in recording satisfaction, much less a proper satisfaction, in terms of sub-section (3) read with sub-section (2) of section 14A, we hold, that no disallowance could have been made or sustained on this score. As such, we order for deletion of addition of ₹ 3.78 lac made under Section 14A of the Act. - Decided in favour of assessee.
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2015 (4) TMI 476
Disallowance of unexplained credit, impliedly u/s 68 - assessee argued before the ld. CIT(A) that some land was purchased by the assessee from Shri Narender Kumar for a sum of ₹ 18,74,07,000/- which appeared as stock in its balance sheet under the head ‘Inventories.’ - confirmation could not be obtained from Shri Narender Kumar as the time given by the AO was too short. Considering these facts, the ld. CIT(A) deleted the addition - Held that:- In principle, there can be no dispute on the proposition that an addition u/s 68 of the Act can be made only if there is a fresh credit in the books of account of the assessee arising in the previous year relevant to the assessment year under consideration. If the balance is outstanding from earlier year, then, it cannot be a case of making addition u/s 68 in a later year - The balance sheet filed by the assessee, though show the balances at the level stated, but the names of the parties are not given. The explanation tendered before the ld. CIT(A) was not given to the AO, enabling him to examine its veracity w.r.t. the books of accounts. Under such circumstances, we set aside the impugned order on this score and remit the matter to the file of the AO for examining the assessee’s claim - Matter remanded back. Case of the assessee is that the sum of ₹ 3,67,395/- was claimed as deduction in the preceding year which was disallowed by the AO and the reversal by means of write back of this amount in the current year could not be charged to tax as it would result in to double taxation of the same amount. - but there is no material to support the contention made before us. Since necessary details in this regard are not available and the impugned order is silent on this aspect, we remit this matter to the file of the AO for examining the veracity of the assessee’s contention. If it is found that the addition made to the tune of ₹ 3.67 lac in the preceding year on this account has attained finality inasmuch as the assessee has not challenged it in the appellate proceedings, then, the amount of ₹ 3.67 lac, representing the write back of the same amount, should not be taxed in the assessment of the current year. - Matter remanded back - Decided in favour of Revenue.
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2015 (4) TMI 475
Stamp duty valuation u/s.50C - difference in the value of the property declared by the assessee as sale consideration and adopted by the stamp valuation authority - Held that:- AO has made addition on the basis of the difference in the value of the property declared by the assessee as sale consideration and adopted by the stamp valuation authority - in view of the provisions of section 50C(2) of the Act, we are of the considered view that the AO was not justified in adopting the value of the property as adopted by the “stamp valuation authority” without referring to the DVO for ascertaining the fair market value of the property. Therefore, the orders of the authorities below on this issue are hereby set aside and the additional ground raised by the assessee is restored back to the file of AO to decide the same in accordance with law - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 474
Unexplained investment in factory and building - AO has made the addition by observing that ₹ 12 lacs have been invested through cash based transactions for which the assessee has no explanation at all - CIT(A) deleted part addition - Held that:- The assessee produced a statement showing availability of source of ₹ 12,00,000/ before the Ld. CIT(A) during the appellate proceedings and which shows there is no direct evidence regarding the cash transaction but the date on which such has taken place and the availability of cash on such date shows that there is plausible nexus, which explains the source. However, the details furnished by the assessee in this regard indicate that an amount of ₹ 2,50,000/- has been shown to be representing direct credit in capital account. However, in absence of relevant detail, the same cannot be accepted. Thus in our considered opinion, Ld. CIT(A) has rightly confirmed the addition to the extent of ₹ 2,50,000/- and the rest of the amount i.e. ₹ 9,50,000/- is deleted. - Decided against revenue. Unexplained investment in machinery and generator - CIT(A) deleted addition - Held that:- assessee has worked out the availability of fund on the relevant dates. Again it was found that though apparently there may not be direct nexus between the fund available and the investment made in machinery and generator but the circumstantial evidence pointed out by the learned counsel of the assessee that the dates on which cash withdrawals have been made from the various banks of the assessee and the dates on which expenditure has been incurred appears to be plausible explanation for which benefit cannot be denied to the assessee; Accordingly, Ld. CIT(A) has rightly deleted the addition of ₹ 6,11 ,000/-. In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A) - Decided against revenue. Unexplained investment in form of cash deposits - CIT(A) deleted addition - Held that:- Considering the facts and circumstances of the case, the preponderance of probabilities appears to be in favour of the assessee. However, while scrutinizing the date wise withdrawals and the date of deposit, it is seen that at five places apparently there are negative balances, which works out to ₹ 3,20,850/-. In the above circumstances, out of ₹ 17,07,250/-, for the amount to the extent of ₹ 3,20,850/-, the assessee could "not give the source thereof. In view of the above, we find considerable cogency in the finding of the Ld. CIT(A) to delete the addition of ₹ 13,86,400/- and ₹ 3,20,850/- is confirmed. In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A)- Decided against revenue. Unexplained investment in car, furniture etc. - CIT(A) deleted part addition - Held that:- CIT(A) has rightly observed that out of investment of ₹ 1 ,67,667/-, the source of investment to the extent of ₹ 77,223/- (margin money tor car), RS'.10,273/- (margin money for scooter and ₹ 16,000/- (for fax) appears satisfactorily explained to be out of BOP withdrawals. Hence there is no justification for making addition to such extent. However, as regards the investment in furniture to the extent of ₹ 64,171/-, the learned counsel of the assessee has explained the source there of to be out of available cash. Ld. CIT(A) held rightly held that this explanation is of general nature as the same is not supported by any proper evidence. Therefore, the Ld. CIT(A) has rightly held that out of ₹ 1,67,667/-, addition to the extent of ₹ 64, 171/- is confirmed and the balance addition of ₹ 1,03,496/- is deleted. Thus no interference is called for in the well reasoned order passed by the Ld. CIT(A)- Decided against revenue. 20% of expenditure incurred in violation of section 40A(3) - CIT(A) deleted part addition - Held that:- CIT(A) has observed that on perusal of the assessment order it was seen that the AO has made the addition on the basis of presumption without bringing on record the specific transaction made in cash. In the absence of any categorical findings by the AO regarding specific transaction made in cash, no disallowance could be made as held by various Hon’ble Courts. IN view of the above, we find considerable cogency in the finding of the Ld. CIT(A) to estimate the disallowance of ₹ 11,60,000/- on account of 20% expenditure incurred in violation of section 40A(3) of the I.T. Act. In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A)- Decided against revenue.
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2015 (4) TMI 473
Reduction of amount of profits eligible for deduction u/s 80HHC from the book profits u/s 115JA - MAT computation - Held that:- Respectfully following the precedents [2015 (4) TMI 466 - ITAT AHMEDABAD] wherein held that if the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then s. 115JB will cease to be a self-contained code. In s. 115JB, as in s. 115JA, it has been clearly stated that the relief will be computed under s. 80HHC(3)/(3A), subject to the conditions under sub-cls. (4) and (4A) of that section. The conditions are only that the relief should be certified by the chartered accountant. Such condition is not a qualifying condition but it is a compliance condition. Therefore, one cannot rely upon the last sentence in cl. (iv) of Explanation to s. 115JB [subject to the conditions specified in sub-cls. (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department. Thus we hereby hold that the AO is required to re-compute the taxable profit for the purpose of computation of book profit u/s.115JA of the Act in the light of the guide lines laid down by the Hon Courts as cited above. - Decided in favour of assessee. Reduction of amount of profits derived by eligible industrial undertaking referred in s. 80IB [Old Section 80IA] from the book profits u/s 115JA - whether the computation carried out by the AO of the amount of profits derived by eligible industrial undertaking referred in S. 80IA for the purpose of computation of book profits under explanation to Sec. 115JA(1) should be made with reference to the book profits and not the taxable profits? - Held that:- This issue has already been decided in Assessment Year 1999-2000 wherein held that as per the Appellant the deduction U/s 80IA on Silvasa Unit, however the A.O. had allocated certain expenses and reduced the Profit to compute the deduction U/s 80IA. But it was pleaded that this issue was not decided by Ld. CIT(A). Also in the past for A.Y. 1998-99 [2011 (1) TMI 1305 - ITAT AHMEDABAD] this very issue was restored back to the file of Ld. CIT (A) in assessee's own case - Thus for this year as well, this ground may be treated as allowed but for statistical purposes only. - Decided in favour of assessee for statistical purpose only. Deduction of Lease Equalisation Charge from Book Profits u/s 115JA - whether addition on account of Lease equalization charge in computing the Book Profits under explanation to sec. 115JA (1) should be deleted? - Held that:- The assessee has explained that where the annual lease charge is less than the minimum statutory depreciation, a lease equalization credit would arise. Further, it was explained that the lease equalization charge is equal to the annual lease charge less minimum statutory depreciation. Therefore, a separate lease equalization account was opened by the assessee in which there was a corresponding debit or credit to the lease adjustment account. Almost on identical facts in the case of GE Capital Transportation Financial Services Ltd (2007 (7) TMI 343 - ITAT DELHI-D ) it was held that any adjustment made by the Assessing Officer by adding the amount of lease equalization charges while computing the book profit was unjustified. Likewise, in the case of TVS Finance & Services Ltd (2009 (2) TMI 283 - MADRAS HIGH COURT) opined that the lease equalization charges over the period of lease is equal to the difference between the quantum of principal recovered and the residual value. The provision was made as per ICAI guidelines note, therefore, same is not contingent in nature. It was held that the lease equalization charges is not to be included in computing book profit u/s 115JA of the Income-tax Act. Thus we direct to allow the claim - Decided in favour of assessee. Treatment of Exchange Rate Fluctuation as miscellaneous income forming part of total turnover for the purpose of deduction u/s 80HHC - Exchange rate difference on the balances in the EEFC account ought to be treated as export turnover for the purpose of computing the deduction u/s 80HHC - Held that:- This issue has already been decided by us in Assessment Year 1999-2000 wherein held that now this issue is directly covered in favour of the assessee by an order of Honble Gujarat High Court in the case of CIT vs, Alps Chemicals Pvt Ltd [2014 (10) TMI 251 - GUJARAT HIGH COURT] wherein held held that an exporter had an option to keep certain percentage of export receipts in EEFC a/c. The assessee received higher amount in Indian rupees on such amount due to fluctuation in the foreign exchange rate. Conscious of the fact that the assessee had received the proceeds of the export transaction and gained due to fluctuation the court held that such gain cannot only be said to have been 'derived' from export business but the fluctuation gain arose subsequent to receiving the sale consideration hence part of the export sales . The gain was not due to delayed realization of export proceeds. - Decided in favour of the assessee Inclusion of Sale of scrap in total turnover for the purpose of deduction u/s 80HHC - Held that:- This issue has also been dealt with by us while deciding ground No.4 for Assessment Year 1999-2000, wherein held that for the purpose of availing deduction u/s.80HHC, income from sale proceeds of sale scrap was not included in the "total turnover" but it was shown separately as relying on Punjab Stainless Ltd. case [2014 (5) TMI 238 - SUPREME COURT] - Respectfully, following the above decision, we hereby direct to re- compute the turnover after excluding the sale amount of scarp. - Decided in favour of assessee. Loss on Trading Exports for working out the deduction u/ 80HHC - whether loss computed in respect of the trading turnover should be considered as nil for working out the overall deduction u/s 80HHC? - AO held that where an assessee is engaged in export of trading goods and manufactured goods, then the profit of the two should be clubbed - CIT(A) has placed reliance on Ipca Laboratories Ltd [2001 (7) TMI 99 - BOMBAY High Court] and affirmed the calculation of the Assessing Officer - Held that:- The said decision of the Hon'ble Bombay High Court of Ipca Laboratories Ltd was affirmed by the Hon'ble Supreme Court in [2004 (3) TMI 9 - SUPREME Court] wherein the Hon'ble Court was of the view that loss from business of export for the purpose of computing u/s 80HHC do not qualify because the opening words are "profit derived from such exports". Therefore, the view taken by the Hon'ble High Court was affirmed and the assessee's contention was dismissed. - Decided against assessee. Disallowance of deduction u/s 80IB [Old Section 80IA] in respect of sale of DEPB - Held that:- This issue is well settled by in the case of Liberty India [2009 (8) TMI 63 - SUPREME COURT ] wherein it was held that Duty Drawback receipts and DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purpose of deduction U/s 80I / 80IA / 80IB. It was commented by S.C. that Sec. 80IB provides for the allowing of deduction in respect of profits and gains derived from the eligible business. The connotation of the words 'derived from' is narrower as compared to that of the words ' attributable to.' By using the expression ' derived from' Parliament intended to cover sources not beyond the first degree. - Decided against assessee. Disallowance of share issue expenses u/s 35D - Held that:- This issue has already been dealt with by us in Assessment Year 1999-2000 wherein held There are few examples such as payment of stamp duty for issue of public subscription of debentures which was held as revenue expenditure U/s 37(1); even though after the insertion of Sec. 35D. Likewise other expenditure pertaining to issue of debenture is entitled U/s 37(1) and the provision of Sec. 35D are not going to effect such deduction. So the outcome of the above discussion is that the provision of amortisation is not intended to supersede any other provision of the income tax act under which such expenditure is otherwise admissible as a deduction . Under the fitness of circumstances it is therefore required to restore this issue back to A.O. to examine both the aspects i.e. Revenue Expenditure or Capital Expenditure and then decide the question of disallowance. Resultantly this ground is restored back for denovo adjudication - Decided in favour of assessee for statistical purposes. Interest payment to the Dadhas - CIT(A) allowed the relief - Held that:- Since in the past a consistent view had been taken that once the Revenue had accepted the business decision of appointment of the said firms then in the same breath could not question the assessee's other decision taken in the ordinary course of business. We therefore follow the view already taken by the respected coordinate benches and affirm the decision of CIT(A)- Decided against revenue. Unaccounted sale of spent solvents - CIT(A) deleted the addition - Held that:- The post search period and in the financial year under consideration the Assessing Officer has simply presumed that the assessee might have sold the spent solvents; therefore, following the past history of the case, we hereby hold that the addition merely based upon the presumption; hence, rightly deleted by ld. CIT(A). - Decided against revenue. Compulsory depreciation allowance - CIT(A) deleted the addition - Held that:- For the year under consideration, which is before the amendment took place, the depreciation cannot be foisted upon the assessee. Therefore, this ground of the Revenue is hereby dismissed.- Decided against revenue. Inclusion of sales-tax & excise duty as part of total turnover for 80HHC purpose - CIT(A) deleted the addition - Held that:- As decided in Laxmi Machine Works [2007 (4) TMI 202 - SUPREME Court] for the legal proposition that Excise Duty & Sales Tax are indirect taxes so do not involve any element of 'Turnover'. Respectfully following this precedent we hereby affirm the findings of CIT(A) - Decided against revenue. Inclusion of insurance claim as part of total turnover for 80HHC purpose - CIT(A) deleted the addition - Held that:- The fundamental condition is that exclusion of 90% from business profit arises only if such item of profit is included in business profit. Section 28 of the Act provides for inclusion of certain items as business income because such items otherwise would not have fallen under "business profits" but for such specific inclusion. In so far as the question of insurance receipt is concerned, an examination is required that whether it was on account of loss of goods so as to consider that the insurance receipt form part of the total turnover or not. Because of this reason, we hereby restore this ground back to the stage of the Assessing Officer to examine the nature of receipt and then decide according to law as discussed above. - Decided in favour of revenue for statistical purposes. Gross interest,Gross lease rent & Operational charges for computing 'Profit of the Business' for 80HHC purpose - CIT(A) deleted the addition - Held that:- As relying on ACG Associated Capsules Pvt. Ltd.,[2012 (2) TMI 101 - SUPREME COURT OF INDIA] and Topman Exports, reported [2012 (2) TMI 100 - SUPREME COURT OF INDIA] arriving at the conclusion that 90% of the net interest which had been included in the profits of the business was required to be deducted as per Explanation (baa) of section 80HHC. On the same line, we hereby direct to compute the 80HHC deduction. - Decided against revenue. Adjustment of trading export profit for 80HHC purpose - CIT(A) deleted the addition - Held that:- The Revenue should not have any grievance because the ld. CIT(A) has followed the decision in the case of Ipca Laboratories (supra). - Decided against revenue. Deduction under section 80IA reduced by CIT(A)- Assessing Officer has disallowed the profit on sale of DEPB on the ground that the proceeds were not derived from manufacturing activity. - Held that:- Once this issue has been decided by ld. CIT(A) in favour of the Revenue Department, then there was no legal requirement to raise this issue by the Revenue Department. It appears that this ground was inadvertently raised before us. Otherwise also, while deciding the ground No.12 in Assessment Year 1999-2000 in Revenue's appeal, we have decided the question of DEPB sales against the assessee. - Decided against revenue.
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2015 (4) TMI 472
Taxability of contributed to the conducting of events by way of sponsorship - principles of mutuality - no intention to earn income - contributing companies are nonmembers - Held that:- assessee has been organizing various events for the mutual benefit of its members. The contributions, if any, received from the members were utilized for conducting the events and the surplus, if any, is accepted as exempt under the principles of mutuality. The above said companies have partly sponsored the events, apparently as a part of their respective sales promotion activities. Hence, the objective of the assessee in receiving these contributions, in our view, can only be considered to be to meet part of the expenditure incurred in organizing the events. Hence, in our view, there is no intention to earn any income out of the above said contributions, since it only goes to reduce the expenditure. - contribution cannot be subjected to tax as income in the hands of the assessee. It is an accepted fact that the complimentary liquor has been sold at a price, meaning thereby the intention of the assessee was to make profit out of sale of complimentary liquors. Thus the action of the assessee was commercial in nature. It was not shown to that the liquor companies, who have given complimentary liquors, are members of the assessee. Hence, we do not find any infirmity in the decision of the ld.CIT(A) on this issues. Assessment of interest income - Held that:- Both the parties agreed that this issue has since been decided against the assessee by Hon'ble Supreme Court in the case of Bangalore Club reported in [2013 (1) TMI 343 - SUPREME COURT]. Accordingly, we set aside the order of Ld CIT(A) on this issue and confirm the assessment of interest income. - Decided partly in favour of Revenue.
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2015 (4) TMI 471
Computation of the full value of consideration of the property - Computation of capital gain - whether the AO was right in substituting `the full value of the consideration received or accruing as a result of the transfer of the capital asset’ with the ‘fair market value’ determined by the DVO - Held that:- when the legislature has provided to consider the full value of the consideration received or accruing as a result of the transfer of the capital asset, there can be no question of the AO substituting it with the fair market value as determined by the DVO. Of course, the AO is entitled to carry out investigation and conclusively prove with some clinching evidence that the ‘full value of the consideration received or accruing as a result of the transfer of a capital asset’ was, in fact, any amount higher than the one depicted in the sale deed. In the absence of any such an evidence, there can be no scope for frustrating the prescription of section 48, which mandates that the computation of capital gains should be done by considering the full value of the consideration received or accruing as a result of the transfer of a capital asset. A mere report of the DVO estimating higher value of the property cannot be considered as an evidence of the actual full value of consideration received or accruing as a result of the transfer of capital asset. It is manifest from a copy of the Registered sale deed that the stamp value of the property is the same figure - Additions made by AO is not correct - Decided against Revenue.
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2015 (4) TMI 470
Rejection of books of accounts - Estimation of income - Held that:- Assessee did not produce proper books of account and other relevant details in support of the expenses, etc., claimed. The same position continued even before the learned first appellate authority inasmuch as the assessee admitted that it was not possible to do so because of the closure of its business and the case being before BIFR - rejection of books of account by the authorities below is upheld. Determination of the gross profit rate to be applied after rejecting the books of account - AO applied GP rate of preceding year. However, it can be seen from the impugned order that the assessee was in BIFR being a sick company declared so vide order dated 21.12.2006, being the period relevant to the assessment year under consideration. The fact that the assessee was declared as a sick company in this year alone strengthens the view point of the ld. CIT(A) for justifying the departure from the preceding year’s gross profit rate. If there had not been this salient feature in this year, we would have gone by the earlier year’s gross profit rate. But this is a relevant factor justifying the reduction in profit. In our considered opinion, the ld. CIT(A) was justified in ordering the application of 4% GP rate in contrast to 7.18% applied by the AO Auditor of the assessee pointed out the referred irregularities in the payment of statutory liabilities, which called for disallowance, if any, under section 43B or the other relevant provisions of Chapter XVII-B of the Act. Merely because the AO mentioned a wrong section in making the disallowance cannot be a ground to delete the addition, if the facts otherwise justify the sustenance of addition under some other appropriate section. As the ld. CIT(A) has failed to consider the merits of addition made by the AO for a sum of ₹ 14.56 lac, we cannot sustain his point of view. - Matter remanded back - Decided partly in favour of Revenue.
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2015 (4) TMI 469
Disallowance of depreciation - Double deduction - Amount already allowed as application of income - Held that:- Following decision of DIRECTOR OF INCOME TAX Versus VISHWA JAGRITI MISSION [2012 (4) TMI 289 - DELHI HIGH COURT] - Decided against Revenue.
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2015 (4) TMI 468
Disallowance of accommodation entries received - unaccounted money - Noncooperation of assessee - Held that:- CIT(A) granted relief for the assessee on justified and cogent reasons. The assessing officer made addition on information of investigation wing but the AO could not bring any positive or sustainable evidence or any other adverse material on the record to substantiate his conclusions. Per contra, the assessing officer recorded statement of Sh. Ashok Gupta, the Director of the J.R.D. Stock Broker who confirmed the transaction supporting the verified copy of account with the assessee. In view of above stated facts and circumstances, we reach to the conclusion and the addition made by the AO was not sustainable which was rightly deleted by the CIT(A) during first appellate proceedings - Decided against Revenue.
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2015 (4) TMI 467
Disallowance of subscription charges and repair and maintenance of flats charges - Held that:- CIT(A) has held that these expenses have been properly explained by the assessee that these were related to its business. Hence, we find that the Ld. CIT(A) has rightly deleted the addition of ₹ 9,55,587/-. In view of the above, we are of the view that no interference is called for in the well reasoned order. CIT(A) has rightly held that the expenditure has been incurred on residential flats owned by the assessee and provided to the employees. The expenditure is clearly a business expenditure and allowable u/s. 37. Therefore, we find that Ld. CIT(A) has rightly deleted the addition on this account. In view of the above, we are of the view that no interference is called for in the well reasoned order - Decided against Revenue.
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Customs
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2015 (4) TMI 486
Addition in the value for assessment to customs duty of charges paid by the respondent to Met Chem Canada Inc. for supply of technical services required for setting up and commissioning a plant for the manufacture of Hot Rolled Steel Coils in India - Held that:- customs duty is chargeable on goods by reference to their value at a price at which such goods or like goods are ordinarily sold or offered for sale at the time and place of importation in the course of international trade. This would mean that any amount that is referable to the imported goods post-importation has necessarily to be excluded. It is with this basic principle in mind that the rules made under sub-clause 1(A) have been framed and have to be interpreted. - Under the Customs Valuation (Determination of Price of Imported Goods) Rules of 1988, Rule 2(f) defines “transaction value” as the value determined in accordance with Rule 4 of these Rules. Rule 4(1) in turn states that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these Rules. On an analysis of the technical services agreement dated 13.4.1991, it is clear that the respondent has only associated Met Chem Canada Inc. as a technical consultant. There is no transfer of know-how or patents, trademarks or copyright. What is clear is that technical services to be provided by Met Chem Canada Inc. is basically to coordinate and advise the respondent so that the respondent can successfully set up, commission and operate the plant in India. It will be noticed that coordination and advice is to take place post-importation in order that the plant be set up and commissioned in India. In fact, all the clauses of this agreement make it clear that such services are only post-importation. Clause 9 on which a large part of the agreements ranged again makes it clear that ownership of patents, know-how, copyright and other intellectual property rights shall remain vested in the technical consultant and none of these will be transferred to the respondent. The respondent becomes owner of that portion of documents, drawings, plans and specifications originally created by the technical consultant pursuant to the agreement. This again refers only to documents, drawings etc. of setting up, commissioning and operating the plant, all of which are post-importation of the plant into India. Conjoint reading of the technical services agreement and the purchase order do not lead to the conclusion that the technical services agreement is in any way a pre-condition for the sale of the plant itself. On the contrary, as has been pointed out above, the technical services agreement read as a whole is really only to successfully set up, commission and operate the plant after it has been imported into India. It is clear, therefore, that clause 9(1)(e) would not be attracted on the facts of this case and consequently the consideration for the technical services to be provided by Met Chem Canada Inc. cannot be added to the value of the equipment imported to set up the plant in India. So far as the sum of 231 Lakh Deutsche Marks is concerned, since this was payment for engineering and technical consultancy to set up and commission the plant in India, this amount would have to be excluded. This Court held that 10% of this amount only should be added to the value of the plant as the plant had been sold abroad on an as is where is basis and needed to be dismantled abroad before it was ready for delivery in India. Obviously, therefore this 10% is attributable to a pre-import stage. Further, the amount of 22 Lakh Deutsche Marks payable for theoretical and practical training of personnel outside India again could not be added as this amount would presumably be attributable to trained personnel who would be used in the commissioning and operation of the plant, which would, therefore, be attributable to a post-importation event. - seller had an obligation towards a third party which was required to be satisfied by it and the buyer (i.e. the appellant) had made any payment to the seller or to a third party in order to satisfy such an obligation. The price paid by the appellant for drawings and technical documents forming the subject-matter of contract MD 301 can by no stretch of imagination fall within the meaning of “an obligation of the seller” to a third party. There was also no payment made as a condition of sale of imported goods as such. Rule 9(1)(e) also, therefore, has no applicability. Interpretative Note to Rule 4 is concerned it is no doubt true that the Interpretative Notes are part of the Rules and hence statutory. However, the question is one of their applicability. The part of the Interpretative Note to Rule 4 relied on by the Tribunal has been couched in a negative form and is accompanied by a proviso. It means that the charges or costs described in clauses (a), (b) and (c) are not to be included in the value of imported goods subject to satisfying the requirement of the proviso that the charges were distinguishable from the price actually paid or payable for the imported goods. This part of the Interpretative Note cannot be so read as to mean that those charges which are not covered in clauses (a) to (c) are available to be included in the value of the imported goods. The Tribunal has not doubted the genuineness of the contracts entered into between the appellant and SNP. Rather it has observed vide para 10.2 of its order that entering into two contracts (MD 301 and MD 302) was a legal necessity. The Tribunal has also stated that it was not recording any finding of “skewed split-up”. Shri Ashok Desai, the learned Senior Counsel for the appellant has pointed out that under Chapter Heading 49.06 of the Customs Tariff Act, 1975 plans and drawings for engineering and industrial purposes being originals drawn by hand as also their photographic reproductions on sensitised papers and carbon copies thereof are declared free from payment of customs duty. Subrules (3) and (4) of Rule 9 clearly provide that additions to the price actually paid or payable are permissible under the Rules if based on objective and quantifiable data and no addition except as provided for by Rule 9 is permissible. - it is clear that the facts of the present case do not attract Rule 9(1)(e). - Decided against Revenue.
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2015 (4) TMI 485
Confication of goods - Misdeclaration of goods - Imposition of redemption fine and penalty - Held that:- Bill of Entry was filed on 1.5.13 and examination report was obtained on 6.5.2013. Thereafter vide letter dated 8.5.2013, the appellant submits that due to mistake of the supplier of goods, the excessive quantity has been dispatched. On perusal of the record, I find that the letter issued by the supplier is undated. Moreover, the supplier has issued two invoices by same number on the same date, i.e. invoice No. SPH046 dated 29.4.2013 for 25000 pcs as well as 50,000 pcs. In these circumstances, I hold that there was a mis-declaration on the part of the appellant. Therefore, the lower authorities has correctly held the goods are liable for confiscation. - However, fine and penalty is reduced - Decided partly in favour of assessee.
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2015 (4) TMI 484
Penalty u/s 117 - contravention of the Handling of Cargo in Customs Areas Regulations, 2009 - violation of the Facility Notice - Held that:- The Regulation 5(5) requires the Shipping Agency to comply with Rules, Regulations, Notifications and Orders. The Facility Notice is not an order issued under the provisions of the Customs Act. Facility Notice is only issued to facilitate and regulate the movement of containers. The facility notice cannot and does not bind the shipping line to move the containers to a particular CFS at the behest of the CHA. - no basis for levy of penalty. - Decided in favour of appellant.
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Corporate Laws
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2015 (4) TMI 483
Penalty for Violation of regulation 13(3) of Securities and Exchange Board of India PIT (Prohibition of Insider Trading) Regulations, 1992 - Violation of regulation 29(2) of Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 - Delay in making the relevant disclosures - Physical disability such as blindness can not be a excuse to escape from penal liability. Held that:- Penalty for delay in making disclosures under Section 15A(b) of SEBI Act, 1992 is ₹ 1 lac for each day during which such failure continues or ₹ 1 crore whichever is lower. Penalty calculated at the rate of ₹ 1 lac per day, in the present case, exceeds ₹ 1 crore. Thus, as against penalty of ₹ 1 crore imposable under Section 15A(b) of SEBI Act, 1992, adjudicating officer after considering all mitigating factors has imposed penalty of ₹ 5 lac which cannot be said to be excessively harsh or unreasonable. Argument that requisite particulars of sale in question were available on the website of the Stock Exchange and therefore for failure to make disclosures within the stipulated time penalty ought not to have been imposed, is without any merit, because, obligation to make disclosures within the stipulated time is a mandatory obligation and penalty is imposed for not complying with the mandatory obligation. Similarly argument that the failure to make disclosures within the stipulated time, was unintentional, technical or inadvertent and that no gain or unfair advantage has accrued to the appellant, is also without any merit, because, all these factors are mitigating factors and these factors do not obliterate the obligation to make disclosures. When a person dealing in shares in the stock market violates any of the regulatory provisions, then that person whether blind or not, cannot escape penal liability.After taking all mitigating factors, including the fact that the appellant is a blind person, the adjudicating officer has imposed penalty of ₹ 5 lac as against penalty of ₹ 1 crore imposable under SEBI Act, 1992, which cannot be said to be harsh or unreasonable. - Decided against the appellant.
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Service Tax
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2015 (4) TMI 497
Renting of immovable property services - Jurisdiction of central government to levy service tax - Petitioner being Department of State Government discharge sovereign functions - Held that:- by virtue of Entry 35 read with Entry 18 List II of the Constitution of India, leasing of property is a subject under the State List, and therefore, only the State legislature would have the power to legislate in respect of the said subject, I note that the said entries do not deal specifically with levy of a tax on renting of immovable property services. It is not in dispute that the legislative sanction for the levy of a service tax on renting of immovable property services is traceable to Entry 97 of List I of the Constitution of India. That being so, and there being no specific entry dealing with the subject of service tax in any of the other lists in the 7th Schedule to the Constitution of India, the competence of the Parliament to legislate in respect of service tax on renting of immovable property services cannot be called in question. Thus, as far as the applicability of the Finance Act, 1994, as amended is concerned, it would apply even in respect of services rendered by a State Government, unless the services fall under the negative list of services under the Statute. Thus, in the instant case, there is no ground to infer that, in passing Ext.P7 order, the respondents were acting under any jurisdictional error in confirming a demand of service tax on the petitioner in respect of the services rendered by the petitioner pursuant to Exts.P1 and P1(a) orders. - Decided against assessee.
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2015 (4) TMI 496
Waiver of pre deposit - Denial of exemption claim for non dis-closer of foreign commission in the return filed belated - Held that:- Appellants have at least substantially satisfied the conditions for exemption under Notification No.18/2009-ST. Further it also needs to be appreciated that even if the tax had been paid on such commission paid to commission agents based abroad, prima facie the same would have been available to the appellants as credit. We also find force in the contentions of the appellants that no service tax is chargeable under Business Exhibition Service when such exhibitions were held abroad and that no service tax is chargeable under Technical Inspection and Certification service when no inspection or certification took place. We do not agree with the contention of the Ld. Departmental Representative that the service tax under GTA service is correctly confirmed because the appellants did not provide them the evidence that the transport was undertaken in truck owned by individuals and no consignment notes were issued because the onus lies on Revenue to prove the liability to service tax under GTA service. - balance of convenience in this is case is clearly in favour of the appellants and they have made out a good case for complete waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit and stay recovery of the impugned liability during pendency of the appeal. - Stay granted.
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2015 (4) TMI 495
Waiver of predeposit of service tax - Business Auxiliary Service - relevant clause of section 65(19) was not mentioned in the SCN - Penalty u/s 78 - Held that:- Show-cause notice though does not mention the specific clause of Section 65 (19) of the Finance Act, 1994, the definition of BAS, however, is clearly spelt out in the impugned show-cause notice alleging that the Applicant has provided aforesaid services for and on behalf of their clients - Commissioner has, after considering the relevant facts, arrived on the conclusion that in the present case, the Applicant was involved in rendering services which are incidental and auxiliary to the service of "procurement of goods from services, which are inputs for client" falling under Clause (iv) and hence would fall under clause (vii) of Section 65 (19) of the Finance Act, 1994, as amended. We also find that the ld.Commissioner has categorically recorded that in spite of several reminders, the Applicant did not submit particulars of such services during the relevant period, so as to enable the Department to compute the service tax liability. - Prima facie case not in favour of assessee - Partial stay granted.
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Central Excise
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2015 (4) TMI 490
Waiver of pre dpeosit - Extension of stay order - Power of Tribunal to extend the stay - Held that:- Waiver from pre-deposit and unconditional stay on the realisation of the adjudicated liability has been granted by the Tribunal since a prima facie case was found in favour of the assessee. The Tribunal has also observed that the appeal could not been disposed of only on account of the pendency of several older appeals and not on account of any delay on the part of the assessee. - ends of justice would be met if the Tribunal is requested to dispose of the appeal expeditiously and preferably within a period of six month - waiver of pre-deposit and stay will continue to remain valid for a period of six months - Stay granted.
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2015 (4) TMI 489
Waiver of pre deposit - appeal were filed before the amendment - Non compliance with pre deposit condition - Amendment in Section 35F - Held that:- In view of the section 35F, the statute provides that appeal shall be entertained only when the 7.5% or 10% as the case may be of duty is deposited. - as regard appeal procedure in this appellate Tribunal, the moment appeal is filed, it attains the stage of entertaining the appeal by the Tribunal. Unlike procedure in the Hon'ble High Court and Hon'ble Supreme Court, there is no procedure in this Appellate Tribunal for motion hearing on admission of the appeal. In this Tribunal when the appeal is filed it is registered and appeal number is allotted and thereafter the appeal is matured for considering on merit. Therefore since there is no provision of admission of the appeal in this Tribunal the moment the appeal is filed it stands admitted and become due for consideration on merit. Therefore the mandatory deposit of 7.5% or 10% as the case may be is required to be deposited by the appellant and to be complied at the time of filing of the appeal itself. - After the amendment, intention of the legislature is that instead of 100% of the adjudged dues the appellant is required to pay only 7.5% or 10% as the case may be of the duty or penalty. Therefore it cannot be interpreted that as per the amended Section 35F now the appellant can file the appeal without any deposit - as per Section 35F of Central Excise Act, 1944 and Section 129E of Customs Act, 1962, the appellant is required to ‘deposit 7.5% of duty amount before filing of appeal and to furnish the proof of such payment alongwith appeal filed in this Tribunal. Therefore, we direct the appellant to deposit required amount of 7.5% of the duty including amount already deposited - Decided against assessee.
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2015 (4) TMI 488
Demand of differential duty - Finalization of provisional assessment - whether, the appellants are liable to pay interest on the differential duty in a case, where the duty is paid prior to passing of order finalizing provisional assessment - Held that:- Ruling in the case of Premier Ltd. vs. Union of India (2014 (10) TMI 445 - BOMBAY HIGH COURT), is not applicable in facts of this appeal. It is a case of demand for interest, which does not arise purely from the statute but from a negotiated demand for instalments, pursuant to the final order of the Hon'ble Supreme Court fixing liability to pay the principal amount. Further, I find from the plain reading of Rule 7 (4) that the liability to pay interest arises consequent to determination of amount payable on finalisation of provisional assessment. In the present case, the appellant has admittedly paid the differential duty prior to finalisation of provisional assessment. Further, I find that the issue is entirely covered by the ruling of Hon'ble Bombay High Court in the case of Ispat Industries Ltd. (2010 (10) TMI 178 - BOMBAY HIGH COURT ). - Decided in favour of assessee.
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2015 (4) TMI 487
Denial of CENVAT Credit - export of exempted goods - Common inputs - manufacture of dutiable final products hand tools which had been cleared on payment of duty and garden tools which are fully exempt from duty under notification no.5/-3006-CE dated 1.3.2006 - garden tools have been exported out of India under letter of undertaking without payment of duty - Held that:- garden tools fully exempted from payment of duty had been exported under letter of undertaking and, therefore, in terms of Rule 5 of Cenvat Credit Rules, the input duty credit availed in respect of inputs used in the manufacture of such garden tools can be utilized by the manufacturer for payment of duty on final products cleared for home consumption or for export on payment of duty. Thus, in this case, the respondent have correctly availed the cenvat credit in respect of the inputs for garden tools which were exported out of India and have correctly utilized the credit for payment of duty on the other dutiable final products which were exported out of India under rebate claim. - Following decision of Repro India [2007 (12) TMI 209 - BOMBAY HIGH COURT ] - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (4) TMI 494
Validity of assessment order passed - Jurisdiction of Assessing Authority to pass the said order - Whether the Taxing authority has jurisdiction to make audit assessment under Section 42 of the OVAT Act after completion of the assessment under Section 43 of the said Act for the self-same tax period - Held that:- Where the tax audit conducted under subsection (3) of Section 41 results in detection of suppression of purchase or sale or both, erroneous claims of deduction including input tax audit, evasion of tax or contravention of any provision of the Act affecting the tax liability of the dealer, the assessing authority may notwithstanding the fact that the dealer may have been assessed under Section 39 or 40, serve on such dealer a notice as prescribed under the Rules along with a copy of the audit visit report for making an audit assessment. Therefore, if audit assessment has to be made after completion of any other assessment provided under the OVAT Act, the same is restricted to assessment made under Section 39 or Section 40 of the OVAT Act and all other types of assessment provided under the said Act are impliedly excluded. If the Legislature in its wisdom has taken away assessment as contemplated under Section 43 from Section 42 for the purpose of making audit assessment, after completion of any other assessment under the OVAT Act, Section 43 cannot be read into Section 42 by the State. Section 41(2) of the OVAT Act read with Rule 41(2) of the OVAT Rules empowers the Commissioner to direct audit on any specific issue or issues relating to any dealer or class or classes of dealers on being referred to by subordinate officers to check tax evasion. - Therefore, in case of an assessee, if the Revenue authorities decide not to exercise the power conferred under Section 41(2) of the OVAT Act read with Rule 41(2) of the OVAT Rules to make audit assessment for particular tax period and choose to proceed to complete the assessment under Section 43 of the OAVT Act, it is thereafter not permissible to assess the petitioner under Section 42 of the OVAT Act. Audit assessment under Section 42 cannot be made after completion of the assessment of escaped turnover under Section 43 of the OVAT Act read with Rule 50 of the OVAT Rules for the self-same tax period(s). - order of assessment passed under Section 42 of the OVAT Act for the period 29.03.2006 to 30.11.2008 under Annexure-1 is hereby set aside. However, it is open to the Assessing Authority to assess the petitioner under Section 42 of the OVAT Act excluding the period from 24.01.2006 to 31.07.2006 for which the dealer has already been assessed under Section 43 of the OVAT Act. - Decided in favour of assessee.
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2015 (4) TMI 493
Jurisdiction of Commercial Tax Officer - jurisdiction to levy Entry Tax under the Tamil Nau Tax on Entry of Motor Vehicles into Local Areas Act, 1990 - Held that:- Admittedly, the petitioner has not submitted his objections as against the notice issued by the respondent inspite of granting sufficient time. The respondent has passed the impugned order only after the expiry of time granted to the petitioner to furnish reply. However, the respondent failed to give an opportunity of personal hearing to the petitioner. Only on the said ground, I am inclined to set aside the impugned order. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 492
Valuation - Determination of sale turnover - Inclusion of value of freight - Held that:- As per terms and conditions in the contract, when the seller was required to deliver the goods at the destination after taking into consideration the transit risk and all other liability namely; delivery charges plus sales tax plus octroi duty plus local tax/levies etc, in transit and at destination on the corporation selling price to the general trade on the date of delivery for each supply and when there is a specific reference of delivery at consignees storage/consumer pumps in corporation/ transporters in bulk and for delivery at consignees' storage/ consumer pumps, it prescribes that price built up will be exdepot price plus delivery charges/octroi/local levies/ Surcharges, Transportation charges at actual Sales Tax and any other levy as applicable from time to time and it will be the responsibility of the assessee and the IOC/BPC/HPC shall be responsible & liable for any shortage, damages or deterioration to the consignment in transit if the same is to be carried in their own or contractor's truck's/tank lorries to the destination station and as per the terms and conditions of DGS & D, the rate contract, as noticed earlier and specifically mentioned herein above, it was the duty of the assessee to deliver the goods at the destination. Therefore, in my view, the Tax Board has rightly come to the conclusion that the freight is includable in the sale price - Decided against assessee.
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2015 (4) TMI 491
Disallowance of for tax exempted sales of agricultural implements - "Tractor trailers for use in agricultural purpose" - Whether under the facts and in circumstances of the case, the Appellate Board is right in law and had valid material to hold that Tractor trailers, sold by the appellant were not 'for use in agricultural purpose' and not entitled for exemption from payment of tax under Entry No. 1 of Schedule I of the Act, read with Entry No. 55 of notification No. A-3-6-2000/ST-V(52), dated 17-07-2000, being 'Tractor trailers for use in agricultural purpose - Held that:- Tractor trailers were ultimately intended to be used for agricultural purpose. It was immaterial whether these were sold directly to the agriculturists or to the agriculturists through dealers/distributors. It was not necessary for the assessee to establish that the trailers sold were actually used for the agricultural purpose. - appellate board erred in holding that tax exemption could be granted only in respect of the trailers sold directly to the agriculturists and where the trailers were sold through distributor/dealer, the exemption from tax was available to such dealer/distributor when he would have sold such trailers to the agriculturists. As such, the impugned order is not sustainable in the eyes of law. - Decided in favour of assessee.
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Indian Laws
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2015 (4) TMI 482
Violation of Regulation 3(a), 4(1) and 4(2)(a),(b),(e) and (g) of SEBI PFUTP (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 - Violation of Regulation 7 read with Clause A(1), A(3), A(4) and A(5) of Code of Conduct for Stock Brokers under SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 - Self trading - Shares purchased at higher price and sold at lower price. Held that:- Regarding submissions of Appellant that price of scrip of SGWL was increasing since start of IP with increase in volume, and hence volatility in scirp, enticed its dealers towards arbitrage opportunity and therefore dealers of AIPL were followers and not creators of the volumes. Ld. AO has rightly held that volumes, increase or decrease, are not concern of regulators, but artificial creation of volumes, through self/fictitious trades, are of concern, which defeat purpose of anonymity of trading system of exchanges and affect investor’s interests, adversely. It has also been held by Ld. AO that there is huge difference in AIPL’s buy and sell volumes, on two days, when self trades were executed and hence not in nature of jobbing. In view of above, AIPL have been held violative of regulation 3(a), 4(1) and 4(2)(a), (b), (e) and (g) of PFUTP Regulations and ABPL held violative in addition to regulation 7 read with Clauses A(1), A(3), A(4) and A(5) of Code of Conduct of Stock-Brokers, as specified in Schedule II of Stock-Broker Regulations. To sum up, facts on record reveal that AIPL which subsequently merged with ABPL, had on November 30, 2009 and December 1, 2009 executed 4 self trades, wherein ABPL acted as broker as well as counter party broker. Moreover, it is found that AIPL had on December 1, 2009 sold shares at lower price and bought shares at higher price, which is contrary to normal jobbing, wherein, normally shares are bought at lower price and sold at a higher price. Although, self trades in question were executed only on two days and there is time gap between buy order and sell order and number of shares may be only 7.45% of total in buy and 10.20% of total sale of SGWL scrip on these two days yet in facts of present case, modus operandi adopted by ABPL/AIPL in executing self trades and that too buying shares at a higher price and selling at a lower price clearly show that the trades executed were not normal trades. In these circumstances, AO is justified in holding that self trades were executed with ulterior motives. Therefore, quantum of penalty imposed upon Appellant based on facts on record, mitigating factors and past conduct of Appellant cannot be faulted. - Decided against the appellant.
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