TMI Tax Updates - e-Newsletter
April 24, 2014
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:
TPA - Determination of ALP - The factum of the assessee having a loss is no ground to reject PSM as the MAM - AT
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Income Tax:
Penalty u/s 272A(2)(k) - Quarterly statements with details of tax deducted at source not furnished - since the assessee has failed to offer reasonable explanation in terms of section 273B of the Act, imposition of penalty is justified - AT
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Income Tax:
Taxability of transfer fee received from members by the CGHS Principle of Mutuality Merely because the amount may be appropriated earlier, it will not lose the character of the amount being paid by a member - not taxable - AT
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Income Tax:
Debit balance written off as bad debt segregation of advances and bad debts - If the details were furnished before CIT(A) then the AO should have been given opportunity to consider the same and rebut the same if so desired. - AT
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Income Tax:
Deduction u/s 80IA(10) A O is justified in redrawing the Profit and Loss A/c. based on the turnover of the assessee's units so as to grant deduction u/s. 80IB - proportionate head office expenditure allowed - AT
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Income Tax:
Disallowing the exemption claimed u/s 54 - Mere nonresidential use subsequently would not render the property ineligible for benefit u/s 54F, if it is otherwise a residential property - AT
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Income Tax:
Validity of setting aside of assessment order u/s 263 - AO has not at all examined the applicability of Section 2(22)(e) and, it is a case of lack of inquiry. - AT
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Income Tax:
Assessee had a taxable income in India which it did not disclose voluntarily but disclosed only after the issuance of notice u/s 148 - it is a clear case where there was escapement of income due to non-filing of return by the assessee - decided against the assessee - AT
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Income Tax:
Deemed dividend u/s 2(22)(e) - if the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of deeming shareholder, then the legislature would have inserted deeming provision in respect of shareholder as well - HC
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Income Tax:
Amount paid by the assessee-company way by way of participation fees to Gujarat Vibrant Summit to encourage development activities in the State - expense allowed - AT
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Income Tax:
Disallowance of Interest u/s. 80IB - audit report u/s 10CCB Belated filed Audit Report under Rule 46A - the otherwise admissible claim of the assessee cannot be defeated for technical reason - AT
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Customs:
Imposition of penalty - Misdeclaration of goods - Abetment in pilferage whatever leniency he deserves, is already meted out to him at the hands of Tribunal - Accordingly, no reason to interfere - HC
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Central Excise:
Valuation of goods - Inclusion of Pre-Delivery Inspection (PDI) and free after sales service(FASS) charges in the assessable value of the vehicles manufactured and sold by the appellant to their dealers - stay granted - AT
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Central Excise:
Duty demand - Penalty - Clandestine removal of goods - Even if the order was cancelled, it was obligatory on the part of the appellant to cancel invoice subsequently and intimate the deptt. accordingly. - AT
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VAT:
Rate of Tax - KVAT - it is clear that the battery is an integral part of the railway coaches, engines and wagons and falls under the part thereof under Entry 76 - it has to be taxed under Section 4(1)(a) - HC
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VAT:
Collection of penalty without order - Karnataka Value Added Tax Act, 2003 - collection of penalty without an order u/s Section 53(12)(c), is illegal and can hardly be sustained - HC
Articles
News
Case Laws:
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Income Tax
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2014 (4) TMI 790
Disallowance of Interest u/s. 80IB of the Act Belated filed Audit Report under Rule 46A - Held that:- The decision in CIT vs. Punjab Financial Corporation [2001 (12) TMI 50 - PUNJAB AND HARYANA High Court] and Zenith Processing Mills vs. CIT [1995 (9) TMI 37 - GUJARAT High Court] followed the otherwise admissible claim of the assessee cannot be defeated for technical reason - the claim of the assessee had been rejected only on the ground that the audit report was not filed along with return of income - The assessee was not asked by the AO to furnish the audit report during assessment proceedings - The assessee had furnished the audit report u/s 10CCB of the Act as additional evidence under rule 46A of the I.T. Rules and the same was admitted by the CIT (A) and also, accepting the explanation of the assessee regarding its failure to submit it before the AO and the remand report was also called from the AO - The AO had not reported anything adverse against the proof submitted by the assessee Decided in favour of Assessee. Rejection of claim of interest and rent Held that:- The decision in Liberty India vs. CIT [2009 (8) TMI 63 - SUPREME COURT ] followed - the claim of the assessee is disallowance relating to interest income, rental income and foreign exchange rate fluctuation being not derived from industrial undertaking of the assessee Decided against Assessee. Income on account of foreign exchange fluctuation Held that:- The income on account of foreign exchange fluctuation is also to be treated as taxable business income - the income from foreign exchange may be incidental to the business activity of the assessee but the same cannot be said to be derived from the manufacturing activity of the assessee Decided against Assessee.
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2014 (4) TMI 789
Deletion of interest on FDRs Held that:- CIT(A) has held that the assessee is 100% government owned company appointed as a Nodal Agency for implementation of various infrastructure development projects all across Gujarat - the interest is not credited to the respective Grant accounts is factually incorrect the decision in COMMISSIONER OF INCOME TAX II Versus SAR INFRACON PVT LTD.[2014 (3) TMI 728 - GUJARAT HIGH COURT] followed - the assessee has credited the interest accrued to the respect grant accounts thus, there is no infirmity in the order of the CIT(A) Decided against Revenue. Disallowance of expenses on contribution to Gujarat Vibrant Summit 2007 Held that:- The CIT(A) has held that the business of the assessee has already been commenced - the amount paid by the assessee-company way by way of participation fees to Gujarat Vibrant Summit to encourage development activities in the State - The assessee had also participated in the same by putting up a stall since the main object of the assessee-company is also to carry out activities for infrastructure development projects in the State of Gujarat thus, there is no infirmity in the order of the CIT(A) Decided against Revenue. Disallowance of deduction u/s 80IA(4) of the Act Held that:- CIT(A) held that the appellant works as a nodal agency for implementation of various works undertaken/decided by the government - the grants for the projects is not its revenue income at all - the grants which are utilized for specified projects have been held to be not income but diversion of funds at source the appellant is doing the work of a concern engaged in work which is in the nature of a works contact awarded by any person and executed by it - as per the amended Explanation below section 80IA(13) with retrospective effect from 1.4.2000; the work should not be of the nature of contract and not only contract - the project costs and source not being revenue of the appellant, it being not affected by the actual cost and efficiency of work, the assets created and the source not being of the appellant at any stage and it being entitled to a fixed remuneration for its professional services - it clearly falls in the excluded category as per the amended Explanation below section 80IA(13) thus, they are not eligible for deduction Decided against Assessee.
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2014 (4) TMI 788
Deemed dividend u/s 2(22)(e) of the Act Advance/loan paid - Held that:- The assessee is not a shareholder of M/s. Ittina - the definition of dividend has been enlarged, and that loan or advances given under the conditions specified under this provision would also be treated as dividend - The fiction is not to be extended for enlarging the concept of shareholders - Dividend is to be given by any company, to its shareholders - in the second category u/s 2(22)(e) of the Act, loan or advances given to a concern which is not a shareholder of the payee company could be treated as shareholder receiving dividend Relying upon Commissioner of Income-tax Versus MCC Marketing (P.) Ltd. [2011 (11) TMI 232 - DELHI HIGH COURT] - if the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of deeming shareholder, then the legislature would have inserted deeming provision in respect of shareholder as well. The legislature has not done so - It is only the person whose name is entered in the Register of the shareholders of the Company as the holder of the shares who can be said to be a shareholder qua Company and not the person beneficially entitled to the shares - it is only where a loan is advanced by the Company to the registered shareholder and the other conditions set out in Section 2(22)(e) of the Act are satisfied, that amount of loan would be liable to be regarded as deemed dividend thus, there was no reason to interfere in the decision of the Tribunal Decided against Revenue.
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2014 (4) TMI 787
Corporate tax Deduction of TDS u/s 194I of the Act - Whether tax should be deducted at source u/s 194I from payments made for use of such standard facilities Held that:- The decision in Asia Satellite v. CIT [2011 (1) TMI 47 - DELHI HIGH COURT] followed - payments made towards use of standard facility, when the lessee is not having any domain or control or possessory rights over such facility, cannot be categorized as use of assets for the purpose of the Act Decided in favour of Assessee. Transfer pricing adjustment - Determination of ALP - Profit Split Method or Transactional Net Margin Method Applicability of Rule 10AB - Held that:- The revenues in the case of the assessee are generated in a transaction where there is contribution from multiple entities - the assessee runs its business independently in India - the assessee is an independent entrepreneur - But when a transaction is integrated and interrelated and when costs are incurred by multiple entities and the revenues are to be apportioned to multiple entities, then the factual conclusions of the T.P.O have to be vacated - the "Profit Split Method" (PSM) is the "M.A.M" for the reason that the assessee generates revenue out of operations that are highly integrated - When one transaction, (example transmitting data from a destination in one country, to a destination in a different country in a secured manner) requires deployment of assets and functions of different entities, located in different Geographical locations, to ultimately deliver services and when such combined efforts generate revenues, the MAM for determining arm's length price is "Profit Split Method (PSM)." The Transfer Pricing Officer is wrong in rejecting PSM on the ground that it is not possible to determine the cost incurred by the Indian entity separately - The cost incurred by the assessee is available on record - The entity maintains books and the same are subject to audit - use of unique intangibles is not a must for adopting "PSM" - the assessee does possess unique intangibles in the field of data transfer and communications, and comparing the operations with a simple E Mail and as a plug in operator is not factually correct - If the assessee is held to be a simple Email operator, then it is to be explained as to why reputed global enteprises would pay them for data transmission, when E Mail is free - The assessee does offer unique services as compared to an ordinary Email service and it is these unique services which are its intangibles. The factum of the assessee having a loss is no ground to reject "PSM" as the "MAM" - the arrangement with the AE under the agreement demonstrates that the administrator does not have absolute discretionary power to determine inter group payment - though the Rules do suggest that benchmarking should be done with external uncontrolled transactions, this is an impossibility, as it is not possible to get a comparable - allocation can be done, based on how much each independent enterprise might have contributed - Relative contribution has to be determined, based on key value drivers - there is a general consensus on the principles of allocation of residual surplus - as per rule 10B(l)(d) of the IT Rules, a contribution or residual PSM would need to be supplemented by a comparable PSM - the TPO, should determine the ALP by adopting residual PSM as the MAM and by allocating residual profits based on the relative value of each enterprise's contribution - Relying upon Allied Motors Private Limited Versus Commissioner of Income-Tax [1997 (3) TMI 9 - SUPREME Court] - Rule 10AB can be applied for the AYs also, for determining the ALP thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (4) TMI 786
Confirmation of Penalty u/s 272A(2)(k) of the Act Quarterly statements with details of tax deducted at source not furnished - Held that:- The paramount duty of the assessee is to remit the TDS amount within the statutory time limit - Payment of interest u/s 201(1A) of the Act will not absolve the assessee from penal consequences because interest is compensatory in nature whereas penal provisions are by way of deterrent measure - for escaping from rigors of penalty, the assessee has to satisfy the AO that there was a reasonable cause for the default committed by him - the explanation furnished by the assessee cannot be taken at its face value and appears to be an afterthought - allegation of the department that only because of the survey action, assessee came forward to file the returns assumes importance - since the assessee has failed to offer reasonable explanation in terms of section 273B of the Act, imposition of penalty is justified - the order of the CIT(A) is upheld for the penalty imposed u/s 272A(2)(k) Decided against Assessee.
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2014 (4) TMI 785
Sale of common plot of land Business income OR capital gains Held that:- The amount of similar nature was received by 14 cooperative housing societies including the four assessee societies in the present case on account of sale consideration of plot of land jointly owned by them - None of the parties appearing could furnish the relevant details - If the details are furnished by the assessee to the AO, the latter is sufficiently empowered to enforce the attendance of the other cooperative housing societies or the necessary compliance or part so as to decide the issue thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Taxability of transfer fee received from members Principle of Mutuality Held that:- The notification issued by the State Government putting restrictions on the amount of transfer fee and the member desired transfer of their shares or occupancy rights are only in respect of housing residential society - the decision in Mittal Court Premises Co-operative Society Ltd. Versus Income-tax Officer [2009 (7) TMI 689 - BOMBAY HIGH COURT] - Merely because the amount may be appropriated earlier, it will not lose the character of the amount being paid by a member - the identity of the contributor and beneficiary being satisfied and considering the provisions of Maharashtra Co-operative Societies Act and rules framed thereunder, surplus can be disposed of in favour of the members only or for the objects for which they may specify thus, the order of the CIT(A) set aside and the amount of transfer fee is not taxable in view of principles of mutuality Decided in favour of Assessee.
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2014 (4) TMI 784
Addition made u/s 68 of the Act Genuineness of the donations Benefit of exemption u/s 11 and 12 of the Act Applicability of section 115BBC of the Act - Held that:- The decision in SUNDER DEEP EDUCATION SOCIETY C/O M/S RRA TAXINDIA, VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2, GHAZIABAD [2014 (4) TMI 523 - ITAT DELHI] followed - The receipts are to be governed by sec. 11 and 12 of the Act - The moment assessee has treated the donations as its income and it is deemed to be an income derived from the property held under the trust as per sec. 12(1) then, the only aspect remained is to verify whether such amounts have been applied for the objects of the society to the extent of 85% or not. The donations cannot be termed as anonymous since list of the donors were filed and payments have been made through banking channel - the benefit of sections 11 & 12 in computing the income received on account of donations from identified donors cannot be denied thus, the AO is directed to verify the facts that assessee has applied 85% of its income during the year including these donations on its objects Decided in favour of Assessee.
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2014 (4) TMI 783
Opportunity of being heard Validity of best judgement u/s 144 of the Act Held that:- The assessment was originally completed by invoking the provisions of section 144 of the Act - AO made best judgment assessment and determined the total income at Rs.10,13,700/- against the returned of income of Rs.1,48,200 - the AO disallowed all the loans and other assets without examining the assessees books of accounts - the assessee is a professional as interior designer - the assessee furnished various papers and evidences as copies of the returns of income of the assessee for the earlier assessment years 2002-03 to 2006-07and enclosed the relevant copies of the profit & loss account - it is erroneously held by the CIT(A) that the profit and loss account were not enclosed/filed the copies of the returns have a clear remark under the enclosures columns, and evidenced the fact of enclosing the relevant profit & loss account thus, the order of the CIT(A) are erroneous - it is an erroneous finding of the CIT(A) which requires revisit by authorities thus, the matter is remitted back to the AO for fresh adjudication Decided in favor of Assessee.
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2014 (4) TMI 782
Debit balance written off as bad debt Applicability of TRF. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] Held that: - The assessee has furnished the detail of the irrecoverable advances in composite amount without segregation of advances and bad debts - The CIT(A) has not discussed about the not furnishing of details by the assessee in respect of 9 units/branches - the assessee has not furnished the details by segregating the bad debts and advances treated as irrecoverable and written off during the course of assessment proceedings If the details were furnished before CIT(A) then the AO should have been given opportunity to consider the same and rebut the same if so desired. As far as the claim of bad debts regarding treating the same as irrecoverable there was no error in the order of CIT(A) while allowing the claim following TRF. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] it is not clear from the record that how much amount out of the total claim of the assessee is regarding the advances given to the various parties and whether the advances were given during the course of business of the assessee and can be allowed as business loss, which has not been properly examined, may be for want of necessary details thus, the issue regarding claim of writing off of advances treating them as irrecoverable is remitted back to the AO for fresh adjudication Decided partly in favour of Revenue.
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2014 (4) TMI 781
Deletion of disallowance of finance charges Held that:- The proportionate disallowance was made by the AO because he was of the opinion that the assessee had incurred direct expenses of Rs.3.57 Crores against which there existed a closing stock of Rs.1.38 Crores and proportionate and accordingly disallowance had to be made - the assessee had claimed that interest was utilised by it for carrying out of its business -AO has not given any finding as to how the said claim of the assessee was incorrect - Assessee was following the same practice, writing its books of accounts as per the Accounting Standards, in earlier years and AO had never pointed out any defect in that practice - It is true that the AO can deviate from the stand taken in earlier years, but for doing so, he has to give cogent reasons which are not present in the particular case - the FAA was correct in holding that the basis for calculating WIP at 42% was not clear - expenses can be capitalised in certain conditions, but if AO wants to capitalise any expenses he has to clearly mention the facts leading to his conclusion - Assessee has never capitalied expenditure Decided against Revenue. Deletion of disallowance u/s 69B of the Act Unexplained investment Held that:- The assessee had hired a premises and paid Rs.20 lakhs to SG, that AO had gathered information from SG but did not inform the assessee about the result of his inquiry - AO has to confront the assessee with the information that he collects behind the back of the assessee and uses against it - the AO has violated the basic principle of natural justice and only on this basis ground of appeal taken by him can be dismissed - the FAA has held that transaction was with the SM it is not known whether assessee had hired any other premises besides the SG thus, the matter is required to be remitted back to the FAA for fresh consideration Decided in favour of Revenue. Deletion on account of service tax Held that:- The assessee was not routing the transactions of ST through the P&L A/c. and that it was dealing with ST only in the balance sheet - FAA has given a finding of fact that the basis for making addition was incorrect the order of the FAA is upheld Decided against Revenue. Disallowance of cash expenses on estimate basis Held that:- FAA rightly mentioned that the AO had not verified even a single bill or voucher that could be treated as bogus - He made a lump sum addition on ad hoc basis the approach has been rightly rejected by the FAA - But, while granting relief, FAA restricted the disallowance to 20% - the FAA has also not identified the bills/vouchers that could be disallowed - FAA could have directed the AO to furnish a remand report in this regard or could have directed the assessee to filed further details of payments of wages and food but, FAA choose not take any of those steps and held that there was possibility of expenses being personal/ non-professional in nature - In absence of any detail it could not be held that as to which expenditure could be termed as non-professional expenditure thus, the order of the FAA is reversed Decided in favour of Assessee. Possibility of incurring of expenditure cannot take place of evidences and tax liability cannot be fastened to an assessee on the basis of some possibility.Therefore, we are not able to persuade ourselves to confirm the order of the FAA.Reversing the order of the FAA, we decide effective ground of appeal in favour of the assessee. Disallowance of adhoc expenses 20% of wages and conveyance Held that:- FAA was correct in holding that disallowance should not be made for the material purchased -FAA has restricted the disallowance to 20% of wages and conveyance expenditure - But no reason has been given for sustaining the partial disallowance - without pointing out the mistakes in the books of accounts or in the vouchers/bills maintained by the assessee, no addition could be made under any head of expenditure - AO had two occasions to pass a reasoned order or bringing the relevant facts on record - But, he did not apply his mind the order of the FAA is reversed Decided in favour of Assessee.
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2014 (4) TMI 780
Applicability of section 2(22)(e) of the Act Deemed dividend - Transaction with subsidiary company Held that:- Relying upon Commissioner of Income-tax Versus Parle Plastics Ltd. [2010 (9) TMI 726 - BOMBAY HIGH COURT] - various factors and circumstances need to be looked into while considering whether a part of the business of the company is its substantial business - CIT(A) appears to have not properly appreciated the submissions made before him in the form of written submissions - the AO as well as the CIT(A) considered the expression substantial part only with reference to the amount of income, i.e. whether major part of the income is from inter corporate deposit or not and did not appreciate the other factors but the fact remains that even to consider an activity as substantial part of its business activity various other factors are to be looked thus, the matter is remitted back to the CIT(A) to obtain the details of BSPL and analyse as to whether the loan was given in the ordinary course of its business and whether it was a substantial activity or not Decided in favour of Assessee.
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2014 (4) TMI 779
Deletion on account of difference between income appearing in the TDS certificates and income offered for taxation Held that:- If a particular amount as per TDS certificate has been availed against which no corresponding income is shown, then the course open to the Revenue is to deny the benefit of such TDS credit to the assessee and not to make addition for any income - As no specific instance has been pointed out by the AO that a particular TDS credit was claimed by the assessee against which no corresponding income was shown, the general submission made on behalf of the Revenue cannot be accepted Decided against Revenue. Deletion on account of non-inclusion of Excise duty Duty pertaining to closing stock of raw material Contravention of section 145A of the Act Held that:- Similar disallowance was made by the Assessing Officer u/s 145A on account of non-inclusion of Excise Duty pertaining to the closing stock of raw material for the immediately preceding year the decision in CIT Vs Mahavir Aluminum Ltd. [2007 (11) TMI 41 - HIGH COURT, DELHI] followed - No distinguishing features for the current year have been pointed out by the revenue the order is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue. Deletion of disallowance of excess claim of depreciation Depreciation on scanners and CD writers @ 60% - Held that:- The decision in DCIT Vs Datacraft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] followed - when a device is used as part of the computer in its functions, then it would be termed as a computer the order of the CIT(A) for deletion of disallowance is upheld - Decided against Revenue. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules Held that:- If an assessee has interest free funds as well as interest bearing funds at its disposal then the presumption would be that the investment were made from interest free funds Relying upon CIT Vs Reliance Realities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - if the interest free funds available at the assessees disposal are more than the investments made which give exempt income then the presumption would be that such investments were financed out of the interest free funds available at the assessees disposal also in CIT Vs Suzlon Energy Ltd. [2013 (7) TMI 697 - GUJARAT HIGH COURT] it has been held that no disallowance of interest u/s 14A can be made if own capital is more than the investment fetching exempt income - necessary details are not properly forthcoming, thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (4) TMI 778
Rejection of application of approval u/s 80G(5)(vi) of the Act No details or documents furnished - Condonation of delay - delay of 49 days - Held that:- The assessee was failed to produce any copy or evidence of any representation which was filed by the assessee before the DIT(E) - Any application/representation etc., whether maintainable or not maintainable, can be filed before him in writing and not orally the assessee has taken a false plea of filing any such representation - Though the period of delay is 49 days only but the assessee should have come with clean hands before the Tribunal with a reasonable explanation as to what prevented it from filing the appeal assessee has failed to explain as to which of the finding arrived at by the DIT(E) was wrong or not justified - Even no details or documents have been produced before us in support of the claim of the assessee trust - no copy of objects of the trust has been furnished before us despite a specific query by us in this respect thus, there is no reason to interfere in the order of DIT(E) Decided against Assessee.
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2014 (4) TMI 777
Disallowance of expenses u/s 14A of the Act Nexus between expenditure incurred and the income not forming part of the total income - Held that:- Before the CIT(A), assessee contended that sufficient interest free funds were available with the assessee company and the disallowance u/s 14A was not warranted - the major income consisted of only commission, rent and there is no other business activity - The incurring of interest is in no way connected with earning of this income - out of total funds of Rs.12.75 crores, funds amounting to Rs.2.37 crores were invested in current assets and Rs.27.17 lacks were in the form of fixed assets and accumulated losses leaving behind net funds available to the assessee at Rs.10.11 crores only which were entirely invested in the said investments - the funds invested in the current assets are in the form of loans and advances which also are interest free advances the contention of the assessee that interest free funds were used in the partnership business cannot be accepted thus, there is no infirmity in the order of the CIT(A) Decided against Assessee.
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2014 (4) TMI 776
Applicability of section 80IA(10) of the Act Held that:- Though provisions of section 80IB(8) are applicable, the AO mentioned that the provisions of section 80IB(10) are applicable - Mentioning of wrong provisions of section is not fatal - The intention of the AO was to recompute the profit of Kathua and Kallakal Units by substituting the market value of the goods transferred from Kallakal unit to Kathua unit - the assessee failed to give proper explanation for the peak variation - The contention of the assessee could be accepted that the price charged by Kallakal Unit is market value for the purpose of section 80IA(8) if the Kallakal Unit charges same price for other customers of it - The assessee having failed to offer any satisfactory explanation for exceptional variation in price charged by Kallakal unit to Kathua unit as evidenced by exceptionally low profit in Kallakal Unit in the relevant year and there is always lesser of expenses vis-a-vis sales of Kathua Unit in comparison to the Kallakal Unit - the assessee arranged the transaction between the units in such a manner to increase the profit of Kathua Unit and reduce the profit of Kallakal Unit - the AO is justified in redrafting of Profit and Loss A/c. assessee's three units so as to bring the true profit for taxation. In the preceding year the Department has no grievance and that the expenses incurred were pure and simple administrative expenses, monitoring the requirement of finance and other action which are necessary for running of the business - in the absence of any details made available by the assessee to establish that particular expenses were incurred for its particular unit out of its three units, the expenses have to be treated one for all the three units which has to be divided based on the proportion of the turnover - the assessee having failed to furnish satisfactory explanation to the discrepancies noticed by the AO, including the nomenclature of various commodities mentioned in the sale bills, the assessee's unit-wise accounts are not reliable the AO is justified in redrawing the Profit and Loss A/c. based on the turnover of the assessee's units so as to grant deduction u/s. 80IB of the Act Decided against Assessee. Computation of deduction u/s 80IB of the Act Allocation of expenses Held that;- Deduction u/s 80IA/80IB is allowable in respect of profit derived from the eligible undertaking Relying upon ACIT vs. Asea Brown Boveri Ltd. [2007 (4) TMI 284 - ITAT BOMBAY-E] - the profit derived from the eligible undertaking for the purpose of deduction u/s 80IA/80IB are the net profits derived from the eligible undertakings and such net profit has to be worked out after deducting all expenses, direct or indirect - head office expenses or expenses which are common to all the units will have to be spread over and charged against the receipts of all the units there is no infirmity in the order of the CIT(A) thus, the action of the AO in allocating the head office expenses to Banaskatha unit in the ratio of turnover to work out the profit of the said unit eligible for deduction u/s 80IB Decided against Revenue. Excise duty refund Capital receipt or not Held that:- The decision in CIT vs. Dharam Pal Prem Chand Ltd. [2008 (11) TMI 231 - DELHI HIGH COURT] followed - the assessee being entitled to exemption of Excise Duty, Excise Duty paid from current account and refunded in the next month would not make it any the less income derived from the industrial undertaking eligible for deduction u/s. 80IB of the Act the order of the CIT(A) upheld Decided against Revenue.
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2014 (4) TMI 775
Contravention of section 201/201(1A) of the Act Short deduction of TDS u/s 194J of the act Payment of professional fees Held that:- FAA was of the view that the arrear has accrued since the assessee has inadvertently deducted and deposited the tax u/s 119 J by applying the pre amended rate of 5% - sole deductee during the year for the assessee company was Motorola India Pvt.Ltd., which had duly paid all the taxes for the AY 2008-09 The Decision in Hindustan Cocacola Beverages P.Ltd. vs. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] and Circular of the CBDT No.275/201/95 and IT(B) dt. 29.1.1997 followed - the circular declares that no demand visualized u/s 201(1) of the Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee assessee - this will not alter the liability to charge interest u/s 201(1A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty u/s 271C of the Act thus, there is no infirmity in the order of CIT(A) Decided against Revenue.
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2014 (4) TMI 774
Disallowing the exemption claimed u/s 54 of the Act - Rent from property and capital gains from sale of residential house - Held that:- The decision in Shri M.V. Subramanyeswara Reddy (HUF), Hyderabad [2014 (4) TMI 71 - ITAT HYDERABAD] followed The intention of the parties when the development agreement was entered into and the municipal permissions were obtained, which determine the nature of the property sought to be acquired, and subsequent change in the user of the property does not disentitle the assessee to relief under S.54 of the Act - Even though the property was subsequently leased out to M/s. APP Lab Technology P Ltd, and it has been used for non- residential purposes, the deduction u/s 54F cannot be denied - Mere nonresidential use subsequently would not render the property ineligible for benefit u/s 54F, if it is otherwise a residential property, as held in Mahavir Prasad Gupta Vs JCIT [2005 (10) TMI 231 - ITAT DELHI-G] - The Revenue authorities are not justified in denying the assessee the benefit of relief u/s 54 of the Act thus, the order of the CIT(A) set aside and the AO is directed for fresh examination and grant relief u/s 54 of the Act Decided in favour of Assessee.
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2014 (4) TMI 773
Addition of unexplained investment Held that:- Both the authorities have considered the issue without examining the facts - as seen from the record also, assessee took credit for the gift amount of Rs. 2 lakhs from the father which was confirmed whereas, on the basis of the amount mentioned in the Balance Sheet, A.O. brought to tax an amount of Rs. 3.6 lakhs - even the chit amounts and other amounts received are not examined properly - Both Revenue and assessee are aggrieved on the various confirmations/ deletions by the CIT(A) - thus, the matter is remitted back to the AO for fresh examination Decided in favour of Assessee. Disallowance of expenditure claimed Held that:- CIT(A) partly confirmed the amount there is no reason to differ from the disallowance made by the CIT(A) AO has no basis to disallow the entire expenditure out of the commission earned the order of the CIT(A) upheld Decided against Revenue.
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2014 (4) TMI 772
Jurisdiction of the CIT(A) Admission of additional grounds - Held that:- The ground is not maintainable - survey was conducted on 15.02.2010 and order was passed on 29.03.2010 - The appeal was preferred before the CIT(A), Guntur on 22.04.2010 - The jurisdiction order on which ground was raised and copy placed on record was passed on 10.11.2010 - Since the notification assigning the jurisdiction to CIT(A), Vijayawada was issued after the appeal was preferred before the CIT(A), Guntur there is no reason to consider the Revenue ground thus, the additional grounds cannot be admitted. Deletion made u/s 201(1) of the Act Advance tax paid by the recipient Requirement to made TDS u/s 201(1) of the Act Held that:- Assessee could furnish the details of returns filed with reference to first three items - CIT(A) partly confirmed the order there is no reason to interfere in the findings of the CIT(A) Decided against Revenue. Relief worked out and excess recovery Held that:- The A.O. attached the bank account on 24th January, 2012 i.e., after the CIT(A) has passed the order giving relief, without giving effect to the consequential order and recovered an amount - as per the consequential order passed on 03.05.2012, the net demand payable worked out to only Rs.2,04,333/-. there seems to be no direction for granting the excess recovery thus, the AO is directed to verify the actual short deduction and to determine the amount payable and refund the excess amount collected to the DDO Decided partly in favour of Assessee.
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2014 (4) TMI 771
Validity of setting aside of assessment order u/s 263 of the Act Applicability of section 2(22)(e) of the Act Deemed dividend Loan from company Held that:- The decision in Commissioner of Income-tax Versus Vikas Polymers [2010 (8) TMI 745 - Delhi High Court] followed - the CIT cannot invoke his jurisdiction u/s 263 of the Act for inadequate inquiry - the assessment order can be said to be erroneous only when there is total lack of inquiry on any point - there was no inquiry conducted by the Assessing Officer with reference to the applicability of Section 2(22)(e) with regard to loan claimed to have been taken from ACIL - money received by the assessee prior to sale of shares would be loan to the assessee from the party - no material was placed before the AO and the AO has not at all examined the applicability of Section 2(22)(e) with reference to the loan taken by the assessee from ACIL - before the AO, the assessee denied to have taken any loan - It is only before the CIT that the assessee came with the explanation that the amount received from ACIL was against the sale proceeds of the shares the AO has not at all examined the applicability of Section 2(22)(e) and, it is a case of lack of inquiry. Claim of deduction u/s 54F of the Act Investment in residential house Held that:- The AO did raise the query with reference to Section 54F and the assessee gave reply - the AO did raise the query in this regard and it cannot be said that there was no inquiry by the AO with reference to allowability of Section 54F to the assessee so as to empower the CIT for invoking his jurisdiction u/s 263. The order of learned CIT modified partly - His finding with regard to no inquiry u/s 2(22)(e) and the difference between the net profit as per profit & loss account and the net profit shown under various heads in the computation of income is upheld and the CITs finding with regard to Section 54F of the Act is vacated because the AO did make necessary inquiry with regard to deduction u/s 54F claimed by the assessee - the order u/s 263 is partly modified and the AO is directed for fresh adjudication and to inquire into and re-adjudicate the applicability of Section 2(22)(e) and also the allocation of income under the various heads by the assessee in the computation of income Decided partly in favour of Assessee.
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2014 (4) TMI 770
Jurisdiction of the AO u/s 147 of the Act Issue of notice u/s 148 of the Act Held that:- The belief of the AO that income of the assessee had escaped assessment due to non-filing of the return by the assessee, is well-founded DRP was of the view that the basis for issue of notice u/s 148 is very clear - It was upon survey u/s 133A conducted on 17.02.2009 at the office premises of Huawei India at Gurgaon, which led to the information in the form of documents and statements obtained by the Department revealing that the assessee was having a PE in India - It was on this basis that notice u/s 148 was issued there was no infirmity in the order of DRP - the assessee had a taxable income in India which it did not disclose voluntarily but disclosed only after the issuance of notice u/s 148 - it is a clear case where there was escapement of income due to non-filing of return by the assessee Decided against Assessee. Confirmation of income under DTAA - DTAA between India and China Income accrue/arise in India u/s 5(2) of the Act Deemed to accrue and arise u/s 9 of the Act Income of the Permanent Establishment Held that:- The assessee was unable to controvert the finding recorded by the AO as well as DRP - the Assessing Officer has clearly recorded the finding that the business of the assessee in India is being conducted with active involvement of the employees of Huawei India - Such employees of Huawei India alongwith the employees of the assessee have jointly prepared bidding documents for contracts, negotiated and concluded the contract on behalf of the assessee with its Indian customers - the employees of Huawei India form the sales team of the assessee - Such employees have habitually secured orders in India wholly or almost wholly for the assessee - Various documents found during the course of survey in the form of agreements, purchase orders, copies of contract prove the active involvement of employees of Indian company in the conclusion of contracts on behalf of the assessee - All the facts recorded by the AO and upheld by the DRP have not been controverted this, there is no reason to interfere with the order of DRP Decided against Assessee. Allocation of 30% of total supplies towards software - Bifurcation of the contract price between the hardware and software Held that:- The decision in DIT Vs. Ericsson A.B., New Delhi [2011 (12) TMI 91 - Delhi High Court] followed - The hardware supplied by the assessee contained the software and the software was not separately supplied - the buyer is granted a non-exclusive, non-transferable and non-sub-licensable license to use the software the buyer is granted no title or ownership rights or interest in the software - there was only one contract for supply of equipment which included hardware and software both - the income from supply of the equipment is to be assessed as business income arising from the assessee's business connection/PE in India the AO is directed to rework out the assessee's income Decided in favour of Assessee. Levy of interest u/s 234A and 234B of the Act Held that:- Relying upon DIT-I, International Taxation Vs. Alcatel Lucent USA, Inc. and another [2013 (11) TMI 734 - DELHI HIGH COURT] - what was the stand of the assessee in the return of income filed by it would be relevant for deciding the liability to interest under Section 234B - this aspect has not been considered either by the AO or by the DRP - the orders of authorities below with reference to levy of interest under Section 234B of the Act set aside - thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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Customs
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2014 (4) TMI 803
Imposition of penalty - Misdeclaration of goods - Abetment in pilferage Valuation of the goods - Retraction of statement u/s 108 of the Customs Act Condonation of Delay Hospitalisation after bail Conduct of Accused - Whether there was compulsion, persuasion or coercion in giving a statement under section 108 - Held that:- The earliest opportunity to retract the statement was the time when he was produced before the Magistrate concerned, before whom he could have stated that his statement was recorded either under coercion, threat or exertion - But no such complaint whatsoever came to be made - Though learned counsel for the appellant tries to bring on record a statement dated 8.4.2005 said to have been sent to the department denying voluntary statement u/s 108, no material is found indicating in fact this statement or letter dated 8.4.2005 was sent to the department - In the absence of acknowledging the statement dated 8.4.2005 by the department, the only retraction is by way of reply dated 17.12.2005 - Therefore, Commissioner was justified in opining that retraction was an afterthought and he did not make use of the earliest opportunity to do so when he was produced before the Magistrate concerned - Learned counsel tried to impress this Court that out of fear, he might not have declared so before the Magistrate - Even if it is so, a prudent and reasonable thinking person would not wait till April, 2005 to do so - If his illness was the cause for delay, it appears, he was hospitalised only for two weeks after release on bail - None of the arguments justifies the delay so far as retraction of statement. Opportunity of being heard - Section 124 Held that:- The procedure for confiscation of goods and also imposition of penalty, it only indicates a summary proceedings and no detailed enquiry of any nature - Issuance of show cause notice and reply dated 17.12.2005 are admitted facts - Whatever he wanted to say as defence, was indicated in the reply dated 17.12.2005 and the same was analysed with reference to the facts found on record - Therefore, there is no denial of any opportunity - Substantial justice is extended by reducing the fine of 2,00,000 to 20,000 having regard to the involvement of the appellant This Court is of the opinion, whatever leniency he deserves, is already meted out to him at the hands of Tribunal - Accordingly, no reason to interfere Decided against appellant.
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2014 (4) TMI 802
Authorization to Assistant Commissioner to file appeal against the Order passed by Additional Commissioner - "such authority" - Whether authorization to Assistant Commissioner in terms of Section 129D(2) to file an appeal against the Order-in-Original passed by the Additional Commissioner is legally sustainable Held that:- From bare reading of section 129D(2) as it stood prior to 2006, it is clear that only an adjudicating authority could be directed/authorised to file appeal before the Commissioner (Appeals), being "such authority", for determination of such points arising out of the decision or order as may be specified by the Commissioner of Customs in his order - Even the reliance placed on section 129D(4) by learned counsel appearing for the appellant, in support of his submission, also is of no avail to take their case further - Sub-section (4) of Section 129D of the Act cannot be read in isolation - Thus, no reason is found to interfere with the order dated 30.11.2004 impugned in the present appeal Decided against Appellant.
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Corporate Laws
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2014 (4) TMI 801
Review petition - Appellant seeks review that property at G-58, Sector-6, Noida was not allotted to the company in the family settlement but was allowed to respondent Nos.2 & 3 but the Court records to the contrary - Held that:- The question whether the claim made on the basis of a lease deed stated to have been entered into on 27.07.1982, which is filed not in the course of the appeal proceedings, but only with the review petition, can be entertained and it can be held that the property could not have been the subject matter of the family arrangement is a question which requires to be examined in detail and, therefore, cannot be gone into while exercising the power of review. The error must be manifest on the face of the judgment and should be so clear that no Court would permit such an error or mistake to remain on record. The lease document dated 27.07.1982 admittedly was not before the Court at the time when the appeal was decided. The review petitioner himself had accepted the family settlement for a period of 15 to 16 years and did not raise any question. The review petition itself states that the said lease document is being placed on record along with the review petition. It thus appears to me that I cannot examine the claim under Section 114 of the CPC as it would involve a detailed factual investigation which is beyond the scope of Section 114. - Decided against appellant.
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Service Tax
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2014 (4) TMI 793
Demand of service tax - Original authority dropped the proceedings however Commissioner confirmed the demand of service tax along with interest and penalty - Held that:- tax was demanded on the appellant towards service received from M/s.Atona who had no office in India. We find that the Honble Bombay High Court in the case of Indian National Ship Owners Association Vs Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT] held that service tax could not be demanded from the service recipient prior to 18.4.2006 as the provisions of Rules 2(1) (d) (iv) of Service Tax Rules 1994 ultra vires under the provisions of the Act - Decided in favour of assessee.
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2014 (4) TMI 792
Demand of service tax - construction of complex services - Held that:- Although the activity does not amount to manufacture but once duty on final product has been accepted by the Department then the credit taken by the assessee cannot be denied. Therefore, as per the said decision, applicant has made out a case for waiver of predeposit on account of payment made by them utilizing their CENVAT credit account. Manpower recruitment and supply agency service - Held that:- Towards the demand under the category of manpower recruitment and supply agency service, we find that applicant has only reimbursed salary portion which has been paid by their foreign counterpart is also covered by the decision of this Tribunal in the case of ITC Ltd. Vs. CST, New Delhi [2012 (7) TMI 744 - CESTAT, NEW DELHI] wherein it has been held that the payment of salary by their foreign counterpart in foreign currency abroad is not covered by manpower recruitment and supply agency service as the applicant having the control over the employees and the services of employee have availed by the applicant themselves and they have also reimbursed the salary paid by the foreign counterpart. Therefore, in this count also, the applicant has made out a prima facie case in their favour - Stay granted.
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Central Excise
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2014 (4) TMI 800
Valuation of goods - Inclusion of Pre-Delivery Inspection (PDI) and free after sales service(FASS) charges in the assessable value of the vehicles manufactured and sold by the appellant to their dealers - Held that:- Larger Bench elaborately examined the scope of transaction value defined under Section 4(3)(d) of the Act and took the view that PDI and FASS charges were includible in the transaction value of the motor vehicles sold by the manufacturer to dealers irrespective of whether such charges were collected from the buyers. But, prima facie, this view taken by the Larger Bench in 2010 is seen impliedly overruled by the Honble High Court in the case of Tata Motors Ltd. (2012 (9) TMI 244 - BOMBAY HIGH COURT). Therefore, for the present purpose, we are unable to follow the Larger Bench decision and would like to follow the ruling of the Honble High Court, which is clear enough - Stay granted.
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2014 (4) TMI 799
Duty demand - Bar of limitation - Held that:- period involved in this case is 1995-96 and during the relevant period, the assessee was required to file monthly RT-12 returns along with all the copies of the invoices which were issued from their factory premises. It is undisputed in this case that the appellant had filed the RT-12 returns regularly with the authorities along with the invoices. It is also undisputed that the invoices which were issued by the appellants indicated deduction from the value as permissible deduction under Section 4. In our considered view, when these invoices were filed along with the RT-12 returns with the authorities, the range authorities should have called for an explanation from the appellant as to what were the deductions that was claimed in the said invoices. The range authorities as well as the divisional authorities, kept quiet and did not ask any explanation from the appellant and issued a show cause notice on 23.04.2000 demanding the differential duty. In our view, the appellant has made out the case in his favour on the ground of limitation as the revenue authorities cannot allege suppression of facts, misstatement with intend to evade payment of duty as the RT-12 returns as well as the invoices indicated the discharge of duty liability after the deduction as claimed by the appellant - Decided in favour of assessee.
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2014 (4) TMI 798
Waiver of predeposit and stay of recovery - Duty demand - Denial of CENVAT Credit - Held that:- The definition of "input service" as it stood during the period of dispute includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. Prima facie, the appellant is entitled to CENVAT credit of the service tax paid on advertisement, sales promotion and chartered accountant's service in as much as these are services expressly mentioned in the inclusion part of the definition of "input service". In other words, there is no need to examine "nexus" - Stay granted.
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2014 (4) TMI 797
Applicability of Notification No. 108/95 - Supply made to United Nations or International Organizations working under them - Held that:- there is no dispute of supply of goods to M/s. UNICEF or issuance of certificate. The dispute is that the certificate is in the name of sister concern who was also supplying the goods to the appellant. The appellants contention is that such certificate was produced before the jurisdictional Central Excise Officer. In absence of any challenge to the earlier order of Commissioner (Appeals) we agree with the learned Advocate that substantial benefit should be extended to them - Decided in favour of assessee.
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2014 (4) TMI 796
Duty demand - Penalty - Clandestine removal of goods - Shortage of stock - Cancellation of order - Held that:- apart from shortages detected by the officers at the time of their visit to the appellants factory, there was no other evidence available on record indicating clandestine clearances of such shortages. The appellants representative in his statement had clearly deposed that they take sponge iron to furnace by estimation only and the shortages can be on account of faulty accounting procedure. If that be so, the allegation of clandestine clearances of the produce cannot be upheld against the appellant. It is well settled that charges of clandestine removal are required to be substantiated with production of tangible and positive evidence. As regards confirmation of demand of duty of Rs.36,916/-, I find that the same is based on recovery of a parallel invoice No.70, dtd. 07.07.05 showing clearances of the goods to M/s Amba Steels. The said invoice was admittedly not entered in RG-1 register. The appellants plea that their customer M/s Amba Steels cancelled the order and as such another invoice was issued on the subsequent date, i.e., 08.07.05, cannot be accepted in the absence of any evidence to show cancellation of the order. Even if the order was cancelled, it was obligatory on the part of the appellant to cancel invoice subsequently and intimate the deptt. accordingly. Having not done that, I am of the view that confirmation of demand in respect of clearances made to M/s Amba Steels vide invoice dtd. 07.07.05 is justified - Decided partly in favour of assessee.
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2014 (4) TMI 795
Availment of CENVAT Credit - Whether, for the period of dispute, CENVAT credit on outdoor catering service was admissible to the appellant - Held that:- it appears that a manufacturer of excisable goods can claim CENVAT credit on outdoor catering service for any period prior to 1.4.2011 (the date on which this benefit was forbidden) where he employed more than 250 workers in his factory and did not recover any part of the cost of the services from his employees. Accordingly, there will be waiver of predeposit and stay of recovery in respect of the adjudged dues - Stay granted.
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2014 (4) TMI 794
Extension of stay order - Stay order vacated by High Court - Held that:- As we have already noted, this order waived predeposit in view of the fact that no duty demand had since been quantified. Now that the duty demand stands quantified and the party's W.P. stands dismissed, our Order dated 23.01.2009 will have no force. This apart, the stay Order did not grant any stay of recovery either - Decided against assessee.
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2014 (4) TMI 791
Waiver of pre-deposit - Denial of benefit of Notification No. 108/95-CE dated 28.8.1995 - supplies were made to the contractor and not the projects directly and the contractor might not have diverted the goods - Held that:- Following decision of M/s Nawa Engineers & Consultants Pvt. Ltd. vs. Commissioner of C. Ex., Hyderabad [2014 (4) TMI 370 - CESTAT BANGALORE] - Stay granted.
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CST, VAT & Sales Tax
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2014 (4) TMI 808
Interim directions Pre-deposit - Demand of tax Reopening of the TIN Number - Punjab General Salex Tax Act, 1948 - Held That:- The Court directed the respondents to open the TIN number of the applicant seized under Rule 51-A of the Rules and assessee will deposit a sum of Rs.10 lacs within two weeks' time and also furnish bank guarantee for the balance amount of 7 lacs approximately If the petitioner fails to comply with aforesaid order, the respondents would be at liberty to recover the entire tax due for the assessment year 2011-12 by adopting coercive measures Interim stay granted.
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2014 (4) TMI 807
Rate of Tax - Sale of batteries to Railways - Entry 76 of third Schedule or Residuary Clause Classification Interpretation of Statute - Karnataka Value Added Tax Act, 2003 - Levy of penalty - Whether the batteries are part of railway coaches, wagons etc., and fall under Entry 76 of the third schedule - Held that:- Judgment in TATA ENGINEERING AND LOCOMOTIVE COMPANY 1994 (10) TMI 131 - SUPREME COURT OF INDIA] followed- No vehicle can operate or work nor can it be said to have been produced unless tyre, tube and batteries are fixed to it - Use of these items is integrally connected with the ultimate production - They retain their identity as the end product - It is the battery, which is the most integral part of the motor vehicle, without which, a motor vehicle could never have driving force - Entry 52 in the third schedule of the KVAT Act was substituted w.e.f 7-6-2005 and renumbered as Entry 76 which includes the word part thereof, meaning any item like batteries, tyre, tube, etc., which are required in making of railway coaches, wagons, etc. are to be treated as part of railway coaches, wagons etc. - The legislature in its wisdom amended Entry pertaining to the railway coaches, wagons, engines including the word parts thereof'. If the legislature was not intending to tax batteries as part of railway coaches, wagons etc., then perhaps it would have excluded batteries from the Entry and in that situation, Entry would have been railway coach, engine, wagon and part thereof, excluding batteries - Hence, the battery is the part of railway coaches, wagons, engines etc. - The battery being the part of the railway which falls under Entry 76 of the third schedule, would be liable to tax at the rate of 4% u/s 4(1)(a) of the Act and not u/s 4(1)(b) under residuary clause - Further, the Government by notification dated 24-3-2008 invoking its power u/s 4(3) reduced the tax from 12.5% to 4% w.e.f. 1-4-2008 on the sale of batteries to the Indian Railways - Hence, it is clear that the battery is an integral part of the railway coaches, engines and wagons and falls under the part thereof under Entry 76 - Hence, it has to be taxed under Section 4(1)(a) No need found to interfere with the order of Tribunal - Decided in favour of assessees
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2014 (4) TMI 805
Claim of benefit under Entry 53 - Classification of VSATs - Whether Tribunal was justified in holding that VSATs are not covered by Entry 53 in the third schedule to the Karnataka VAT Act overlooking item No.5 in the Notification dated 06.04.2006 Interpretation of Statute - Held that:- After carefully perusing Rules including general explanatory notes and examining the notification dated 6-4-2006 and also Entry No.53 of the third schedule to the Act this court has also gone through the impugned orders There is substance in the submissions for assessee to the extent that the Rules for interpretation of the notification were not taken into consideration by the Tribunal - Tribunal did not interpret the entries in the table, as reflected in the notification dated 6-4-2006, in the light of these rules which provide for interpretation of the Notification matter remanded back to tribunal - Decided in favour of assessee.
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2014 (4) TMI 804
Collection of penalty without order - Section 53(12)(c) of the Karnataka Value Added Tax Act, 2003 - Non-production of E-sugum form Held that:- E-sugam was generated before commencement of the journey and that is on record - It is the duty of the officer to verify it - If the authorities have not verified, assessee cannot be held responsible for such lapse. Difference in the Serial No. of invoices Held that:- Assessee has instruction to submit the consignor has more than one units from where the products is supplied depending upon its availability at each counter, and separate invoice books are maintained and used and therefore part of the consignment is from one unit and part of the consignment is from the another unit, though on the same day it was consigned - Thus, serial number depends on the book used. Notice to assessee of alleged contravention Held that:- On perusal of records it is clear, the officer has passed the impugned order on 6.4.2013 after collecting the penalty on 27.3.2013, but perused the impugned order imposing penalty later which is described as vitiated and being in contravention of Section 53(12)- The procedure contemplated u/s 53(12) pre supposes that the notice need to be issued to show cause, and if it is found no insufficient cause regarding the alleged violation is shown, penalty could be imposed - Therefore, collection of penalty without an order u/s Section 53(12)(c), is illegal and can hardly be sustained - The order passed by the respondent imposing penalty u/s 53(12)(c) shown to be illegal, Annexure - H is quashed - The writ petition is allowed and the respondent is directed to refund the penalty of ₹ 2,48,064/- deposited by assessee towards penalty Decided in favour of assessee.
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Indian Laws
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2014 (4) TMI 806
Whether the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012 and the notifications issued pursuant thereto are in any manner ultra vires Article 19(1)(g) of the Constitution of India or violative of any other provisions of law Constitutional Validity of Order & Notification Restriction on sale of Unregistered BIS products Reasonable Restriction - Right to Carry on Business Article 19(1)(g) - Held that:- The notification restricting the sale from 3rd July 2013 onwards of the products which are not registered with the BIS department is in the interest of the people at large because if something goes wrong then nobody would be held responsible for the same and in the process, the innocent consumer will suffer This is not a case where the parallel imports are completely stopped or banned but are permitted subject to certain restrictions like submitting the products for testing to the BIS recognized labs to comply with the Order, 2012. Article 19(1)(g) read with Article 19(6) of the Constitution of India spells out fundamental rights given to the citizens to practice any profession or carrying on any occupation, trade or business so long as it is not prevented or is within the frame work of the regulation, if any - The restrictions permitted to be imposed by sub-clauses (2) to (6) of Article 19 must be read as a whole, each throwing light on the scope of the other and that the common thread running through these several provisions was the ground of public policy understood in a comprehensive sense - Every public statute was enacted in the public interest and, therefore, both public policy and public interest demanded its enforcement - The public interest justifying the restrictions might, therefore, arise from the very provisions of the enactment and might be grounded on the necessity to prevent its evasion. The restrictions permitted by sub-clauses (2) to (6) of Article 19 follow a pattern i.e. they are imposed by the legislature for the reasons of public policy - The aspect of public policy involved in the facts of each of the several fundamental rights conferred by the several sub-clauses of Article 19(1) might defer but one underlined principle, requirement of public policy, runs through various clauses of restrictions and pervades the scheme There is no justifiable reason found to declare the impugned Order, 2012 and the consequent notifications as ultra vires - The petition fails and is rejected Decided against the petitioner.
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