TMI Tax Updates - e-Newsletter
April 2, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Once the income from leasing those gas cylinders is accepted as the "business income", which is taxed at the hands of the assessee as such, we see no reason how the depreciation on these gas cylinders could be disallowed on the ground that the cylinders were not purchased for "leasing business". - SC
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Income Tax:
Depreciation on the 1250 gas cylinders - leasing out of gas cylinders - assessee has proved ownership of these gas cylinders and use of these gas cylinders for business purpose. Once these ingredients are proved, the assessee was entitled to depreciation u/s 32 - SC
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Income Tax:
Settlement commission - Validity of Sections 245 HA(1)(iv) and 245HA(3) of the Income Tax Act, 1961, as amended by Finance Act, 2007 challenged - Time limits were set for completion of a particular stage of the proceedings - the amendment was unconstitutional - SC
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Income Tax:
Disallowance under Section 40A(3) - limit of payments in cash in excess of ₹ 10,000/- increased to ₹ 20,000 by an amendment - Once we find that the amendment is substantive in nature, it cannot be applied retrospectively. - SC
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Income Tax:
Validity of Search and seizure operations - Since the petitioners did not furnish adequate and cogent material, we are not inclined to call the respondents to disclose the information - information received on the first date of the search by itself caused a reasonable belief for issuance of the warrant of authorisation against the petitioners' for search of their lockers - HC
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Income Tax:
Validity of Gift of Dividend - The companies are competent to make and receive gifts and natural love and affection are not the necessary requirements - The amount of gift so received is neither taxable as income from other sources u/s. 56 nor as capital gain nor as income u/s.2(22)(e) nor u/s.115JB of the I.T.Act. - AT
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Income Tax:
Penalty under section 271(1)(c) - assessee did not maintain regular books of account, and therefore, provisions of section 145(3) were applied and the rates were enhanced by the AO for making estimated addition - It is well settled law that for an estimated addition, no penalty is leviable - AT
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Customs:
Revocation of CHA License - Clearance of misdeclared goods - When a documentary evidence is produced, even if belatedly, if the same has to be rejected, cogent reasons have to be given and rejection cannot be based on the subjective feeling of the adjudicating authority. In these circumstances, the benefit of doubt certainly has to be extended to the appellant - AT
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Indian Laws:
NEW FTP 2015-20 - Scrips issued under Exports from India Schemes can be used to pay Customs Duty, Central Excise Duty and Service Tax and will be easily transferable
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Indian Laws:
HIGHLIGHTS OF THE FOREIGN TRADE POLICY 2015-2020
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Service Tax:
Consultancy services - Service provided outside India - tax liability would not be there of a person or company which is situated outside India and having no business establishment in India. - HC
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Central Excise:
CENVAT Credit - input services - there is no merit in the Departments contention that the services in question may have been used in respect of the products manufactured by other factories of the appellant company. - stay granted - AT
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Central Excise:
Classification of goods - Treadle Pumps, which are feet operated pumps, which can lift water from the depth upto 7 Mtrs - the goods in question are correctly classifiable under Heading 8413.80 - AT
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Central Excise:
Denial of rebate claim - goods were not exported direct from factory of manufacture - AS such duty payment of exported goods is not proved. - export of duty paid excisable goods cleared from factory cannot be established. - rebate dened - CGOVT
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VAT:
Applicability of rate of tax on the sale of demo cars - Benefit of exemption - By mere use of the new car purchased from the manufacturer for the purpose of demonstration, the said car cannot be treated as a used car so as to attract the benefit under the notification. - HC
TMI Short Notes
Articles
Notifications
Customs-
15/2015 - dated
31-3-2015
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Cus
Seeks to further amend Notification No 12/2012 - Customs dated 17/03/2012
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14/2015 - dated
31-3-2015
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Cus
Seeks to amend Notification No 26/2011 - Customs dated 01/03/2011
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35/2015 - dated
1-4-2015
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Cus (NT)
Rate of exchange of conversion of each of the foreign currency with effect from 2nd April, 2015
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34/2015 - dated
31-3-2015
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Cus (NT)
Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001
DGFT-
01/2015-2020 - dated
1-4-2015
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FTP
Notification of FTP 2015-2020
Income Tax-
37/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Shree Bidada Sarvodaya Trust, Gujarat
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36/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Urivi Vikram Charitable Trust , New Delhi
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35/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Akshar Trust, Baroda
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34/2015 - dated
6-1-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Vidya Pratishthan, Maharashtra
VAT - Delhi-
No.F.3(352)Policy/VAT/2013/936-947 - dated
31-3-2015
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DVAT
Regarding submission of information online in Form DP-1
Circulars / Instructions / Orders
News
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FTP 2015-20 - APPENDICES AND AAYAT NIRYAT FORMS
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Government Amends Procedure For Appointment of Non Official Directors (Nods) on The Boards of Public Sector Banks, Insurance Companies and Financial Institutions to Professionalise the Boards
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Foreign Trade Policy Statement
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FTP - HANDBOOK OF PROCEDURES From 1-4-2015 to 31-3-2020
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FOREIGN TRADE POLICY From 1-4-2015 to 31-3-2020
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DGFT and Enforcement Directorate Sign MoU on Foreign Exchange Data Sharing
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HIGHLIGHTS OF THE FOREIGN TRADE POLICY 2015-2020
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RBI penalises 16 Central Co-operative Banks (CCBs)
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RBI approves ING Vysya Bank Ltd.- Kotak Mahindra Bank Ltd. Amalgamation
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Change in Tariff value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Central Government Provides Financial Support worth ₹ 2303 Crore to Andhra Pradesh to Bridge Resource Gap of Financial Year 2014-15; Balance amount of ₹ 1803 Crore Released on 31.3.2015 for the Purpose
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PREPARATIONS WITH REGARD TO LAUNCH OF MUDRA BANK REVIEWED BY DR. HASMUKH ADHIA, SECRETARY (DFS); PM WOULD ALSO LAUNCH PRADHAN MANTRI MUDRA YOJANA ON THE OCCASION
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GOVERNMENT ANNOUNCES INTEREST RATES FOR VARIOUS SMALL SAVINGS SCHEMES; RATES TO COME INTO FORCE WITH EFFECT FROM 01-04-2015
Case Laws:
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Income Tax
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2015 (4) TMI 20
Depreciation on the 1250 gas cylinders disallowed - High Court concurred with the opinion of the Tribunal in denying the depreciation on the ground that the cylinders were not purchased for leasing business and one of the parties to whom the cylinders were leased out is the manufacture and seller of the cylinders. It is further stated that the cylinders were dispatched to the other party only a day before the closing of the accounting period - Held that:- The reasons given by the ITAT and the High Court in denying the depreciation do not appear to be valid reasons in law. Insofar as the purchase of gas cylinders by the assessee is concerned, this fact is not disputed. It is also not disputed that these gas cylinders were purchased for business purpose. In fact, the plea of the assessee that since manufacturing unit had not started functioning and this necessitated the assessee to lease out these gas cylinders to the aforesaid two parties to enable it to earn some income, rather than keeping those cylinders idle, is also not in dispute. On the contrary, as mentioned above, the income which is generated from leasing out those gas cylinders is treated as "business income". Once the income from leasing those gas cylinders is accepted as the "business income", which is taxed at the hands of the assessee as such, we see no reason how the depreciation on these gas cylinders could be disallowed on the ground that the cylinders were not purchased for "leasing business". The aforesaid facts would clearly demonstrate that the assessee has proved ownership of these gas cylinders and use of these gas cylinders for business purpose. Once these ingredients are proved, the assessee was entitled to depreciation under Section 32 - Decided in favour of assessee.
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2015 (4) TMI 19
Settlement commission - Validity of Sections 245 HA(1)(iv) and 245HA(3) of the Income Tax Act, 1961, as amended by Finance Act, 2007 challenged - Time limits were set for completion of a particular stage of the proceedings. - High Court found [2009 (8) TMI 86 - BOMBAY HIGH COURT] the aforesaid provisions to be violative of Article 14 etc but at the same time, it did not invalidate these petitions as the High Court was of the opinion that it was possible to read down the provisions of Section 245HA(1)(iv) in particular to avoid holding the provisions as unconstitutional - Held that:- The conclusion arrived at by the high court that fixing the cutoff date as 31st March, 2008 was arbitrary the provisions of Section 245HA(1)(iv) to that extent will be also arbitrary. Also held that it is possible to read down the provisions of Section 245HA(1)(iv) in the manner set out earlier. This recourse has been taken in order to avoid holding the provisions as unconstitutional. Having so read, we would have to read Section 245HA(1)(iv) to mean that in the event the application could not be disposed of for any reasons attributable on the part of the applicant who has made an application under Section 245C. Consequently only such proceedings would abate under Section 245HA(1)(iv). Considering the above, the Settlement Commissioner to consider whether the proceedings had been delayed on account of any reason - No interference in HC judgment required - Appeal of Union of India dismissed.
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2015 (4) TMI 18
Settlement commission - Validity of Sections 245 HA(1)(iv) and 245HA(3) of the Income Tax Act, 1961, as amended by Finance Act, 2007 challenged - Time limits were set for completion of a particular stage of the proceedings. - High Court found [2009 (8) TMI 86 - BOMBAY HIGH COURT] the aforesaid provisions to be violative of Article 14 etc but at the same time, it did not invalidate these petitions as the High Court was of the opinion that it was possible to read down the provisions of Section 245HA(1)(iv) in particular to avoid holding the provisions as unconstitutional - Held that:- The conclusion arrived at by the high court that fixing the cutoff date as 31st March, 2008 was arbitrary the provisions of Section 245HA(1)(iv) to that extent will be also arbitrary. Also held that it is possible to read down the provisions of Section 245HA(1)(iv) in the manner set out earlier. This recourse has been taken in order to avoid holding the provisions as unconstitutional. Having so read, we would have to read Section 245HA(1)(iv) to mean that in the event the application could not be disposed of for any reasons attributable on the part of the applicant who has made an application under Section 245C. Consequently only such proceedings would abate under Section 245HA(1)(iv). Considering the above, the Settlement Commissioner to consider whether the proceedings had been delayed on account of any reason - No interference in HC judgment required - Appeal of Union of India dismissed.
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2015 (4) TMI 17
Disallowance under Section 40A(3) - limit of payments in cash in excess of ₹ 10,000/- increased to ₹ 20,000 by an amendment - whether to be applied retrospectively - Block assessment - Held that:- Since the date of the amendment falls within the aforesaid block period, the assessee wants the benefit of this amendment for the entire block period of ten years, i.e., 1.4.1986 to 31.3.1996. Such a plea is unacceptable on the face of it. It is clear that amendment is substantive in nature, which is so mentioned in the explanatory notes of amendments as well. Once we find that the amendment is substantive in nature, it cannot be applied retrospectively. The only ground on which the assessee wants benefit of this amendment from 1.4.1986 is that the assessment was of the block period of ten years. However, on our pertinent query, learned counsel for the appellant was fair in conceding that there is no judgment or any principle which would help the appellant in supporting the aforesaid contention. We are, thus, of the opinion that the order of the High Court is perfectly justified. - Decided against assessee.
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2015 (4) TMI 16
Unaccounted production, sales and closing stock of finished products - whether in respect of sales of 32,809 kg., which are shown in the stock register of M/s. Ashish Agro Plast Private Limited, there has been double taxation - Held that:- The submission of the learned counsel for the appellant is that on the aforesaid sales, which are found in the accounts of M/s Ashish Plastic Industries, the receipts are shown as income on which tax has been paid by M/s Ashish Agro Plast Private Limited. Also learned counsel submitted that he can bring satisfactory evidence in support of this plea. We are of the view that the order of the authorities below should be sustained but if the appellant is able to prove that tax on the income generated from the sale of the aforesaid 32809 Kg. of material has been paid by M/s Ashish Agro Plast Private Limited, benefit thereof should be extended to the appellant. For this purpose, therefore, we remand the case back to the assessing authority, who shall give an opportunity to the assessee to demonstrate as to whether the sister concern has already paid the tax on the aforesaid income from the aforesaid sales and if that is shown, to the extent tax is paid, benefit shall be accorded to the appellant. - Decided in favour of assessee by way of remand.
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2015 (4) TMI 15
Reopening of assessment - validity of notice challenged - Held that:- The assessment order in the present case has obviously taken into account the aspect of depreciation. Perusal of the assessment order reveals that all relevant documents and details as called for were filed. It is further recorded in paragraph 3 of the assessment order that the details of assessing company alongwith return of income and those which were called for assessment proceedings were scrutinised. There does not appear to the tangible material/reason for the assessing officer to reopen the assessment proceedings in the facts of the present case. The reasons offered by the Assessing Officer while rejecting the objection that the issues involved in reassessment proceedings were never examined by the Assessing Officer are not tenable. No particulars whatsoever has been relied upon by the Assessing Officer while rejecting the objections. The facts reveal and we are satisfied that in the present case, the order of reopening of the assessment will not be justified. The decision to reopen assessment is not based on proper reasons but obviously is a result of change of opinion. This is impermissible. In the case of ECGC, there was specific finding that there existed tangible material and reason to reopen the assessment and that was evident from the record in that case. It is not the case of the Revenue that in this case any new material was forwarded to the Assessing Officer. In any event we are not called upon to decide on the merits of the case and the proposed reopening is not justifiable in the facts and circumstances of the present case.- Decided in favour of assessee.
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2015 (4) TMI 14
Validity of Search and seizure operations - warrant not issued in the name of petitioners - Held that:- The jurisdiction to assess the undisclosed income, if any, of the petitioners' on the basis of the search vests in the assessing officer by virtue of the provisions of Section 158BA of the Act in case where a search under Section 132 of the Act is initiated. Such assessment is to be carried out in respect of undisclosed income of a person, who was not issued a warrant of authorisation by invoking the provisions of Section 158BD. We are of the opinion that even though no warrant of authorisation was issued against the petitioners' under Section 132 of the Act, nonetheless, the search conducted against them was wholly valid for the reasons stated aforesaid. Pursuant to the search conducted on the first day, the respondents found various bank accounts and lockers of the petitioners' and, based on the search, fresh warrant of authorisation for searching the lockers was obtained on 1st February, 2012. The contention of the petitioners that there was no material or information with the authorising authority to believe that there was money, jewellery, etc. in the lockers and, therefore, the action of the respondents was wholly illegal is bereft of merit. It may be noted here that only a bald assertion has been made in para 59 of the writ petition which paragraph has been sworn on legal advice. Such assertion based on legal advice without making the foundational assertion cannot be investigated. Making such allegation without corroborative support is by itself not sufficient to challenge the action taken by the authority under Section 132 of the Act, nor can the Court call upon the authority to disclose the information on the basis of an allegation made on legal advice. Since the petitioners did not furnish adequate and cogent material, we are not inclined to call the respondents to disclose the information. We are also of the opinion, that in the given circumstances, information received on the first date of the search by itself caused a reasonable belief for issuance of the warrant of authorisation against the petitioners' for search of their lockers. Such search conducted and the lockers seized on 2nd February, 2012, on the basis of the search conducted on 1st February, 2012 was perfectly valid. - Decided against assessee.
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2015 (4) TMI 13
Taxability of the interest receipt in the hands of the assessee - ITAT not treating the interest as income of the assessee - Held that:- The Hon'ble Tribunal on considering the letter of the Central Government while sanctioning the grant in favour of the assessee, more particularly the condition that, "the interest earned on the central grant already released would form part of the central grant limit of ₹ 50 Crores" and considering the decision(s) of the Hon'ble Gujarat High Court in the case of Gujarat Municipal Finance Board vs. Dy.CIT reported at (1996 (5) TMI 71 - GUJARAT High Court) as well as in the case of Gujarat Power Corporation Ltd. vs. ITO reported at (2012 (11) TMI 181 - Gujarat High Court), the Tribunal has correctly allowed the appeal by deleting the addition made by the AO. The Hon'ble Jurisdictional High Court affirmed the view taken by the Tribunal who has also has gone by its earlier decision in respect of the very assessee for the earlier assessment year 2007-2008 and assessment year 2010-2011 - Decided in favour of assessee.
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2015 (4) TMI 12
Stay of demand - Held that:- Petitioner has approached this Court by way of this writ petition seeking extension of stay in respect of the assessment year 2009-10 till the disposal of the appeal by the Tribunal. The learned counsel for the petitioner has placed before us several orders passed by this court, whereby this Court has extended the stay initially granted by the Tribunal till the disposal of the appeal by the Tribunal in exercise of its jurisdiction under Article 226 of the Constitution. In fact, it is settled law that there is no bar for grant of such a relief if the Court is of the opinion that the circumstances and the ends of justice so warrant. This has also been stated clearly in Maruti Suzuki (2014 (2) TMI 1037 - DELHI HIGH COURT). We feel that since the petitioner had already been granted conditional stay by the Tribunal in respect of the said appeal and that the Tribunal is in the midst of hearing the appeal, it would be in the interest of justice that the stay order granted by the Tribunal is continued till the disposal of the appeal by the Tribunal. It is ordered accordingly.
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2015 (4) TMI 11
Revision u/s 263 - CIT held that the assessment order was erroneous and prejudicial to the interest of the Revenue in as much as the unproved, unsecured loans, sundry creditors, expenses have been accepted and the income had been under-assessed to that extent - Held that:- No question of law arises in this matter. The ITAT has considered the issues, essentially on facts, in coming to the conclusion that the order of the CIT is not sustainable. It is sufficient to refer to some of the aspects regarding the impugned order passed by the ITAT. The ITAT noted that the fall in gross profit was examined by the Assessing Officer. The respondent/assesses' reply was considered. The volume of work had fallen during the year. As a result thereof, the profit had also decreased. Further, the profit had decreased only by less than a quarter percent. Even thereafter, the ITAT had come to the conclusion that the insignificant fall in the gross profit cannot lead to the conclusion that the assessment order was erroneous. As far as the loan and security in respect thereof was concerned, the ITAT noted that the certificate from the Bank was on record. The Bank statement was also produced by the respondent before the Assessing Officer and before the CIT. Based on the material produced, the ITAT noted that merely because there may be excess cash at a particular point of time, it does not follow that the respondent cannot raise a bank loan. In view of the nature of the respondent's business, namely, the construction business, the ITAT came to the conclusion, based essentially on facts that it was possible that the stock register was not maintained. Similarly, as regards the sundry creditors made possible in the current financial year, it was noticed that there was opening credit in the balance of the assessee and the copy of the accounts of the assessee was there in the books of M/s Garg Sales and thus, no adverse inference could be taken on the said account. - Decided against revenue.
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2015 (4) TMI 10
Computation of capital gain - Reduction of Cost of improvement - payment of compensation to tenant - AO treating the same as not an expense incurred in connection with the transfer of the capital asset in question but payments made with a motive to avoid taxes - Held that:- The provisions of sec.40A(2)(b) cannot be made applicable on a transaction claimed as deduction against capital gain. Revenue did not produce any material to controvert the findings of fact recorded. Whether the transaction could be termed as dubious or not? would essentially require the exercise of fact finding inquiry. The material appears to have been re-appreciated by the C.I.T. (Appeals) and the finding of fact was recorded that the transaction of payment of compensation was genuine and disallowance was not proper. When the Revenue did not produce any material to controvert the said findings of fact before the Tribunal and if the Tribunal has confirmed the said finding, it cannot be said that such finding of fact is perverse, as sought to be canvassed nor it can be said that any substantial question of law would arise, as sought to be canvassed on behalf of the Revenue. - Decided against revenue.
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2015 (4) TMI 9
Validity of Gift of Dividend - It was submitted by assessee that all the donor companies are shareholders of Reliance Industries Limited and received dividend income from Reliance Industries. The donor companies had given irrevocable instructions to Reliance Industries to pay dividend directly to assessee. The receipt of dividend was debited to bank account and credited to Capital reserve Account of the assessee. The assessee submitted that the Gift is in the nature of capital receipt and is not required to be credited to 'Profit and Loss Account' of the assessee. - Regarding MAt, assessee submitted that since the accounts are prepared as per the companies Act, no adjustment is required to be made to the book profit u/s115JB on account of gift received by the assessee. - whether the same was covered under the ambit and scope of 'income from other sources' u/s 56(1) of the I.T Act? - whether CIT (A) was justified in relying on the provisions of section 25 of Companies Act and section 80G of the I.T Act and holding that a company can make gift, without appreciating the fact that these are specific provisions stipulated by statute for specific purposes and therefore, the same cannot be applied in generality and to the facts under consideration? Held that:- The companies are competent to make and receive gifts and natural love and affection are not the necessary requirements. The only requirement for a gift by a corporate entity to another corporate entity is that they are authorized to do so by their Memorandum and Articles of Association. As mentioned earlier the assessee and the donor companies are authorized in this regard for receiving and making gifts respectively by their Memorandum and Articles of Association. The position regarding the competency of corporate entities to make and receive gifts has also been upheld in the following cases, on which assessee has relied during appellate proceedings: (i) CIT vs Groz-Beckert Saboo Ltd [1978 (11) TMI 2 - SUPREME Court]. All the donor companies and the assessee are authorized by their Memorandum and Articles of Association for giving and receiving gifts. Proper resolution in the Board Meeting have been passed by all the four companies for making the gift to the assessee and assessee, has also accepted the said gifts by way of adopting a resolution in the meeting of Board of Directors. Therefore, the element of gifts i.e. delivery, donative intent-4 and acceptance by the donee are present in the transactions of gifts received by the assessee. Therefore, in view of the above discussion, submission of the assessee, case laws and in particular the decision of Hon'ble ITAT in the case of D.P. World (2012 (10) TMI 444 - ITAT MUMBAI ), it is held that the amounts received by the assessee-company from the said four concerns are valid gifts Validity of Gifts - Furthermore, As per section 56(2)(viia) and 56(2)(viib), gift of certain kind of shares received by a company in which the public are not substantially interested are taxable and, therefore, it is clear that the Income-tax Act, itself provides that companies can receive gifts, of course, gifts of only shares of certain kind received by certain category of companies are taxable. (The provisions of section 56(2)(viia) and (viib) are applicable w.e.f. 1/6/10 and 1/4/13 respectively). Therefore, it cannot be said that the assessee could not have received such gifts from other companies. It is also clear from the Transfer of Property Act that companies can receive and make gifts and there is no requirement of any natural love and affection for making or receiving a gift by companies. Even the Income-tax Act by way of Section 56(2)(viia) and 56(2)(viib) provides that gifts of certain kind of shares are taxable in the hands of certain category of companies. Taxability of gifts - held that:- In the case of CIT Vs. Groz- Beckert Saboo Ltd. [1978 (11) TMI 2 - SUPREME Court the Hon'ble Supreme Court has an occasion to consider the gift of raw material being stock in trade received by a company and its taxability under the Act. The Hon'ble Supreme Court has held that the gift of stock in trade received constituted a capital receipt in the hands of an assessee and on its conversion to stock in trade the market value as on the date of receipt of gift has to be allowed as deduction against the computation of taxable profit. The Supreme Court thus held the gift received being capital in nature and hence not chargeable to tax on the contrary the market value of gift received was allowed as deductible expense while computing the total taxable income. In view of judicial pronouncements discussed above the gift of ₹ 161,86,77,034/- received by the assessee from corporate bodies are in the nature of capital receipt not liable to tax under the provisions of the Income Tax Act. Applicability of Section 82 of the Companies Act - Held that:- There in no impediment for assessee or donor companies under the Companies Act to make / receive dividend as gift. - Section 122 of the Transfer of Property Act provides for making of a gift and permits transfer of moveable or immovable property but without any consideration. The shares or interest in a company is a moveable asset as per the Companies Act. Further as per section 5 of the Transfer of Property Act, a company is a living person, competent to transfer a property 88 per the Act and therefore the Transfer of Property Act permits a limited company to be a donor. Whether Artificial company can make gifts - Held that:- Three elements are essential in determining whether or not a gift has been made, a) delivery. b) donative intent,' and c) acceptance by the donee. All the above essentials stated by the AO are duly been fulfilled by the assessee and all the four donor of gifts. With respect to delivery of gift, the dividend has actually been received by the assessee in its bank account which conclusively prove the delivery of the gift from donor to donee. With respect to intent of donor, all four donors have passed a resolution in the meeting of shareholders and board of Directors that they intend to transfer the dividend on shares of Reliance Industries held by them to the assessee donee as gift. Thus, the donative intent to transfer the dividend as gift is clear from the resolution passed by the donors. With respect to acceptance by the donee, the assessee has duly passed a resolution in the meeting of shareholder and board of directors duly conveying their acceptance of the gift. Thus all the essential requisites of gifts stated by the AO in assessment order have been duly fulfilled by the assessee and no adverse conclusion can be drawn in the case of the assessee. Taxability u/s 56 - Held that:- Legislature again indicated its intention that certain gifts received by individuals and HUFs only will be taxed under the Income-tax, in the hands of the recipient, but gifts received by companies or any other person other than individuals and HUFs were not brought under the tax net. With the passage of time, it was realized that certain kind of transactions of transfer of certain kind of shares by certain category of companies only further need to be taxed and accordingly the - legislature brought provisions of section 56(2)(viia) and 56(2)(vilb) of Income-tax Act in the statute with effect from 01/06/2010 and 01.04.2013 respectively, but any other gift by companies or any other person other than individual and HUF still left outside the tax net. - transaction involved in the present appeal is nothing but a Gift and thus it is a capital receipt not taxable under the alleged provisions of the Act. Taxability as Deemed Dividend u/s 2(22)(e) - Held that:- there has to be an advance or loan given by a company to a substantial shareholder with 10% interest or to a concern in which such shareholder is holding not less than 20% of the voting power/shares for taxing such loan u/s. 2(22)(e). Whereas, in the case under consideration, there is no common shareholding between the assessee and the other four companies who have made the gifts. Therefore, no addition can be considered in the case of the assessee u/s. 2(22)(e) of Income-tax Act. Minimum Alternate Tax (MAT) - Computation of book-profit u/s. 115JB - Held that:- A.O. has made addition of the gifts received by the assessee to the income of the assessee, while computing the income u/s. 115JB also holding that it is credit to profit and loss A/c. as an item of exceptional nature - Held that:- The receipts totaling to ₹ 161,86,77,034/- are capital receipts as discussed and decided against the earlier grounds of appeal in this order, whereas, there is no requirement of Schedule VI to credit to profit and loss A/c. any capital receipt and, therefore, assessee has rightly taken them directly to the Balance-Sheet. Section 115JB does not prescribe any such item to be added to book-profit while computing the income u/s. 115JB, the items mentioned from (a) to (i) in explanation 1 to subsection 2 of section 115JB do not include any such item by which the book-profit is to be increased. Therefore, it cannot be added to the book-profit u/s. 115JB. Hence, the addition made by the A.O. to the book-profit of ₹ 161,86,77,034/- is deleted. The amount of gift so received is neither taxable as income from other sources u/s. 56 nor as capital gain nor as income u/s.2(22)(e) nor u/s.115JB of the I.T.Act. - Decided in favour of assessee.
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2015 (4) TMI 8
Transfer pricing adjustment - selection of comparables - Held that:- Mold-Tek Technologies Ltd.during the year had shown super normal profit of 113 per cent. The co-ordinate bench of this Tribunal in the case of Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT [2014 (3) TMI 626 - ITAT HYDERABAD] held that companies having extraordinarily high profit cannot be treated as comparable. That besides the activities of M/ s Mold-Tek is also found to be functionally different as it is involved in providing engineering services in the nature of producing design, drawings, detailed structural engineering drawings using 3D and 2D software, thus cannot be treated as a comparable Eclerx Services Ltd. company cannot be treated as a comparable as it was earning super normal profit and is also functionally dissimilar as it is engaged in providing KPO services. These facts have not been controverted by the learned Departmental representative Hence this company cannot be treated as a comparable. Accurate Data Converters P. Ltd.was initially not selected as a comparable by the Transfer Pricing Officer. Subsequently, the Transfer Pricing Officer conducted search in the data base for finding additional comparables on applying 25 per cent. employee cost filter. After examining the information obtained from the company the Transfer Pricing Officer treated it as a comparable by observing that the said company is engaged in data processing which is in the nature of information technology enabled services similar to the assessee. It is very much clear from the order of the Transfer Pricing Officer that the aforesaid company was selected as a comparable without inviting objections of the assessee. - remit this issue to the file of the Assessing Officer who shall decide the acceptability or otherwise of the company as comparable after considering the assessee's objection. Vishal Information Technologies Ltd. (now known as Coral Hub Ltd) cannot be taken as a comparable and direct for excluding the same for determining the arm's length price as relying on Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT [2014 (3) TMI 626 - ITAT HYDERABAD] HCL Comnet Systems & Services Ltd.o far as the other contention of the assessee with regard to not providing details to the assessee it is seen from the record that the Transfer Pricing Officer himself has admitted the fact relevant information was not provided to the assessee. It is further revealed from the observations made by the Transfer Pricing Officer in his order during the financial year relevant to the assessment year under dispute HCL Comnet had related party transactions of 21.52 per cent. of the revenue. Thus remit this issue to the file of the Assessing Officer who shall consider the acceptability or otherwise of the aforesaid company after considering all the contentions and arguments of the assessee. Maple e Solution Ltd. & Triton Corp Ltd.cannot be treated as comparable, hence, we direct the Assessing Officer to exclude the same for determining the arm's length price. Infosys BPO Ltd. and Wipro Ltd. (Seg.)find force in the contention of the learned Departmental representative that the upper limit of ₹ 200 crores will not apply uniformly while applying the turnover filter. The upper limit has to be fixed keeping in view the turnover of the assessee. It is seen from the record that during the assessment year under dispute the assessee was having a turnover of more than ₹ 151 crores. Therefore, the upper limit of ₹ 200 crores for excluding companies as comparables will not apply so far as the present assessment year is concerned. It is further found from record while the turnover of Infosys BPO Ltd. is ₹ 649.56 crores that of Wipro Ltd. (Seg.) is ₹ 939.78 crores. Hence, the turnover of the aforesaid two companies are within accepted limit, hence, they cannot be excluded on account of extraordinarily high turnover. Geneysis International Corporation Ltd. is having diversified activities. Many of the activities carried on by Geneysis are functionally dissimilar to the assessee, which is engaged in providing information technology enabled back office support services to its associated enterprise and other group companies. That besides, the assessee's contention with regard to provision for bad debts to be made part of operating expenses has certainly some force and deserves to be considered in proper perspective. Therefore, on considering the totality of the facts and circumstances of the case, we remit this issue to the file of the Assessing Officer who shall consider afresh the assessee's contention with regard to acceptability or otherwise of Geneysis as a comparable and take a decision on the same after considering all the facts and materials before him in the light of the decisions which may be relied upon by the assessee. Accentia Technologies Ltd. remit the matter to the Assessing Officer to verify the fact of amalgamation and acquisition and take a decision in the matter after considering the submissions of the assessee. The Assessing Officer while deciding the acceptability of the aforesaid company shall also consider the contentions of the assessee with regard to functional difference between the two. Reduction of communication charges from export turnover while computing deduction under section 10A - Held that:- communication charges though has to be excluded from the export turnover for the purpose of computing deduction under section 10A of the Act, the same has also to be reduced from the total turnover. We, therefore, direct the Assessing Officer to compute the deduction under section 10A after reducing the communication expenses both from the export turnover as well as total turnover. See CIT v. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ] and ITO v. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] - Decided in favour of assessee.
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2015 (4) TMI 7
Contribution towards provident fund - CIT(A) deleted the addition - Held that:-No contrary evidence has been placed by the Revenue except half heated arguments devoid of facts, we find no infirmity in the impugned order where considering the past history the AO rejected the assessee’s claim and the CIT(A), considering the facts on record relying upon the High Court’s decision upto which stage the issue was settled allowed the claim of the assessee by rejecting the departmental plea. It is a matter of record that consistently the view on the issue has not been varied either by the Tribunal or by any Higher Forum in the intervening years. Accordingly being satisfied by the finding in the absence of any fact to the contrary the Ground raised is dismissed. - Decided against revenue. Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- Assessing Officer has not considered all relevant facts on record and has also not verified the claim of the assessee with regard to the source of investment. To reach at the conclusion that he was not satisfied with the claim of assessee with regard to expenses incurred to earn exempted income, then only he can invoke Rule 8D for working out the disallowance. Therefore, in our considered view, this issue requires a relook at the level of Assessing Officer. The same is restored to the file of the Assessing Officer for deciding de novo after providing an opportunity of being heard to the assessee. In the case of disallowance with regard to the administrative and other expenses being 0.5% of average value of investment, the assessee’s claim is that average value of investment taken by the Assessing Officer was ₹ 2,50,20,59,294/- instead of ₹ 41,88,44,725/- which is only 16.94% of the average value of investment taken by the Assessing Officer. Therefore, for this aspect also, we set aside the issue to the file of the Assessing Officer. The Assessing Officer shall decide both these disallowances after providing an opportunity of being heard to the assessee and considering the legal position on these issues. - Decided in favour of revenue for statistical purposes. Valuation of closing stock of sugar - CIT(A) deleted the addition - Held that:- The assessee is valuing closing stock on cost or net realizable value whichever is lower since 1993. The issue was contested in Assessment Year 1993-94 up to the Hon'ble Delhi High Court wherein the contention of the assessee has been accepted. The CIT (A) has granted the relief by relying on the decision of ITAT which has been confirmed by Hon'ble High Court. Therefore, in our considered view, there is no fault in the order of the CIT (A) and the same is sustained on this issue - Decided in favour of assessee.
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2015 (4) TMI 6
Deduction under section 80-IB(10) - claim of the assessee that profits from both the two housing projects were eligible for deduction under section 80-IB(10) of the Act was rejected by the Assessing Officer - Held that:- In the case before us, the project in question has commenced prior to 01.4.2005 and also stands completed on 31.12.2004 i.e. prior to 31.3.2005, and in this view of the matter, the newly inserted clause (d) to Sec. 80 IB (10) cannot be invoked to disentitle the assessee from the claim of deduction u/s. 80 IB (10) of the Act for the A.Y. 2005-06. Therefore, in so far as the project DSK Vishwa - Phase III is concerned, the objections made out by the Revenue for the A.Ys. 2004-05 and 2005-06 in order to deny the claim of deduction u/s. 80 IB (10) are unfounded and deserve to be negated. We hold so. Area covered by Rule 15.4.2 is not includible in the meaning of ‘ built up area’. The extract of Rule 15.4.2, has been placed in the Paper Book at page 36, and it reflects that a multi storied stilt flooring space constructed under a building is allowed to be used as a parking subject to height restrictions. In terms thereof, it is sought to be made out that the area of car parking is specifically excludible while calculating ‘ built- up area’ as per the Development Control Rules and therefore, the Assessing Officer was wrong in considering such area for the purpose of computing ‘built- up area’ of the residential units. A bare perusal of the Development Control Rules, in our view, supports the assertions put forth by the assessee and therefore, the area of car parking is not to be includible for the purposes of computing ‘built- up area’ of residential units in the facts and circumstances of the present case. Merely because the assessee has violated the condition u/s. 80 IB(10)(c ) in relation to the flats on the 11th floor, the deduction u/s. 80 IB(10) cannot be denied in its entirety, but, the denial shall be limited to the profits in respect of the flats on the 11th floor alone. For the balance of the residential units, the plea of the assessee for deduction u/s. 80 IB(10) of the Act is justified, and the assessee succeeds on this aspect. With regard to the project DSK Frangipani for the A.Y. 2005-06 also, the facts and circumstances are identical. In this year also, in our considered opinion, our decision in the aforesaid paragraph fully applies. Though in A.Y. 2005-06, the definition of ‘built-up area’ as per Section 80 IB (14)(a) was on Statute, but, admittedly, assessee’s project was approved and commenced prior to 1.4.2005, therefore, the calculation of ‘built- up area’ shall not be governed by such definition. Therefore, for the A.Y. 2005-06 also, the project DSK Frangipani is eligible for deduction u/s. 80 IB(10), albeit on a proportionate basis in respect of the flats whose built up area does not succeed 1500 Sq.ft. as prescribed u/s. 80 IB (10)(c ) of the Act. In this view of the matter, the order of the CIT(A) for both the years is set aside and the Assessing Officer is directed to re-compute the deduction allowable to the assessee u/s. 80 IB (10) of the Act in terms of our above discussions. - Decided partly in favour of assessee.
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2015 (4) TMI 5
Disallowance u/s 14A r.w. rule-8D - dividend income claimed exempt u/s 10(34) - Held that:- No effort has been made by A.O. to record his findings as to why the claim of assessee that no expenditure was incurred was not correct. He has made disallowance just by holding that some expenditure must have been incurred. Therefore, case of CIT Vs Taikisha Engineering India Ltd. [2014 (12) TMI 482 - DELHI HIGH COURT] is applicable to the assessee and no disallowance u/s 14A was warranted. Moreover, we find that the assessee was holding shares as stock in trade and not as investments as is apparent from balance sheet of assessee and, therefore, also disallowance u/s 14A was not warranted as held in the case of DCIT Vs Baljit Securities Pvt. Ltd. (2014 (10) TMI 659 - ITAT KOLKATA). - Decided in favour of assessee.
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2015 (4) TMI 4
Penalty under section 271(1)(c) - income surrendered at ₹ 45 lakhs and addition in respect of Rahon Road Property in a sale of ₹ 1,38,750 - CIT(A) cancelled penalty levy - Held that:- It is clear that all the facts of surrendered income and actual surrender of ₹ 45 lakhs and payment of tax thereon were within the knowledge of the Revenue Department and were in fact disclosed by the assessee to the Revenue Department prior to the order sheet dated December 24, 2008. It appears to be inadvertent mistake on the part of the assessee in not mentioning ₹ 45 lakhs in the original return of income, therefore, the decision in the case of Price Waterhouse Coopers P. Ltd. v. CIT [2012 (9) TMI 775 - SUPREME COURT] squarely applied in favour of the assessee. The assessee thus would be entitled for benefit of Explanation 5(2) to section 271(1)(c) of the Income-tax Act. The decisions cited by the learned Departmental representative are, therefore, clearly distinguishable on facts because the Assessing Officer did not detect anything on or before December 24, 2008 because every fact was disclosed to the Revenue Department and within the knowledge of the Assessing Officer. In view of the above discussion, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) and delete the penalty with regard to the surrender of ₹ 45 lakhs. As regards the levy of penalty on account of sale of property to Rahon Road, Ludhiana, the main reason for levy of penalty was that assessee disclosed lower rates of plots but the same was not supported by any reasons by the Assessing Officer for taking higher valuation. The learned Departmental representative admitted that no material or evidence was found during the course of search to support the findings of the Assessing Officer that assessee has concealed any higher sale consideration. The assessee in support of the sale consideration had filed sale deeds which have not been rebutted through any evidence. The assessee did not maintain regular books of account, and therefore, provisions of section 145(3) were applied and the rates were enhanced by the Assessing Officer for making estimated addition of ₹ 1,38,750. It is well settled law that for an estimated addition, no penalty is leviable. The particulars of sale of plots were also disclosed in the return of income filed by the assessee. The hon'ble Madras High Court in the case of CIT v. K. R. Chinni Krishna Chetty [1998 (6) TMI 5 - MADRAS High Court] held that (catchwords) "Mere revision of income to a higher figure by assessing authority does not automatically warrant inference of concealment of income". - Decided in favour of assessee.
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2015 (4) TMI 3
Eligibility for interest on refund - Held that:- No substance in the argument of the Revenue that the delay n the refund was caused because of the conduct of the assessees. In fact, the assessee was questioning the proposition of the Revenue to assess the income in the hands of the Main Trusts. That is why the beneficiary trusts have filed their individual returns of income disclosing the benefits received from the main trusts also. But when KVSS was pronounced by the Government of India, it was for the assessees to decide whether to take benefit out of that or not. Therefore, it is only when KVSS was promulgated, the assessee had an occasion to make a move and settle the dispute. So also the proceedings were locked up in different appellate forums. Therefore, there is no merit in the argument of the Revenue that the delay was caused by the conduct of the assessees. Therefore, we also find that the assessing officer has rightly granted interest to the assessees on refunds due to them. - Decided in favour of assessee. Interest on interest - Held that:- According to decision of CIT vs. Gujarat Flouro Chemicals, [2013 (10) TMI 117 - SUPREME COURT]the interest which can be granted to the assessee on refund as per section 244A would be the interest provided in that section and no other interest on such statutory interest can be provided. Thus, it was pleaded by Ld. DR that there is no provision according to which assessee can be granted interest on interest. - Decided against assessee.
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2015 (4) TMI 2
Computation of capital gain - year of assessability of the capital gains received by the assessee on the sale of property - Held that:- The possession of the property has been handed over to the purchaser on September 3, 2005. The evidences produced by the assessee, such as, filing of telephone bills and ration card etc. are not the conclusive material. The fact remains that the sale deed was executed on September 3, 2005 and consideration was also received in September, 2005. From the clauses of the sale deed dated September 3, 2005, it is clear that the possession was also handed over in the assessment year 2006-07 itself. Therefore, in our considered view, the Commissioner of Income-tax (Appeals) has rightly confirmed the action of the Assessing Officer in holding that the capital gain on the sale of the property was to be assessed in the assessment year 2006-07. We accordingly confirm the order of the Commissioner of Income-tax (Appeals) - Decided against assessee.
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2015 (4) TMI 1
Excess stock valuation - CIT(A) deleted the addition - Held that:- a clear finding has been given by CIT(A) that physical removal from stacks and weighment in respect of approximately 1,00,000 bags of agricultural products was not possible in such time frame. He has further noted that the assessee on the very next day of survey had given an affidavit of the incorrect taking of stocks by the department and retraction as to the surrender which was done under pressure. He has also noted that the Assessing Officer has also not commented upon or controverted or tried to examine the arguments and affidavits which were also placed before him during the assessment proceedings. We have seen that before us also, in spite of providing several opportunities, the survey folder and assessment folder were not produced before us by learned DR of the revenue. Without carrying out actual weighment, how the stock inventory can be prepared when the bags were not having uniform weight. Considering all these facts, we do not find any reason to interfere in the order of CIT(A) on this issue. - Decided against revenue. Rejection of books of accounts - CIT(A) accepting the books reliable - Held that:- a clear finding has been given by CIT(A) that mistake pointed out by the Assessing Officer in the assessment order regarding some mistakes noted for recording of vouchers etc. cannot lead to the rejection of the entire accounts because no mistake has been pointed out by the Assessing Officer in the books of account maintained by the assessee. He has also given a finding that the assessee has brought on record, the assessment order in Sales Tax proceedings and the Assessing Officer could not point out any specific amount of sales not accounted for or purchases not accounted for. He has also given a finding that the Assessing Officer could not point out any purchase or sales which is sham. None of these findings could be controverted by Learned D.R. of the Revenue and we also find that in the present year, the assessee has reported a gross profit of 12.84% as against 12.62% in assessment year 2004-05 and 11.66% in assessment year 2003- 04. Hence, it is seen that the gross profit rate reported by the assessee is also higher than the preceding two years. Considering all these facts, we are of the considered opinion that no interference is called for in the order of CIT(A) on this issue also.- Decided against revenue. Negative cash found - CIT(A) deleted the addition - Held that:- the basis of the decision of CIT(A) is that as per a letter submitted by a computer expert on 14.3.2005 after the date of survey on 9.3.2005, it was stated that the software program was corrupt and incorrect. He has also noted that sales as per this trial balance were ₹ 6,34,57,711/- only whereas the sales as on that date as per regular books of accounts were ₹ 17,35,36,988/-. This goes to show that there is ample force in this contention of the assessee that the software program was corrupt because if the software program was not corrupt then how the sales as per this trial balance can be so much lower as compared to sales reported by the assessee as per its books of account. These findings of CIT(A) could not be controverted - Decided against revenue. Deduction under section 80IB - CIT(A) allowed the claim - Held that:- A clear finding is given by him that this issue is covered in favour of the assessee by the Tribunal order in assessee’s own case for assessment year 2003-04. - Decided against revenue. Addition u/s 68 - CIT(A) deleted addition - Held that:- CIT(A) that in all the earlier years and subsequent years, the advance of customers as reported by the assessee were accepted by the Assessing Officer in the assessment order framed u/s 143(3) of the Act. In the present year also, the Assessing Officer has accepted this practice and out of total amount of ₹ 55.37 lac, he has made addition of ₹ 19.70 lac for which advances were received in cash but he has accepted the balance amount of ₹ 35.67 lac for which advances were received through cheque. In our considered opinion, only because the advances were received in cash, it cannot be said that the advances are not genuine. The assessee has submitted all the confirmations but the Assessing Officer had not verified the same. This is also noted by him that the sales against these advances were made in subsequent years and the same was accepted as genuine. Considering these facts, we are of the considered opinion that no interference is called for in the order of CIT(A) - Decided against revenue.
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Customs
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2015 (4) TMI 27
Revocation of CHA License - Clearance of misdeclared goods - Difference of opinion - Majority order - Held that:- As regards the charges of contravention of Regulations 13(a) and 13(d), both the charges arise from a finding in the order dated 26-11-2005 about alleged mis-declaration of imported goods by the importers mentioned therein wherein the appellant CHA had filed the bills of entry and one of the employees of the CHA Mr. Dhirubhai Shah was found involved in the alleged mis-declaration. Surprisingly, the CHA was not made a party to the said adjudication proceedings. This is quite strange. If the CHA was a party to the transaction and a statement had been recorded to that effect, show cause notice should have been issued to the CHA for various omissions/commissions. This omission on the part of the department in incorporation of the CHA in the alleged transactions, weakens substantially the case of the department, in spite of the fact separate proceedings can be initiated against the CHA under the CHALR. During the arguments, I had asked the DR to produce printouts from the EDI system of the Department of the said Bills of Entry so that it could be verified whether it was the appellant CHA who had attended to the clearance work in respect of the consignments covered by the bills of entry and whether the importer had also signed the said bills of entry affirming the declarations made therein. In spite of sufficient time given, the DR could not produce the print outs. If the importers had signed the said bills of entry, then there was no requirement of producing authorizations separately by the CHA. Further from the records, it is seen that the CHA had in fact produced copies of the authorization letters from the importers. However, the adjudicating authority rejected the said evidence only on the specious ground that the same does not inspite confidence since they have been produced very late. I find the reasoning of the adjudicating authority quite absurd and irrational. When a documentary evidence is produced, even if belatedly, if the same has to be rejected, cogent reasons have to be given and rejection cannot be based on the subjective feeling of the adjudicating authority. In these circumstances, the benefit of doubt certainly has to be extended to the appellant. Therefore, I conclude that contravention of Regulation 13(a) of not obtaining authorization from the importers by the CHA has not been established beyond any reasonable doubt. In one case, Sri. Shah was imposed with a penalty of ₹ 20 lakhs for his alleged involvement in mis-declaration of imported goods leading to evasion of duty vide order dated 26-11-2005. Therefore, there is sufficient evidence available on record to prove this charge against the appellant. However, for a contravention of Regulation 19(8) alone, revocation of CHA licence is not warranted and the punishment suffered by the appellant of not being able to operate as a CHA for the last two years is sufficient. - revocation of the CHA licence is not warranted in the facts and circumstances of the case and the punishment suffered of not being able to operate as a CHA for the last two years is sufficient. - Decided in favour of appellant.
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2015 (4) TMI 26
Exemption from CVD - Addition of trade discount to transaction value - Maintainability of appeal - Held that:- Amount involved in this case is ₹ 4,13,115/- as seen from the worksheet submitted by the learned advocate and the issue is not recurring in nature. - Following decision of - Commissioner of Income-tax Versus Ranka & Ranka [2011 (11) TMI 449 - KARNATAKA HIGH COURT] - appeal filed by Revenue is dismissed under proviso to Section 129A (1) of the Customs Act, 1962 as not maintainable - Decided against Revenue.
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2015 (4) TMI 25
Waiver of pre deposit - Denial of the benefit of Notification No. 135/2010-Cus dated 31/12/2010 - Demand of differential duty - Held that:- The contract entered into by the appellant with the foreign supplier M/s. Trafigura Pte Ltd makes it absolutely clear that the coal will be supplied from Indonesia, in terms of clause 7. The country of origin furnished by the appellant before the Customs authorities gives the details of the quantity shipped, the vessel in which the goods were carried, the departure date of the vessel and all other relevant particulars. If one sees the bills of lading submitted by the appellant, all these details are tally and therefore, there cannot be any doubt whatsoever from where the impugned goods have originated. Even the surveyor's report certifying the weight of the goods also confirms the country of origin as Indonesia. In these circumstances, the denial of benefit of Notification No. 135/2010 in respect of the goods originating from Indonesia is clearly not sustainable. Thus, the appellant has made out a strong case for waiver of the dues adjudged. Accordingly, we grant unconditional waiver from pre-deposit of dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.
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Corporate Laws
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2015 (4) TMI 24
Application under Section 633(2) of the Companies Act to grant relief - Notice issued to company under section 209(1), 209(3)(b), 217(3), 292(1)(e) and 297 of the 1956 Act - Another notice issued under Section 295 & 299 of the Companies Act - Held that:- Section 295 of the Companies Act specifically foists a duty on the Directors not to grant loan without taking necessary steps, while Section 299 of the Companies Act makes it mandatory on the Directors to disclose his interest. There is no doubt that on basis of the first and second set of show-cause notice instruction to launch prosecution has been issued. Even on receipt of the communication dated 20th February 2009 the basis of the instructions has not been sought for by the applicants herein. In the affidavit filed by the Central Government it has been stated that permission has been sought to withdraw the prosecutions directed. For violation of Sections 295 and Section 299 of the 1956 Act the Central Government can impose either a fine or direct imprisonment of six months. Section 299 also postulates imposition of fine, therefore, the period of limitation would not exceed one year. As the show-cause has not been issued within one year of the offence, if any nor has any application been filed under Section 190 of the Code of Criminal Procedure within the time specified above entitles the petitioners to being excused under Section 633(2) of the 1956 Act for show-cause notices dated 2nd February, 2009 and 13th February, 2009. By the letter dated 20th February, 2009 the petitioners have been informed that instructions have been given to launch prosecution pursuant to the show-cause notices issued under Section 209(1), 209(3)(b), 217(3), and 292(1)(e) of the 1956 Act. That the said letter has been received by the petitioners is an admitted fact but in spite of receipt no copy of letter dated 2nd December, 2008 has been sought by the petitioners, therefore, in respect of the said communication dated 20th February, 2009 the petitioner is not entitled to any order. - Application disposed of.
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2015 (4) TMI 23
Violation of Regulation 8(3) of SEBI SAST(Substantial Acquisition of Share and Takeovers) Regulations, 1997 - Inadvertent non compliance - Appellant on his own approached SEBI on non compliance Held that:- We note that the appellant on his own approached SEBI on becoming aware of the technical violation in question and asked for consent proceedings which, somehow, could not materialize. Be that as it may. We have given our thoughtful consideration to the whole matter and we note that the basic purpose of SAST Regulations, 1997 (now Substantial Acquisition of Share and Takeovers Regulations, 2011) including that of regulation 8(3), is to make a company law abiding and compliant. In the present case, learned counsel for the appellant, Shri Sunil Humbre has stated that the company shall file proper disclosure to the stock exchanges within a period of two weeks although it is claimed that such disclosures have already been made in the past. In addition, we also note the conduct of appellant in approaching SEBI on its own and thereby bringing the violation in question to the notice of SEBI. In the peculiar facts and circumstances of the case, therefore, we are convinced that ends of justice would be met with by disposing of this appeal with a direction to the appellant to make the required disclosure to the stock exchanges in question as per the Regulation 8(3) of the SAST Regulations, 1997 on or before November 17, 2014. On furnishing the required disclosure, the penalty of ₹ 9 lac imposed on the appellant shall stand modified to ₹ 5 lac to be deposited by the appellant with SEBI within a period of one month thereafter. In case the appellant does not make appropriate disclosure by November 17, 2014, the original penalty against the company shall revive.
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Service Tax
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2015 (4) TMI 40
Maintainability of appeal - Appeal previously dismissed as barred by limitation - Service Tax on the works undertaken by the petitioner - Held that:- Issue is after availing the remedy unsuccessfully before another Court whether we can accept the challenge to the self same order, which has reached its finality under writ jurisdiction or not. According to us, it is not legally permissible, if it is done the writ court will unsettle a legally settled position. We think that when appellate authority has already decided the matter against the petitioner, the writ Court is debarred from doing so and the same binds the writ Court applying the principle of res judicata , particularly, when the appellate authority's orders are not challenged in the writ jurisdiction. - Petition not maintainable.
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2015 (4) TMI 39
Consultancy services - Service provided outside India - Held that:- by an amendment which was brought on 18.4.2006 with effect from 1.5.2006, it was provided that in case where the service provider was situate outside India, the service recipient would be liable for payment of tax and would be treated as a service provider. Prior to that, there was no provision for taxing the service provider situated outside India. The matter in hand relates to a period prior to such amendment, It is not disputed that the provision for payment of service tax extends to the whole of India (except the State of Jammu & Kashmir). The same would mean that the tax liability would not be there of a person or company which is situated outside India and having no business establishment in India. In the present case, the service was provided by the respondent company from its office in United Kingdom. - no reason to differ with the order passed by the Tribunal in the present case as the service provider i.e., the respondent company was located outside India and did not have any business operations or office within the territory of India. - Decided against Revenue.
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2015 (4) TMI 38
Manpower Recruitment and Supply Agency Service - activities of cutting/harvesting and transporting of sugarcane to Sugar factory - first appellate authority came to a conclusion that the services rendered by the appellant would not fall under the category of manpower supply agency service - Held that:- Since then much water has flown and now sufficient amendments are made in the relevant provisions. We are told that now all services, except the services mentioned in the "negative list" are made taxable. Until this provision is made i.e. July 2012, the situation was different for the Revenue and apparently, the services rendered by the respondent at the relevant time were found not taxable. - Decision in the case of Bhogavati Janseva Trust Vs. CCE, Kolhapur [2014 (9) TMI 482 - CESTAT MUMBAI] and Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society Vs. CCE, Kolhapur [2014 (12) TMI 42 - CESTAT MUMBAI] followed - No merit in appeal filed by Revenue - Decided against Revenue.
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Central Excise
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2015 (4) TMI 34
Waiver of pre deposit - CENVAT Credit - input services - services have not been exclusively received by the appellant unit or for other premises - service received by the appellant for repair and maintenance of refrigerators warranty period - receipt of IPR service - Held that:- on going through the agreement between Takecare India Pvt. Ltd. and the appellant company and M/s P.E. Electronics and the appellant company it is seen that these agreements are only in respect of the unit at Shajahanpur, Distt. Alwar. Similarly, the invoices by the respective service provider i.e. Takecare India Pvt. Ltd. and M/s.P.E. Electronics Pvt. Ltd. have also been issued to the appellant company unit at Shajahanpur, Distt. Alwar and similarly, the invoices issued by the advertisement service provider an also to appellant company at Shajahanpur, Dist Alwar. Thus prima-facie, we are of the view that the services, in question, have been received by the appellant company unit at Shajahanpur, Dist. Alwar and as such, there is no merit in the Departments contention that the services in question may have been used in respect of the products manufactured by other factories of the appellant company. It is also seen that the department does not dispute the appellant's contention that other units of the appellant company have entered into separate agreement for the same service providers M/s. Take care and M/s. P.E. Electronics Pvt. Ltd. - the appellant have strong prima-facie case in their favour. - Stay granted.
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2015 (4) TMI 33
Denial of refund claim - refund claim was rejected by the adjudicating authority on the ground that the act of raising an objection by the departmental authorities, payment of duty alongwith interest by the appellant at the instance of such objection, is complete transaction in itself and cannot be reversed by claiming the refund of the amount so paid - Held that:- If the scrap is retained by the job worker and sale of the same will affect the conversion charges towards job work, the same should be included in the assessable value of the job work goods. We agree with the submission made by Ld. A.R. that though the Ld Commissioner (Appeals) heavily relied on judgment of [2007 (1) TMI 19 - CESTAT, MUMBAI] (sic) Mahindra Ugine Steel Co. Ltd. but subsequently said Tribunal judgment was set aside and matter was remanded back to the Tribunal. The impugned order of the Ld. Commissioner, based on the judgment which does not exist presently, cannot be sustained. - total sum of both these element will form the total consideration received by the respondent towards job work. Therefore the sale value of scrap is includible in the assessable value of job work goods. Therefore, differential excise duty and interest thereupon paid by the respondent is correct and legal and the question of refund of said amount does not arise. - Decided in favor of Revenue.
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2015 (4) TMI 32
Classification of goods - Treadle Pumps, which are feet operated pumps, which can lift water from the depth upto 7 Mtrs and are normally used for minor irrigation purposes for lifting water from beneath or surface water ponds, canals or rivers - whether the goods, in question, are the pumps, covered by the Heading no.8413.80 as claimed by the department or the goods, in question, are the mechanical appliances for projecting, dispersing, spraying liquids or powders for agricultural or horticulture covered by Heading No.8424.10 of the Tariff as claimed by the appellant. Held that:- goods, in question, are the pumps primarily designed for lifting water to the surface from the depth upto 7 Mts. and are feet operated pumps. Though the same are primarily meant for agricultural uses, the fact remains that the same are feet operated pumps for handling water. The same cannot be said to be the mechanical appliances for projecting, dispersing or spraying liquids or powders and thus, the same cannot be treated as the irrigation system. Therefore, in our view, the goods are specifically covered by the Heading no.8413.80. In any case, as per the General Rules for interpretation of the Tariff, the heading which provides the most specific description shall be preferred to Heading providing more General description. In view of this, the goods in question are correctly classifiable under Heading 8413.80. - Decided against Assessee.
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2015 (4) TMI 31
Duty drawback - Determination of brand rate - inputs not specified in the relevant SION - original authority vide impugned order-in-original fixed the brand rate @Rs.16.62 kgs with quantity ::restriction of 4.0000.06 kgs as against rate of ₹ 22.45 kgs of full' quantity claimed by the applicant - Held that:- applicants failed to produce the original which was not-in possession of department, as per applicants own submission' at the time of reverification. They also could not produce any other evidence regarding claimed quantity. Further, they have not produced any substantial documentary evidence challenging brand rate fixation ®Rs.16.62 kgs as against ₹ 22.45 kgs. claimed by the applicant. In absence of such documentary evidences the fixation of brand rate by the original authority cannot be faulted with. The appellate authority also discussed the same in detail and Government agrees with the findings of appellate authority. - No infirmity in order of Commissioner (Appeals) - Decided against assessee.
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2015 (4) TMI 30
Condonation of delay - Denial of rebate claim - there is difference In weight of goods as per ARE-1/Invoice and Shipping Bill/Bill of Lading - correlation of goods covered in excise documents and export documents could not be established - respondents claimed the rebate of goods exported having weight as mentioned in ARE-1 and genuineness of such export is proved - Held that:- appeal was filed before Commissioner (Appeals) after a delay of 45 days and the said fact is not disputed by applicant. As per provisions of section 35B of Central Excise Act, 1944, Commissioner (Appeals) is empowered to condone delay upto 30 days in filing appeal. There is no provision in section 35B ibid to condone delay exceeding 30 days. Hon'ble Allahabad High Court in the case of M/s India Rolling Mills (P) Ltd. Vs. CESTAT, New Delhi [2004 (2) TMI 77 - HIGH COURT OF JUDICATURE AT ALLAHABAD] has held that the Commissioner (Appeals) cannot. condone delay in filing appeals beyond 30 days. Government also notes that Hon'ble Supreme Court in the case of Singh Enterprises Vs. CCE Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] has also held that Commissioner (Appeals) is empowered to condone delay upto 30 days and has no power to allow appeal to be presented beyond the delay of 30 days. - appeal filed after a delay of 45 days was not maintainable and liable to be dismissed as time barred. Commissioner (Appeals) has erred in condoning the said delay exceeding 30 days. - Decided against Revenue.
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2015 (4) TMI 29
Refund claim for the unutilized cenvat credit - jurisdiction of revision authority - period of limitation for filing of appeal - applicant filed this Revision Application after expiry of more than 9 months from date of receipt of impugned Order-in-Appeal - Exemption under Notification No. 30/2004-CE dated 09.07.04 - Held that:- revision application is filed on 21.8.2012 against the impugned orders-in-appeal No. 261/10 dated 07.12.2010. The said application is filed after the expiry of 3 months initial time period and also even after the lapse of condonable-period of 3 months. The revision application filed after stipulated time period is clearly time barred and is not maintainable at all. Applicant has claimed that said order was received on 1.1.12. But no evidence has been produced in support of their claim of receiving said order on 1.1.12. So this contention is not acceptable. As such this revision application is time barred. Refund of unutilized cenvat credit which is not covered under section 35EE read with first proviso to section, 35B(1) of Central Excise Act, 1944. As such, the revision application filed beyond jurisdiction is not maintainable before central Government under section 35EE. Applicant can avail the available appellate remedy under section 35B before Hon'ble CESTAT in accordance with the provision of law. - Decided against assessee.
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2015 (4) TMI 28
Denial of rebate claim - Violation of condition No.2(a) of Notification No.19/04-CE(NT) dated 6.9.04 - goods were not exported direct from factory of manufacture - Held that:- If the Central Excise Officer deputed for verification of goods for export is satisfied about the identity of goods, its duty paid character and all other particulars given by exporter, he will endorse such form and permit export. The detailed procedure is given in para 8.1 to 8.6 of circular. In this case, no such procedure is followed as there is not endorsement from Central Excise Officers in Part-A of ARE-1 form. As such condition 2(a) of Notification No.19/04-CE(NT) dated 6.9.04 stands violated. The Central Excise office has not certified the identity of goods and its duty paid character. AS such duty payment of exported goods is not proved. - export of duty paid excisable goods cleared from factory cannot be established. The lower authorities have rightly concluded that export of duty paid goods is not established in this case. As such, the rebate claim is not admissible to the applicant under Rule 18 of Central Excise Rules 2002 read with Notification No.19/04-CE (NT) dated 6.9.04 - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (4) TMI 37
Imposition of penalty u/s 78(5) of the Rajasthan Sales Tax Act, 1994 - Rectification of order - Whether in the facts and circumstances of the case the Rajasthan Tax Board was justified in law in completely changing and reviewing its earlier order in rectification application which is having limited scope - Held that:- Rectification implies the correction of an error or removal of defects or imperfections and could not be used to appreciate the evidence on new facts which were not placed earlier. Rectification implies an error, mistake or defect which after rectification is made right. - the order of the Tax Board, by which the order has been rectified, certainly appears to be reviewing its own order and coming to a different conclusion than what was reached by the Tax Board earlier on 27/11/2007. - Tax Board was unjustified in reviewing the order in the garb of rectification order dt.19/01/2011 - Decided in favour of Revenue.
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2015 (4) TMI 36
Availability of an exemption to hatcheries and poultry farms, within the State - Exemption to the turnover of sale of poultry and chicks hatched and reared within the State with the exemption in respect of hatcheries being for the sale of poultry chicks and meat hatched and reared within the State and the exemption for poultry farmers being for the sale of poultry and meat reared in own farms within the State - Held that:- Exts.P7 and P8, being notices issued by the respondents in terms of the KGST Act, cannot be interfered with by this Court in proceedings under Article 226 of the Constitution of India except, in exceptional circumstances such as when it is established that the notices have been issued by authorities acting without any jurisdiction or in excess of their jurisdiction. Admittedly, in the instant case, the petitioner does not have a contention that the notices are vitiated by any jurisdictional error. Apprehension of the petitioner is only with regard to a possible delay, that may result from a prolonged agitation of the dispute, which, according to the petitioner, has already been resolved in his favour in the previous assessment years. This, in my view cannot be a justification for the petitioner to by-pass the statutory remedies available to him under the Act. I am of the view, therefore, that it would be in the interests of justice to relegate the assessment proceedings pursuant to Ext.P7 notice to the 1st respondent Assessing Authority for completing the same in accordance with the provisions of Section 17(3) of the KGST Act. This is notwithstanding that the notice contemplates a summary procedure of assessment in terms of Section 17D of the KGST Act. The 1st respondent shall, therefore, complete the assessment proceedings pursuant to Ext.P7 notice, under Section 17(3) of the KGST Act, within a period of three months from the date of receipt of a copy of this judgment, after considering the materials produced by the petitioner to substantiate his claims. - Appeal disposed of.
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2015 (4) TMI 35
Applicability of rate of tax on the sale of demo cars - Benefit of notification dated 25.10.2005 - When the authorities noticed that the claim is for demo cars and not used cars, the said claim was disallowed and tax was levied at 12.5% on the value of the cars sold - Held that:- dealer is in the business of selling cars manufactured by Maruthi Udyog Limited. The dealer is also in the business of purchase and sale of used cars. In respect of the purchase and sale of used cards, the dealer’s claim under the notification has been allowed. It is only in respect of the cars, which are purchased from the manufacturer, the said benefit is not extended. The reason is obvious. The purchase is not that of a used car. The purchase is that of a brand new car from the manufacturer. After purchase from the manufacturer, if the dealer instead of selling the same to a customer uses the said car for demonstration purpose and after some time sells the said car to a customer, it would not be a case of purchase of used car and sale of a used car. The benefit under the notification is meant only for purchase of used cars and sale of used cars. By mere use of the new car purchased from the manufacturer for the purpose of demonstration, the said car cannot be treated as a used car so as to attract the benefit under the notification. Therefore, the Tribunal has rightly held that the petitioner is not entitled for the benefit of the notification. We do not see any merit in these petitions. - Decided against assessee.
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Indian Laws
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2015 (4) TMI 22
Proposed acquisition of share capital - Proposed combination of business of retail in India - No adverse affect on competition in India - Held that:- As observed, the proposed combination relates to the business of retail in India. The size of the retail market in India was estimated to be around US$ 450-500 billion1 in the year 2012. The retail market in India comprises both organised and unorganised retailing. The organized retailing includes the hypermarkets, supermarkets, departmental stores etc. The retail market in India is dominated by a large number of unorganized retailers consisting of the local kirana shops, owner-manned or self-owned general stores and shops, hawkers, pavement vendors etc. As per the publically available information, in the year 2012, unorganised players controlled approximately 92 per cent share of the overall retail market in India. The organised retail market, which was approximately 8 per cent of the overall retail market in 2012, is expected to account for 20 per cent by 20202. Some of the large players who have been operating in the organised retail market in India are Reliance Retail, Future Retail, Spencer's Retail, Bharti Retail, Aditya Birla's 'More', Shoppers Stop etc. Additionally, due to increased internet penetration and changing lifestyles, the Indian retail market has also witnessed a surge in online retailers which has widened the choice for the consumers. THL currently operates only 16 retail stores across various locations in India and its total revenue, as per the annual report of Trent, during the financial year 2012-13 was only around INR 785 crores, which is insignificant as compared to the size of the overall retail market as well as the organised retail market in India. It is observed that while THL is engaged in the business of multi-format retail trading in India including hypermarkets, supermarkets and smaller convenience stores, TOIL is not present in the retail market in India and therefore, there is no horizontal overlap between the business activities of THL and TOIL in the retail market in India. Considering the facts on record and the details provided in the notice given under sub-section (2) of Section 6 of the Act and the assessment of the combination after considering the relevant factors mentioned in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination under sub-section (1) of Section 31 of the Act. This order is, however, issued without prejudice to the proceedings under Section 43A of the Act. - Acquisition approved.
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2015 (4) TMI 21
Penalties imposed by the Competition Commission of India (hereafter ‘CCI’) for non-filing of undertakings to cease and desist from anti-competitive conduct - Held that:- penalties as contemplated under Section 42(2) of the Act are levied as a punitive measure for noncompliance of orders including orders under Section 27 of the Act. Given the nature of penalties and the wide discretion vested with CCI, the same are to be considered keeping in view several relevant factors including the nature of directions that have remained uncomplied – whether they are substantive or merely formal, the effect of such non-compliance, the intention of the parties accused of non-compliance, the benefit derived by such parties, causes for non-compliance. Penalties by their very nature are punitive measures and thus, have to be considered in light of the gravity of the offence in respect of which they are imposed. There is no allegation that the petitioners had indulged in any anti-competitive conduct or had failed to comply with the directions to cease and desist from anti-competitive conduct as directed by CCI. In the case of petitioner (RSI) had lost its registration with DGS&D on 21.12.2011. Thus even prior to the information being filed with CCI and CCI recording its prima facie opinion, the petitioner had ceased to be a DGS&D Rate Contractor. Consequently, the petitioner had neither participated in the Rate Contract nor was capable of doing so. In the circumstances, the question of the petitioner entering into any arrangement or bid rigging or indulging in anticompetitive conduct proscribed by CCI, did not arise. - In the given circumstances, it is amply clear there was neither any allegation that the petitioners had failed to comply with the ‘cease and desist’ order nor in fact the petitioners could have indulged in an anti-competitive conduct after CCI’s order of 06.08.2013. Thus, in the present case, CCI has imposed penalty even though CCI’s ‘cease and desist’ order was not violated and had been fully complied with. - impugned order is, clearly, without application of mind and has been passed in wanton exercise of powers, ignoring the relevant factors and the constitutional principles. - Decided in favour of appellant.
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