TMI Tax Updates - e-Newsletter
April 27, 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:
Reopening of assessment - there is a nexus between the reasons recorded and the belief that income had escaped assessment because of fully and truly information having not been furnished by the assessee - reopening sustained - HC
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Income Tax:
Business of advancing money and cash - capital asset v/s stock-in-trade - From the application of funds it cannot be said that the principal business of the assessee is borrowing and lending money. - HC
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Income Tax:
Benefits under Section 10A - STP - in the event that the appellant establishes that the 31 units constitute separate undertakings for the purposes of Section 10A, it would be entitled to the claims made in the revised return - HC
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Income Tax:
Bogus transactions - Once income had not accrued to the assessee in the real sense, then the original return represents wrong statement which was corrected by the assessee by filing a revised return. Therefore, no hypothetical income of the assessee could have been brought to tax. - HC
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Income Tax:
Tribunal has rightly quashed and set aside the assessment under Section 158 BC of the Act on the ground that material collector during the survey was used while framing the assessment u/s 158BC - HC
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Income Tax:
Reopening of assessment - Petitioner is a company in the hospitality sector and we do not see how the amount of premium that has been charged from the subscribers can be questioned without the revenue provided valid reasons. - there is no justification in issuing of notice under section 148 - HC
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Income Tax:
Disallowance to deduct the cost and expenditure incurred in earning income under the head "income from other sources" - What can be taxed is only the net income which the appellant earns after deducting cost and expenditure incurred and administrative expenses incurred by the assessee - HC
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Customs:
Condonation of delay in filing an appeal - Limitation Act including Section 14 would not apply to appeals filed before a quasi-judicial authority - However with regard to condoning delay, where Section 14 may not apply, the principles on which Section 14 is based, being principles which advance the cause of justice, would nevertheless apply - SC
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Corporate Law:
Offence u/s 138 & 142 of the Negotiable Instrument Act - Dishonour of cheques -an employee of the Company signed the complaint & DGM of the Company gave evidence as if he knows everything though he does not know anything. There is nothing on the record to suggest that he was authorized by the Managing Director or any Director - Prosecution proceedings were rightly quashed - SC
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Indian Laws:
Transfer of company / shares without consent - change of hand of the asset including the land in question - authority rightly issued notice demanding transfer fee from each of the respondents - SC
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Central Excise:
Valuation - non inclusion of freight, insurance and unloading charges - it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question - demand confirmed - SC
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Central Excise:
Valuation of goods - no part of the royalty can be loaded on to the duplicate CDs produced by the appellant, the circular dated 19.2.2002 which deals with apportionment of royalty would have no application - SC
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Central Excise:
Valuation of goods - wSponge Iron - the packing charges would not be includible in the assessable value of the goods if the goods are marketable, as such, without being packed. cost of packing of the Sponge Iron in the gunny bags would not be includible in the assessable value - AT
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Central Excise:
Clandestine removal of goods - parallel invoices - Duty evasion - Malafide intention - Preponderance of evidence - Blank copies of invoices found from invoice book show ill intention of respondent manufacturer in absence of any explanation therefore - AT
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Central Excise:
Area based exemption in Jammu and Kashmir - application for fixation of special rate of value addition - If for 2013-14 the appellant opt for Notification 1/2010-CE and also opt for special rate of value addition, the same must be determined in terms of the above formula - AT
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Central Excise:
Area based exemption - when both JMAPL and SE could have availed the full duty exemption under notification no. 50/03-CE - they did not file the declaration for availing of this exemption under belief that there activity does not amount to manufacture, no malafide can be attributed to them. - demand set aside as extended period of limitation not applicable - AT
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Central Excise:
Area based exemption - Manufacturing activity or not - Job work - appellants are in the nature of semi finished goods which require further processing by KEL for being used as parts of the fans, the same cannot be treated as marketable and hence, excise duty would not be chargeable. - AT
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (4) TMI 845
Reopening of assessment - non stating any failure on the part of the assessee to disclose complete and full facts/concealment of facts is bad as submitted by assessee - Held that:- It is in respect of items mentioned at serial no. 2 i.e. payments made to L.G. Electronics, Korea, there is no disclosure with regards to non-resident company having P.E. In India as has been found after survey and as affirmed up to the High Court. We are satisfied that because of non-disclosure of the fact qua the L.G. Electronics, Korea having a P.E. In India, there has not been fully and truly complete disclosure of the material facts which could have led the Assessing Officer to examine as to whether tax was payable on the remittance to the non-resident Indian Company or not. In our opinion in the reasons disclosed for initiating the re-assessment proceedings in the facts of the case, as noticed above, no fault can be found as the assessee had failed to disclosed fully and truly the complete facts in respect of L.G. Electronics, Korea having a P.E. In India to which payments have been made. Thus there is a nexus between the reasons recorded and the belief that income had escaped assessment because of fully and truly information having not been furnished by the assessee. The Assessing Officer has given valid reasons to believe that income had escaped assessment. No illegality in the notice issued under Section 148 - Decided against assessee.
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2015 (4) TMI 844
Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (4) TMI 843
Business of advancing money and cash - capital asset v/s stock-in-trade - Tribunal held that the assesse was not engaged in the business of advancing loans and that money and cash was not its stock-in-trade was perverse and contrary to materials on record and based on irrelevant materials and considerations - Held that:- Copy of the 23rd Annual Report consisting of the statement of accounts of the financial year 1993-1994 from which it appears that the available funds of the company/assessee was about ₹ 11,23,00,000/- consisting of a sum of ₹ 5.56 crores on account of capital and reserve and the balance sum of ₹ 5.67 crores consisting of loans both secured and unsecured. Out of the aforesaid sum about ₹ 2.55 crores were invested in fixed assets comprising of furniture and fixture, office equipment, motor car, equipments given on lease, heavy vehicles given on lease, bottles given on lease and a scooter, about ₹ 52 lakhs were invested in shares and debentures, about ₹ 3.67 crores is invested in inventories consisting of investment in shares and hire purchase transactions; about a sum of ₹ 1.46 crores is receivable on account of lease, hire purchase and others, and a sum of ₹ 5.45 crores were invested in loans and advances both secured and unsecured, part of which has also been lent to the subsidiary referred in the judgment of the learned Tribunal. From the aforesaid application of funds it cannot be said that the principal business of the assessee is borrowing and lending money. Therefore, the view taken by the learned Tribunal is a possible view and by no means is perverse. - Decided in favour of assessee.
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2015 (4) TMI 842
Addition under Section 68 - addition set aside concurrently by the CIT (Appeals) and the ITAT - Held that:- The objective of Section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed on 31.12.2007, the investigation report which was specifically called from the concerned department in Kolkata was available but not discussed by the AO. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the credit worthiness of the share applicants would have been apparent. Even otherwise, the share applicants’ particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee’s account to the share applicants’ account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. - Decided in favour of assessee.
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2015 (4) TMI 841
Benefits under Section 10A - Software Technology Park (STP) - Whether in the event of an assessee’s failure to avail the benefits of a statutory provision, such as Section 10A of the Act, creates an estoppel precluding it from availing such benefits in future? - Held that:- The AO, DRP as well as the ITAT concurrently have rejected the appellant’s claims under its revised return primarily on the ground that the appellant itself did not treat all 31 units as separate undertakings previously, and in fact, for the subject assessment year as well, it originally adopted its earlier approach. On an examination of the authorities relied upon by the appellant, this Court notices that they are overwhelmingly in its favour and therefore, this Court answers the first question in favour of the appellant. an assessee’s treatment of facts in any given manner is not relevant for the purposes of determining liability under the Act. If, on an application of the statutory provision, the party is entitled to the benefits under the Act, the mere circumstance that for the past 5 to 7 years, or even 10 years, it did not claim such benefit would not preclude it from availing it in the assessment year in question. What the appellant cannot resile from is the existence of a given set of facts which it has not challenged earlier. However, if, based on the same set of facts, it now seeks to claim deduction under Section 10A which it had foregone earlier, the appellant’s claim must be allowed, provided, of course, the requirements of Section 10A are satisfied. Therefore, in the instant case, in the event that the appellant establishes that the 31 units constitute separate undertakings for the purposes of Section 10A, it would be entitled to the claims made in the revised return. - Decided in favour of assessee. New units claimed to be separate undertakings for the purposes for Section 10A - Held that:- since the deduction under Section 10A is available to each undertaking, and given the concurrent finding of fact of lower authorities wherein they have held the material on record to be insufficient to treat each of the 31 units as separate undertakings, this Court holds that no interference on this issue is warranted. Consequently, it is held that the 31 units cannot be treated as separate undertakings for the purposes of availing benefit under Section 10A of the Act. Thus, the second question on the merits of the rejection of the claim for deduction under Section 10-A is answered in favour of the revenue - Decided against the assessee.
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2015 (4) TMI 840
Bogus transactions - tribunal part deletion - whether the Tribunal lost sight of the legal provisions and particularly, Section 139(4) and Section 139(5) of the I.T. Act? - Held that:- If the Revenue is trying to show that the relevant transactions were sham and not real, then it has to bring in satisfactory material. The Tribunal found in paras 37 to 40 of the impugned order that the income which was earlier disclosed was not as such because the Agreements were terminable or could have been cancelled. Once they were cancelled, the properties have reverted back to the assessee. They are duly reflected in the balance sheet and as assets of the assessee. There were revised accounts and which were also scrutinized. They were found to be in order and meeting the accounting practice adopted. Therefore, the accounting policy also could not have been faulted. In para 42 of the impugned order, the Tribunal held that income could not have really accrued because of the fact that these Agreements were cancelled. Then the issue of their cancellation has been gone into, and in extensive details. The correct legal principles were applied and a finding of fact is arrived at in para 48, that no income could be said to have really accrued to the assessee as a result of the five transactions in the immovable properties and which income was chargeable to tax in the year under consideration. Once income had not accrued to the assessee in the real sense, then the original return represents wrong statement which was corrected by the assessee by filing a revised return. Therefore, no hypothetical income of the assessee could have been brought to tax. The Tribunal has also found that the requirement of sub-section (5) of Section 139 is thus complied with. It is also found on merits of the revised return that a scrutiny thereof reveals no income accruing to the assessee from the five transactions in the immovable properties, which were cancelled subsequently. Such findings of the Tribunal are essentially on facts. They are consistent with the material placed on record. We do not find that any re-appreciation or re-appraisal thereof is permissible, as such findings of fact are neither perverse nor vitiated by any error of law apparent on the face of the record. The Appeal does not raise any substantial question of law.- Decided against revenue.
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2015 (4) TMI 839
Adoption of value of closing stock - ITAT directing the Assessing Officer to adopt the value of the closing stock as declared by the assessee - Held that:- The objection raised by the assessee on account of the method of accounting is not justifiable, inasmuch as Section 145A deals with the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" and it requires the assessee to follow the method regularly employed by the assessee. In the present case, it is not in dispute that the method of accounting had been altered with effect from the Assessment Year 2001-02. However, the facts reveal that the write off was on account of deterioration in the condition of the non-moving stores since the assessee's plants were located in remote places and near the sea. The non-moving stores and spares were corroded over a period of time due to wear and tear. This method of accounting having been adopted in the earlier years, there was no reason for the Assessing Officer to disallow the same on the ground that the accounting method had changed. Accordingly, we are of the view that the Judgment of this Court in the case of Heredilla Chemicals [1997 (1) TMI 66 - BOMBAY High Court] will not affect the write off by the assessee in the present case being distinguishable on facts. It is not merely on the basis of obsolescence of any particular equipment that the assessee has claimed write off of the slow/non-moving items. The write off claimed is essentially on the basis of deterioration of various materials, including raw-materials and in particular slow moving items of machinery. No substantial question of law arises.
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2015 (4) TMI 838
Revision u/s 263 - whether the Order passed by the AO under Section 143(3) r.w.s. 144A was erroneous and prejudicial to the interest of the revenue? - whether compensation received by the Appellant as per the Consent Terms dated 19.08.1994 was on account of relinquishment of the claim for specific performance and, therefore, the same was liable to capital gains tax ? - Held that:- In the present Appeal, the Tribunal failed to note that in this case as well the specific performance of the agreement was refused. It is erroneously held that the claim of the Assessee regarding specific performance had never been rejected by this Court. A reading of the order passed by the Division Bench leaves us in no manner of doubt that such a Decree was expressly denied. The Consent Terms may constitute an agreement or contract between the parties, however, a Consent Decree is passed after the agreement is placed before the Court and the Court applies its mind and records a satisfaction that the terms are not contrary to law or public policy. That they can be accepted and based on that a Decree can be passed. Therefore, it is not an agreement between the parties, by which the Suit was disposed of but on that agreement there is a seal of approval or satisfaction of the Court and in terms of Order XXIII Rule 3 of the Civil Procedure Code, 1908. In such circumstances, even if there was any interim order in favour of the Assessee in the present case eventually the Suit ended in the Assessee's claim for specific performance being refused and he being entitled to receive the sum stipulated in this Court's order in lieu of the specific performance. In these circumstances, the Assessee was right in urging that he has no right, title or interest in the immovable property. The Tribunal completely misread and misconstrued this Court's order. In the Consent Terms, which are drawn up and based on which the Suit is decreed by the Court, it does not deal with the rival cases on merits. There is no requirement of the Court then passing an order and Judgment on merits of the claim of the parties. The Court is required to apply its mind and consider as to whether the arrangement reached by the parties can be accepted by it. Once it is accepted and an order or decree is passed in terms thereof, then, it is an order of the Court. Thus, the Court has not undertaken any mechanical exercise or has not casually and lightly accepted the terms and approved the same. We do not think that the Assessee had any right left or remaining in him to claim the immovable property, which is subject matter of the oral agreement. That right got extinguished once the specific performance was refused. Even if the refund of earnest money or compensation is the relief granted, it is apparent on a reading of the Specific Relief Act, 1963 that the Court has power to grant relief of possession, partition or refund of earnest money if any person sues for specific performance of a contract for the transfer of immovable property.The agreement for sale of immovable property itself does not create any right, title or interest in the immovable property, which is subject matter of such agreement but creates a right to obtain performance of the agreement by approaching Court of law and seeking a Decree of specific performance in terms of the Specific Relief Act, 1963. It is that limited right which is recognised by law and the difference between contract for sale of an immovable property and sale as emerging from section 54 of the Transfer of property Act, 1882 is thus explained. The Tribunal was not justified in holding that the order passed by the Assessing Officer under section 143(3) read with section 144 A was erroneous and prejudicial to the interest of the Revenue and, therefore, the Commissioner of Income Tax was justified in exercising the jurisdiction under section 263 of the IT Act. The answer is in favour of the Assessee holding that the amount of compensation received by the Assessee/Appellant was not liable to capital gains tax. It is held that the Appellant's case was covered by the ratio of this Court in the case of Commissioner of Income Tax vs. Abbasbhoy A. Dehgamwalla and Ors. [1991 (4) TMI 38 - BOMBAY High Court] - Decided in favour of assessee.
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2015 (4) TMI 837
Validity of the assessment proceedings under Section 158 BC - Held that:- As from the appraisal report in the case of Parmar Group prepared by ADIT (INV), Valsad, which was submitted through additional DIT(INV), Surat, and on perusal it appears that it was a case of survey and there was no search of the premises of the assessee under Section 132 of the Income Tax Act. Whatever the material was collected, was / were during the course of survey at the site office of the Parmar Builders and Developers, Emperor Building, Vapi. Under the circumstances, the material used for framing assessment under Section 158 BC was collected during the survey and not search proceedings under Section 132 of the Income Tax Act. In view of the above, it cannot be said that the learned Tribunal has committed any error in holding the assessment proceedings under Section 158 BC of the Act has invalid. The learned Tribunal has rightly quashed and set aside the assessment under Section 158 BC of the Act on the ground that material collector during the survey was used while framing the assessment under Section 158 BC of the Act. No substantial question of law arise in the present appeals. On the contrary, we affirm the view taken by the learned Tribunal. - Decided against revenue.
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2015 (4) TMI 836
Debt written off - Whether can be allowed to be deducted either in the assessment year 1980-81 or during the year 1984-85 as claimed by the assessee? - Held that:- Considering the assessment in the year 1980-81 is also open in the sense that the reference is pending before us, we think proper course would be to permit the bad debt in the assessment year 1980-81 itself. Any other view would involve the assessee in unnecessary prejudice. As of date, nobody can doubt the debt had become bad in the assessment year 1980-81. The assessee did not have any doubt when he wrote it off. We find that Reserve Bank of India has also, subsequent to the aforesaid assessment year, permitted the assessee to write off the amount. When law permits the assessee to get the deduction, there is no reason why the assessee should not be given the deduction in the assessment year 1980-81 itself. Any other course would involve the assessee in the liability for payment of further tax and interest.
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2015 (4) TMI 835
Treatment of cash deposits - unexplained cash credit by invoking provisions of section 69 - Held that:- In the case before us, the assessee admittedly made an investment of a sum of ₹ 2,01,000/- which was not disclosed by him in the returns filed under Section 139. During search his explanation was that “the said deposits were made out of the cash balance available. In the absence of any proof with regard to such availability of funds, the assessing officer treated the aforesaid deposits as the income of the assessee from undisclosed sources. We have not been impressed by the submissions advanced before us by Mr. Sen, learned Advocate for the assessee for more than one reason. In the first place, no such case was made out before the learned Tribunal. Even assuming that investment of a sum of ₹ 2,01,000/- has been reflected in the final accounts of the assessment year 1987-88 and has duly been offered for taxation, nothing was easier for the assessee than to produce a copy thereof before us which may have tilted the balance in his favour. The fact that the assessee-appellant did not take any such step leaves no doubt in our mind that the submissions are not true. The investment discovered during the search and seizure has not been disputed on facts. Therefore, it was a clear case where Section 69 of the Income Tax Act would be applicable and this is what was done. - Decided against assessee.
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2015 (4) TMI 834
Reopening of assessment - as per reasons recorded the assessee has purchased bonds / debenture of ₹ 50,00,000/- during the FY 2008-09 relevant to AY 2009-10. Also the assessee has claimed high value of refund for AY 2009-10 which requires to be verified - Held that:- Considering the reasons recorded for reopening of the assessment for AY 2009-10 and even considering the affidavit in reply it appears that even as per AO investment made by the assessee in certain bonds as well as high value of refund sought by her required deeper verification. If that be so and in that case, subjective satisfaction and / or belief of the AO while reopening the assessment that the income chargeable to tax has escaped assessment has been viatiated. Even according to the respondent and in the reasons recorded for reopening of assessment, the aforesaid was required to be verified. Therefore, as such the condition precedent for reopening of the assessment under Section 147 of the Act are not satisfied. As per the catena of decisions while exercising the powers under Section 147 of the Act and while reopening of any assessment, the AO must form, on the basis of tangible material a tentative or prima facie opinion that there is an underassessment or escapement of income. As per the catena of decisions, a computed assessment cannot be reopened to make inquiry or further verification of the claim. After due verification and inquiry when AO forms prima facie opinion that income chargeable to tax has escaped assessment in that case only the reopening of assessment under Section 147 of the Act is permissible. The things which are yet to be verified, on that the AO cannot have a subjective satisfaction that income chargeable to tax has escaped assessment. That will be putting a cart before horse - Decided in favour of assessee.
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2015 (4) TMI 833
Bogus expenses - Indirect expenses including interest on Reliance Capital loan - ITAT deleted the addition - Held that:- CIT(A) has elaborately discussed the issue and has recorded that the assessee was involved in the business of “sub-letting” of properties, and during the relevant year, it had taken 45 properties on rent and paid ₹ 49.20 lacs, and while on subletting he received ₹ 56.24 lacs resulting into net surplus of rent shown as business income of ₹ 7.04 lacs. Assessee has utilized ₹ 47.60 lacs was earned as rent and shown under the head “income from house property”. The balance amount of ₹ 114.34 lacs was claimed by the assessee to have been utilized for business of construction. The CIT(A) has further recorded that this fund flow has substance to slow clear nexus of utilization of borrowed fund for earning income in the form of interest, rent income and business income of construction, and has paid TDS on the interest payment wherever applicable. There being no material before us to controvert these findings of the CIT(A), we hold that there is no mistake in the order of the CIT(A) in deciding the issue in favour of the assessee, and accordingly, we hold that it could not be proved by the Revenue that the assessee’s expenditure were bogus or not incurred for business construction - Decided in favour of assessee. Valuation of work-in-progress - ITAT deleted the addition - Held that:- There is no material before us to reject the valuation of work-in-progress which was also supported by certificate of structural engineer, Shri J.P. Shah. In these facts of the case, we hold that there is no mistake in the order of the AO to accept the valuation of closing work-in-progress as certified by the structural engineer in his certificate, and in deleting the addition, and accordingly, the ground of the Revenue is dismissed. We are in complete agreement with the view taken by the Tribunal as well as the learned CIT(A) in deleting the addition - Decided in favour of assessee.
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2015 (4) TMI 832
Penalty imposed under Section 271(1)(c) - reopening of assessment - Held that:- In the present case, the Assessing Officer made additions with respect to the difference in the cost of construction based upon and/or relying upon the DVO's report in the case of one M/s.Manjusha Estate Pvt.Ltd. from whom, the assessee subsequently got the project. It is true that in the present case, copy of the DVO's report was furnished to the assessee during the reassessment proceedings. However, it is required to be noted that except the DVO's report, there was no further tangible material before the Assessing Officer. Therefore, solely on the basis of the DVO's report which, as per the catena of decisions of the Hon'ble Supreme Court as well as this Court, can be said to be the opinion of the DVO only, no addition can be made with respect to difference between the cost of construction determined by the DVO and shown by the assessee. Under the circumstances and in the facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in deleting the additions made by the Assessing Officer on account of difference of the cost of construction which was solely based upon the DVO's report. No interference of this Court is called for and the present appeals deserve to be dismissed as no question of law, much less, any substantial question of law arises in the present appeals. Once the addition made by Assessing Officer is deleted, the necessary consequences would be to delete the penalty imposed under Section 271(1) (c) of the Act. - Decided in favour of assessee.
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2015 (4) TMI 831
Reopening of assessment - nature of share application money received (the intrinsic value of the share in comparison to the excess premium received) is not substantiated by any cogent evidence as could be noticed from records - Held that:- The transaction seems to be entirely an Arms-length transaction. The subscribers are limited companies who are reportedly stated to be public limited companies. The Petitioner is a company in the hospitality sector and we do not see how the amount of premium that has been charged from the subscribers can be questioned without the revenue provided valid reasons. We have not entered into the merits of the controversy. Suffice it to say that apart from being public limited companies, the subscribers include other infrastructure hospitality companies. Having come to this conclusion, we are constrained to hold that there is no justification in issuing of notice under section 148 of the Act in the given facts of the case. There is no lack of disclosure or suppression of any material facts. All queries of Respondent No.2 have been answered by the assessee or the subscribers in question especially when all questionnaires addressed to subscribers were duly answered by the subscribers. We may add a word of caution here. Although the Petitioner has relied upon the decision of this Court in the case of Vodafone [2014 (10) TMI 278 - BOMBAY HIGH COURT] and the department has accepted the said decision and decided against challenging it by issuing a circular, we would not equate all cases of share premium as being covered by the said judgment and circular. In a given case and the given fact situation, assessees may be required to be probed for valid reasons. Thus no justification for reopening of the assessment - Decided in favour of assessee.
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2015 (4) TMI 830
Addition under Section 41(1) - ITAT deleted the addition - Held that:- In the present case there was no remission and / or cessation of the liability during the previous year relevant to the assessment year under consideration. As such, there is no remission and / or cessation of the liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Under the circumstances, as such, no error has been committed by the learned Tribunal in deleting the additions made under Section 41(1) of the Act. The proposed substantial questions of law with respect to deleting the addition made under Section 41(1) of the Act - Decided against the revenue. Additions made under Section 68 of unexplained labour charges - Tribunal restoring the ground relating to giving benefit of telescopic effect to the addition - Held that:- Restoring the grounds raised by the learned Tribunal with respect to the additions made under Section 68 of the Act of unexplained labour charges of ₹ 25,65,634/- is concerned, it is required to be noted that as such the entire issue is remanded by the learned Tribunal to the file of the learned CIT(A) and the matter is remanded to the learned CIT(A). Under the circumstances, with respect to the above, no interference of this Court is called for, as the entire issue with respect to the same would be at large before the learned CIT(A).- Decided against the revenue.
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2015 (4) TMI 829
Disallowance to deduct the cost and expenditure incurred in earning income under the head "income from other sources" - Held that:- Interest income earned by the appellant falls within the category of "other income" what falls for reconsideration is to answer the question as to whether the Tribunal was right in law in holding that the income by way of interest was chargeable to tax under Section 56 of the Income Tax Act without allowing deductions in respect of proportionate costs incurred as permissible under Section 57. It is no doubt true that the appellant did initially claim deduction under Section 80P(2). Upon the pronouncement of the order by the Apex Court, in these appeals referred to supra, the income earned on the interest is declared as "other income" falling under Section 56 of the Income Tax Act. Then the next immediate question that follows is as to whether the entire fund i.e., in deposit with the Bank is taxable or the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from "other sources", the appellant shall be entitled for proportionate expenditure cost incurred in mobilizing the deposit placed in the Bank/s. What can be taxed is only the net income which the appellant earns after deducting cost and expenditure incurred and administrative expenses incurred by the assessee. Answer the question of law and hold that the Tribunal was not right in coming to the conclusion that the interest earned by the appellant is an income from other sources without allowing deduction in respect of the proportionate costs, administrative expenses incurred in respect of such deposits. Appeals are allowed in part. Matter is remanded to the adjudicating authority for quantification of the cost incurred by the appellant and deduction thereof under Section 57(3) of the Act and to pass orders in accordance with law.
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2015 (4) TMI 828
Addition on account of hedging loss treated as speculation loss - ITAT deleted part addition accepting additional evidence - Held that:- As before the learned CIT(A) the assessee filed the monthly purchase and sale quantity of gold on actual basis and purchase and sale quantity of gold in MCX in Excel sheet, which was carved out from the bills issued by MCX during the year and which were already before the Assessing Officer and, therefore, it cannot be said that as such the learned CIT(A) admitted the additional evidence for which opportunity was required to be given to the Assessing Officer as per Rule 46(A)(3) of the Rules. Under the circumstances, the learned ITAT has rightly observed that there is no breach of Rule 46(A)(3) of the Rules as alleged by the revenue. Thus it cannot be said that the learned ITAT has committed any error in dismissing the appeal preferred by the revenue and confirming the order passed by the learned CIT(A) restricting the additions made by the Assessing Officer on account of hedging loss treating it as speculation loss to ₹ 1,01,417/- instead of ₹ 1,06,65,670/-. No substantial question of law arises. - Decided against revenue.
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2015 (4) TMI 827
Unexplained investment in unaccounted purchases and unexplained cash credits introduced to make investment in unaccounted purchases - ITAT allowing the appeal against the order of the CIT (Appeals) who set aside the addition made by the A.O. - Held that:- the balances of two creditors were on the higher side to the tune of ₹ 10 lacs in the balance sheet. The appellant admitted that the figures furnished to the bank were manipulated. The appellant admittedly obtained two sets of accounts which were at a variance. Both the statements of account were audited and signed by the same auditors on the same day. The two sets of accounts were signed by the same partners. No additions were made under Section 68 of the Income Tax Act, 1961 on account of the credits of ₹ 10 lacs. The CIT (Appeals) held that there was no material to show that the appellant made purchases of ₹ 26 lacs outside the books of accounts. In view of these facts, the Tribunal took a different view. The Tribunal also noted that there were also other variances in the two statements of account. It was for the appellant to establish which of the statements were correct. The appellant failed to discharge the onus. - Decided against assessee.
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2015 (4) TMI 826
Addition under Section 68 - interest eligibly paid on the said loans - ITAT deleted the additions - Held that:- From the assessment order, it appears that the Assessing Officer made the addition of ₹ 33,50,000/- under Section 68 by doubting the genuineness of the transactions and creditworthiness of the depositors. It appears that the Assessing Officer made the addition solely on the ground that though number of opportunities were given, the assessee did not produce those seven depositors before him. However, it is required to be noted that the assessee did produce the conformation letters of those seven depositors and also produced the particulars with respect to those depositors such as PAN numbers etc. and, therefore, the learned CIT(A) as well as the learned ITAT have rightly observed that the assessee discharged his initial burden / onus and, therefore, it was for the Assessing Officer to examine those persons and hold necessary inquiry with respect to those seven depositors whose identity was disclosed and even PAN numbers of those seven depositors were also before the Assessing Officer. Under the circumstances and in the facts and circumstances of the case, it cannot be said that the learned CIT(A) as well as the learned ITAT have committed any error in deleting the addition made under Section 68 of the Act and deleting the disallowance of interest paid to various depositors. - Decided in favour of assessee.
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Customs
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2015 (4) TMI 849
Condonation of delay - Power of Commissioner to condone delay beyond the period of 60 days plus 30days - Section 128 - Appeal was pursued before wrong forum - Held that:- On a plain reading of the provisions of the Limitation Act, it becomes clear that suits, appeals and applications are only to be considered (from the limitation point of view) if they are filed in courts and not in quasi-judicial bodies. A number of decisions have established that the Limitation Act applies only to courts and not to Tribunals. The distinction between courts and quasi-judicial decisions is succinctly brought out in Bharat Bank Ltd. v. Employees of Bharat Bank Ltd., [1950 (5) TMI 19 - SUPREME COURT OF INDIA]. This root authority has been followed in a catena of judgments. - one that authorities under the Sales Tax Act are not “courts” and thus, the Limitation Act will not apply to them. Judgment is in line with a large number of authorities which have held that Section 14 should be liberally construed to advance the cause of justice - see: Shakti Tubes Ltd. v. State of Bihar, [2008 (12) TMI 721 - SUPREME COURT OF INDIA] and the judgments cited therein. Obviously, the context of Section 14 would require that the term “court” be liberally construed to include within it quasi-judicial Tribunals as well. This is for the very good reason that the principle of Section 14 is that whenever a person bonafide prosecutes with due diligence another proceeding which proves to be abortive because it is without jurisdiction, or otherwise no decision could be rendered on merits, the time taken in such proceeding ought to be excluded as otherwise the person who has approached the Court in such proceeding would be penalized for no fault of his own. Limitation Act including Section 14 would not apply to appeals filed before a quasi-judicial Tribunal such as the Collector (Appeals) mentioned in Section 128 of the Customs Act. However, this does not conclude the issue. There is authority for the proposition that even where Section 14 may not apply, the principles on which Section 14 is based, being principles which advance the cause of justice, would nevertheless apply. We must never forget, as stated in Bhudan Singh & Anr. v. Nabi Bux & Anr., [1969 (8) TMI 83 - Supreme Court Of India], that justice and reason is at the heart of all legislation by Parliament. Merely because Parson Tools also dealt with a provision in a tax statute does not make the ratio of the said decision apply to a completely differently worded tax statute with a much shorter period of limitation - Section 128 of the Customs Act. Also, the principle of Section 14 would apply not merely in condoning delay within the outer period prescribed for condonation but would apply de hors such period for the reason pointed out in Consolidated Engineering [2008 (4) TMI 668 - SUPREME COURT], being the difference between exclusion of a certain period altogether under Section 14 principles and condoning delay. As has been pointed out in the said judgment, when a certain period is excluded by applying the principles contained in Section 14, there is no delay to be attributed to the appellant and the limitation period provided by the concerned statute continues to be the stated period and not more than the stated period. We conclude, therefore, that the principle of Section 14 which is a principle based on advancing the cause of justice would certainly apply to exclude time taken in prosecuting proceedings which are bona fide and with due diligence pursued, which ultimately end without a decision on the merits of the case. Take the case of a plaintiff or applicant who has succeeded at the first stage of what turns out to be an abortive proceeding. Assume that, on a given state of facts, a defendant - appellant or other appellant takes six months more than the prescribed period for filing an appeal. The delay in filing the appeal is condoned. The plaintiff/applicant files such a proceeding on the ninetieth day i.e. after three months are over. The said proceeding turns out to be abortive after it has gone through a chequered career in the appeal courts. The same plaintiff/applicant now files a fresh proceeding before a court of first instance having the necessary jurisdiction. So long as the said proceeding is filed within the remaining three month period, Section 14 will apply to exclude the entire time taken starting from the ninety first day till the final appeal is ultimately dismissed. The right of appeal within a period of 180 days (which includes the discretionary period of 90 days) from the date of the said order was a right which vested in the appellant. A shadow was cast by the abortive appeal from 1992 right upto 2003. This shadow was lifted when it became clear that the proceeding filed in1992 was a proceeding before the wrong forum. The vested right of appeal within the period of 180 days had not yet got over. Upon the lifting of the shadow, a certain residuary period within which a proper appeal could be filed still remained. That period would continue to be within the period of 180 days notwithstanding the amendment made in 2001 as otherwise the right to appeal itself would vanish given the shorter period of limitation provided by Section 128 after 2001. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 848
Waiver of pre deposit - Classification of goods - paper sizing chemicals - Revenue says that the goods imported were wax only - Classification under CTH 2914 1990 or CTH 3404 9090 - Held that:- it is proper that the appeals should be disposed expeditiously waiving predeposit because of diversity in the classification in different customs jurisdiction. Accordingly, there shall be waiver of predeposit in these appeals during pendency of the appeals and both sides take notice of hearing in view of the huge demand raised due to change of classification and either side may be prejudiced if the appeals are kept pending. - Stay granted.
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Corporate Laws
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2015 (4) TMI 847
Offence u/s 138 & 142 of the Negotiable Instrument Act - Dishonour of cheques - Compliant filed without power of attorney - Complaint filed with out proper authorization - Held that:- Appeal No.73 of 2007 - Case of A.C. Narayanan - In this case Magistrate had taken cognizance of the complaint without prima facie establishing the fact as to whether the Power of Attorney existed in first place and whether it was in order. It is not in dispute that the complaint against the appellant was not preferred by the payee or the holder in due course and the statement on oath of the person who filed the complaint has also not stated that he filed the complaint having been instructed by the payee or holder in due course of the cheque. Since the complaint was not filed abiding with the provisions of the Act, it was not open to the Magistrate to take cognizance. From the bare perusal of the said complaint, it can be seen that except mentioning in the cause title there is no mention of, or a reference to the Power of Attorney in the body of the said complaint nor was it exhibited as part of the said complaint. Further, in the list of evidence there is just a mere mention of the words at serial no.6 viz. "Power of Attorney", however there is no date or any other particulars of the Power of Attorney mentioned in the complaint. Even in the verification statement made by the respondent no.2, there is not even a whisper that she is filing the complaint as the Power of Attorney holder of the complainant. Even the order of issue of process dated 20th February, 1998 does not mention that the Magistrate had perused any Power of Attorney for issuing process.The appellant has stated that his Advocate conducted search and inspection of the papers and proceedings of the criminal complaint and found that no Power of Attorney was found to be a part of that record. This has not been disputed by the respondents. In that view of the matter and in light of decision of the larger Bench in the case of AC Narayanan And Another [2013 (9) TMI 948 - SUPREME COURT], as referred above, we hold that the Magistrate wrongly took cognizance in the matter and the Court below erred in putting the onus on the appellant rather than the complainant Criminal Appeal No.1437 - Case of G. Kamalakar - In this case it is not in dispute that the complaint was filed by one Shri v. Shankar Prasad claiming to be General Power of Attorney of the complainant company. Subsequently PW-1 Shri Ravinder Singh gave the evidence on behalf of the Company under the General Power of Attorney given by the complainant Company. The complaint was not signed either by Managing Director or Director of the Company. It is also not in dispute that PW-1 is only the employee of the Company. As per Resolution of the Company i.e. Ex.P3 under first part Managing Director and Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for prosecution. Under third part of the said Resolution they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. But nothing on the record suggest that an employee is empowered to file the complaint on behalf of the Company. This apart, Managing Director and Director are authorized persons of the Company to file the complaint by signing and by giving evidence. At best the said persons can nominate any person to represent themselves or the Company before the Court. In the present case one Shri Shankar Prasad employee of the Company signed the complaint and the Deputy General Manager of the Company i.e. PW-1 gave evidence as if he knows everything though he does not know anything. There is nothing on the record to suggest that he was authorized by the Managing Director or any Director. Therefore, Magistrate by judgment dated 30th October, 2001 rightly acquitted the appellant. In such a situation, the case of the appellant is fully covered by decision by the larger bench AC Narayanan And Another [2013 (9) TMI 948 - SUPREME COURT] of this Court passed in the present appeal. - Decided in favour of appellants.
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Service Tax
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2015 (4) TMI 863
Waiver of pre deposit - Telecommunication Service - service rendered by the applicant to their customers abroad for which they have paid the amount to the foreign telecom operators - Reverse charge mechanism - Held that:- Following decision of Vodafone Essar Digilink Ltd. Vs. Commissioner of Central Excise, Jaipur [2013 (12) TMI 1016 - CESTAT NEW DELHI] - Stay granted.
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2015 (4) TMI 862
Waiver of pre deposit - Imposition of penalty - Invocation of section 80 - held that:- appellants have short-paid/evaded service tax, by reasons of fraud, and mis-representation of facts by filing false fabricated ST-3 returns, they are liable for penalty action under Section 78 of the Finance Act, 1994, which provides that the penalty shall not be less than, but which shall not exceed twice, the amount of Service Tax not levied, not paid or short paid. As the period of dispute involved in this case is 16.06.2005 to 31.03.2010 the provisions of Section 78- as it stood before its amendment vide Finance Act, 2011, w.e.f. 08.04.2011- will apply - Appellant directed to make pre deposit - Stay granted.
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Central Excise
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2015 (4) TMI 857
Valuation - non inclusion of freight, insurance and unloading charges - Evasion of central excise duty - place of removal of finished goods was different from the factory gate - Held that:- Most of the orders placed with the respondent assessee were by the various Government authorities. One such order i.e. order dated 24.06.1996 placed by Kerala Water Authority is on record. On going through the terms and conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of material, central excise duty, loading, transportation, transit risk and unloading charges etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier namely the assessee. As per the 'terms of payment' clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. The clear intent of the purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only - CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in the case of Escorts JCB Ltd. [2002 (10) TMI 96 - SUPREME COURT OF INDIA] - Obviously the exact principle laid down in the judgment has not been appreciated by the CESTAT. - Decided in favour of Revenue.
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2015 (4) TMI 856
Valuation of goods - Inclusion of royalty amount - Manufacture of duplicate CD - Held that:- Section 4(1)(a) of the Central Excise Act will not apply for the simple reason that price is not the sole consideration for the sale as a master tape had to be handed over by the distributor/copyright holder to the appellant. Since Section 4(1)(b) applies, the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, would apply. - A reading of Rule 6 shows that the value of the goods referred to in the Rule shall be deemed to be the aggregate of the transaction value and the amount of money value of any additional consideration that may flow directly or indirectly from the buyer to the assessee. Both parties relied upon the explanation to further their case. Since the explanation is determinative of the present case, it is important to note that where the master tape is supplied by the distributor who is the copyright holder to the appellant, whether free of charge or at a reduced cost such master tape must be used in connection with the production and sale of goods by the assessee. What is clear from the present transaction is that the master tape contains within it music/picture in digital form. There is no doubt whatsoever that the music/picture supplied on the master tape ought to be valued and has been valued as additional consideration that flowed from the buyer to the assessee, and its value has been accepted at rupee one per CD. Copyright value in the duplicate CD is not used in connection with the sale of such goods inasmuch as no part of the copyright which may have been passed on by the distributor to the assessee is used by the assessee in selling the duplicate CDs to the distributor who is himself the owner of the copyright. Clearly therefore on the assumption that the music/picture embedded in the master tape is inextricably bound with the copyright thereof, the copyright is not “used” by the appellant while selling the duplicate CDs to the distributor. The distributor having paid a lump sum royalty to the producer of the music, then sells, after the job work done by the appellant, the duplicate CDs in the market with the cost of the royalty loaded thereon. Given the fact that no part of the royalty can be loaded on to the duplicate CDs produced by the appellant, the circular dated 19.2.2002 which deals with apportionment of royalty would have no application to the facts of the present case. In the circumstances, the impugned judgment is set aside - Decision in the case Associated Cement Companies Ltd. v. Commissioner of Customs [2001 (1) TMI 248 - Supreme court of India] distinguished - Decided in favour of assessee.
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2015 (4) TMI 855
Demand of interest - failure to pay fortnightly payment in terms of Rule 170G (1)(d) - absence of provision of law to raise interest - Held that:- Parliament, after taking note of this loophole has amended the law by inserting Section 11AA in the Central Excise Act, where it is provided that notwithstanding anything contained in the judgment, decree or order or directions of the Appellate Tribunal or any Court or in any other provisions of this Act or the Rules made there under, the person, who is liable to pay duty shall in addition to the duty be liable to pay interest at the rate specified in Sub-Section (2) where such payment is made voluntarily or after determination of the amount of duty under Section 11AA of the Act. Therefore, this provision is prospective in nature. It has no application to the period prior to 08.04.2011. The period which is the subject matter of this appeal is anterior to the amendment. During the said period, as rightly pointed out by the Tribunal, there was no provision of levying of interest on duty paid after determination of the dispute. - Decided against Revenue.
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2015 (4) TMI 854
Valuation of goods - whether the cost of gunny bags in which the Sponge Iron is packed in the cases in which the goods are dispatched by rail is includible in the assessable value or not - Held that:- There is no dispute that all the sales are at the factory gate and in the cases where the goods are dispatched through trucks there is no special packing. Since the Sponge Iron is sold at the factory gate without being packed, it is marketable as such, in our view the cost of special packing in the cases of transportation through railways would not be includible in the assessable value of the goods and in this regard we are supported by the judgment of the Tribunal in the cases of Goyal M.G. Gases Pvt. Ltd. vs. CCE, Ghaziabad (2014 (8) TMI 657 - CESTAT NEW DELHI). In this judgment, the Tribunal has held that during the period prior to 01/7/200 and during the period w.e.f. 01/7/2000, the packing charges would not be includible in the assessable value of the goods if the goods are marketable, as such, without being packed. cost of packing of the Sponge Iron in the gunny bags would not be includible in the assessable value. As regards, the charges for loading of the goods on to the trucks in the factory, the same would be includible in the assessable value and the duty demand on this account has to be upheld. - impugned order is upheld only to the extent of the duty demand on the loading expenses incurred inside the factory and the rest of the duty demand, interest thereon and equivalent penalty under Section 11AC is set aside. The duty demand, which has to be upheld, is to be quantified by the Commissioner - Decided in favour of assessee.
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2015 (4) TMI 853
Clandestine removal of goods - parallel invoices - Duty evasion - Malafide intention - Preponderance of evidence - Held that:- Municipality record being public record proved the questionable modus operandi of the respondent manufacturer showing movement of clandestinely removed goods. Recording of higher quantity of production after visit by investigation self speak suppression of production prior to search. Suppressed production cleared clandestinely was proved from blank and parallel invoices found by investigation. The dealers tabulated herein before having been found to be buyers of such goods, they supported case of Revenue. Plea of unrealiability of photocopies failed to sustain when signature of director of respondent company therein was found to be same as reported by Govt. document examiner. Blank copies of invoices found from invoice book show ill intention of respondent manufacturer in absence of any explanation therefor. Goods in the factory of respondent manufacturer was found during search to have been unaccounted. It is settled law that Revenue need not prove its case with mathematical precision. Once the evidence gathered by investigation brings out preponderance of probability and nexus between the modus operandi of the respondent with the goods it dealt, and movement of goods from origin to destination is possible to be comprehended, it cannot be ruled out that circumstantial evidence equally play a role - it is not only the photocopy that was used against the respondents, there are other credible and cogent documentary evidence, circumstantial evidence including oral evidence as well as experts report went against the respondents for which stand of Revenue cannot be criticized. The best evidence when demonstrate the modus operandi beginning from finding of unaccounted goods in the factory till parking of clandestinely removed goods and also throw light on the intention behind suppression of production which was established and corroborated by recording of higher quantity after search, the respondents made futile exercise in their defence. - For the clear case of evasion based by cogent and credible evidence came to record, dealing with the other citations made by respondents is considered to be mere academic exercise - Decided in favour of Revenue.
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2015 (4) TMI 852
Area based exemption in Jammu and Kashmir - application for fixation of special rate of value addition - alue addition of 36% specified in the exemption notification - Benefit of Notification No. 56/02-CE as amended by Notifications No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08 - Held that:- Jammu & Kashmir High Court in its judgment in the case of M/s Reckitt Benckiser [2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT] has quashed the amendments to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08 and the effect of the judgment would be that the provisions restricting the benefit introduced in the Notification No. 56/02-CE by these notifications are no longer there. Therefore, in our view, this judgment of Hon ble Jammu & Kashmir High Court would be applicable to those assessees also who had opted for this exemption even after the amendment to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08. Thus those assessees who have set up their units in the areas specified under Notification No. 56/02-CE on or after 06/2/10, have option either to avail Notification No. 56/02-CE or avail the Notification No. 1/2010-CE dated 06/2/10 and in case they opt for Notification No. 56/02-CE, the benefit available to them would not be restricted by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08. If the appellant, however, opt for the Notification No. 1/2010-CE, the question of determination of special rate of value addition by the Commissioner would come. This rate has to be calculated on the basis of the formula prescribed in the Explanation to para 5 of the notification. In this regard, we do not find any mistake in para 17 of the order-in-original dated 31/5/12 passed by the Commissioner as the value addition has been determined as the difference between the sale value excluding excise, sales tax and other indirect taxes during 2011-12 (Rs. 1,05,11,690/-) and cost of raw material and packing material consumed (Rs. 32,30,184/-) - appellant s plea that the cost of raw material and packing material consumed is nil is not correct and the Commissioner has correctly determined the value addition for 2012-13 as 69.27%. If for 2013-14 the appellant opt for Notification 1/2010-CE and also opt for special rate of value addition, the same must be determined in terms of the above formula. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 851
Area based exemption - Manufacturing activity or not - Job work - Activity of winding the wire on the stator and thereafter were putting varnish on the wires wound on the stators, receipt of stamping rotors and electrical grade aluminum and also dies and making cast, machined and painted rotors, which were being sent back to the principal manufacturer - Held that:- duty would be chargeable on the goods being made by the appellant on job work basis only if, those goods are in fully finished condition and the same are being used by KEL as parts of fans without any further processing. But if, the items being cleared by the appellants are in the nature of semi finished goods which require further processing by KEL for being used as parts of the fans, the same cannot be treated as marketable and hence, excise duty would not be chargeable. As regards, the question of limitation it is seen that so far as SE are concerned, there was correspondence between KEL and the Department with regard to sending of semi finished/ raw material to SE for certain job work and hence, it cannot be said that the Department was not aware of the activity of SE. Similarly, in respect of JMAPL, it is seen that during 2004, there was correspondence between them and the Department with regard to the nature of their activity and whether they are eligible for exemption under notification no. 50/03-CE and from this correspondence also it is clear that the Department was aware about the nature of their activity. In any case, when both JMAPL and SE could have availed the full duty exemption under notification no. 50/03-CE just by filing the declaration and they did not file the declaration for availing of this exemption under belief that there activity does not amount to manufacture, no malafide can be attributed to them. In view of this, even if there is any duty demand confirmed against the appellant, the longer limitation under proviso to section 11A(i) would not be applicable and for the same reason, penalty under section 11AC would not be imposable. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 850
Validity of the amending Notification 19/08-CE dt.27.3.08 and Notification 34/08-CE dt.10.6.08 - Refund claim - whether the appellant would be eligible for full refund of duty paid through PLA in the manner specified in this notification or whether this benefit of notification is restricted to the duty payable on the value addition at the rate specified in the exemption notification or duty paid form PLA in the manner specified in this notification, whichever is lower - Held that:- High Court vide its order dated 12.4.2012 in respect of writ petition has ordered that --- implementation of the notification under challenge shall await the result of LPA as is pending judgement dated 23.12.2010 . In our view pending decision of LPA, the department cannot implement amending Notification 19/08-CE dt.27.3.08 and Notification 34/08-CE dt.10.6.08 which have been challenged by the appellant before the High Court. Therefore, appeal filed by the appellant against the Assistant Commissioner s order rejecting the refund claim, cannot be said to be premature. The Commissioner (Appeals) should have disposed of the appeals after decision of the LPA filed by the department against the High Court s judgement in the case of Reckitt Bencksier (India) Ltd. (2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT), and he should have kept the appeals pending till the decision of the LPA and he could not dismiss them as premature. - impugned order is set aside and the matter is remanded back to the Commissioner (Appeals) to decide the disputed refund claim of education cess and S&H cess in respect of the appellant s plea that they have not taken self-credit of education cess and S&H cess, therefore the question of its recovery does not arise. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (4) TMI 861
Detention of goods - documents accompanying the goods are found to be defective - Held that:- Court has considered similar issue in [2015 (4) TMI 537 - MADRAS HIGH COURT] and [2015 (4) TMI 536 - MADRAS HIGH COURT] and passed an order directing the respondent to release the goods on payment of one time tax to be decided by the respondent. In the case on hand, tax component has already been decided. - petitioner is directed to pay ₹ 21,511/- without prejudice to its rights and contentions and on such payment, the respondent is directed to release the goods and the petitioner is at liberty to work out its remedy with regard to compounding fee before the Appellate Authority - Decided conditionally in favour of assessee.
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2015 (4) TMI 860
Suppression of production - Imposition of penalty - Data taken from departmental website - Held that:- When the respondent has referred to certain documents which has been taken from the departmental website, it is the duty of the respondents to furnish the same to the petitioner and call for an explanation and thereafter pass the final order. Since the same has not been given in this case, I have no other option except to quash the impugned order. - Decided in favour of assessee.
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2015 (4) TMI 859
Reversal of credit - Opportunity of hearing - Appearance of petitioner on the basis of visitor's record - Held that:- Visitors book cannot be considered as an one for recording the personal hearing of the petitioner and it could be taken only as an entry to the office. The petitioner shall deposit 10% of the tax amount, as agreed by the petitioner before the authority concerned - impugned order is set aside and the matter is remitted to the authority for fresh consideration - Decided conditionally in favour of assessee.
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Indian Laws
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2015 (4) TMI 858
Demand of RTO Tax - RTO tax on the mobile crain - Held that:- When the Government was the owner of the showel crowler crain upto 14.11.2006, it is not appreciable how the petitioner shall be liable to pay the RTO tax for the period between 1.8.1995 and 14.11.2006/20.11.2006. Under the circumstances, as such, the impugned order so far imposing the RTO tax upon the petitioner for the period between 1.8.1995 and 20.11.2006 cannot be sustained and the same deserves to be quashed and set aside and accordingly, quashed and set aside. So far as the RTO tax liability for the period after 20.11.2006 is concerned, it is the case on behalf of the petitioner that the petitioner had paid entire RTO tax with penalty and interest etc. from 20.11.2006. The aforesaid be considered by the appropriate authority and if it is found that any amount towards RTO tax, penalty and interest is paid by the petitioner for the period after 20.11.2006, the same may be given credit and/or adjusted from any amount found to be due and payable - Decided in favour of assessee.
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2015 (4) TMI 846
Transfer of company / shares without consent - change of hand of the asset including the land in question - Transfer of Interest in company - Non deposit of Transfer levy - Held that:- Monsanto Manufactures Private Ltd. - In the present case the entire shareholding of Goyal family headed by Mr. Amar Nath Goyal in the said company was transferred to the Mehta-Lamba Family. The entire list of shareholders, Managing Director and Board of Directors was provided by Monsanto to the appellant-Corporation vide letter dated 7.5.1994. The record shows that the original subscribers of shares were members of Goyal family and the entire shareholding was transferred to Mehta-Lamba family. Therefore, the original subscribers of shares of respondent No. 1 Company were totally changed. - In this case, the ownership of a huge Industrial plot measuring 14,533 sq. ft. in the prestigious and economically affluent area of Sahibabad (Ghaziabad) has been transferred from Goyal family to the Mehta-Lamba family for material financial gains, by adopting clever means that too without taking written consent of the Lessor i.e. appellant-Corporation. There are many instances/examples in which the lessee gets allotment of huge industrial plots and thereafter sells the same for huge monetary gains. This adversely affects the aims and objectives of appellant-Corporation i.e. the planned development of industrial areas in the State of Uttar Pradesh. - The Hon'ble High Court ought not to have interfered in the matter looking into the public interest involved and Clause 3(p) of the lease deed. U.P. Twiga Fiberglass Limited - It is not in dispute that the appellant-Corporation on 27th May, 1977 allotted huge plot measuring 1,10,926 sq. mtrs. to respondent no. 1 Company in the industrial area, Sikandarabad, Bulandshehar on nominal amount. The respondent no. 1 clearly admitted that it had a huge debt of ₹ 13,14,00,000/- the different financial institutions and, therefore, it sold shares of company, its own shares, shares of promoters and shares of financial institutions to the foreign company, namely, "M/s Rotar Ltd. - There is larger public interest involved in incorporating alteration in "Capital Structure" in Clause 3(p) of the lease deed. There are many instances where the company takes loan from third parties on the security and land and structure allotted to them in lease, keeping in dark the lessor which amounts to incurring liabilities on the property without the knowledge of the lessor. In this case also there was huge amount of debt on the company as it took loan on land and building/factory from different financial institutions. - Therefore, there is public interest involved for which consent of lessor was necessary. M/s Enrich Engineering Works Pvt. Ltd. - It is not in dispute that the huge plot of about 40, 489 & 8.35 sq. yards in the industrial area of Rai Bareilly (U.P.) was allotted by appellant-Corporation to M/s Tyres and Tubes Company Pvt. Ltd. As the said company suffered heavy losses, on 9.1.1996 the company Judge of Allahabad High Court appointed Official Liquidator and perused High Court's Order on 12.3.2004 the said company was sold to M/s Enrich Engineering Works Pvt. Ltd., by the Official Liquidator.arned counsel for the respondent submitted that it was a case of reconstitution and therefore payment of transfer fee does not arise. However, such submission can not be accepted in view of Clause 6.01(E) & (F) of the guidelines. The fact that there is a change of hand of the asset including the land in question by transfer. - Therefore, the respondent is liable to pay transfer fee. M/s Super Tannery (India) Ltd. - In the present case it has not been denied that respondent company M/s Super Tannery (India) Ltd. and the other company Super Agro Tech. Ltd. are family held companies of the same family having common Directors/Promoters. Pursuant to the order of amalgamation by the High Court the plot of land in question namely A-9, A-10, Industrial Area Unnao Site-II which was allotted to Super Agro Tech. Ltd. became the asset of the respondent company M/s Super Tannery (India) Ltd. As per Amalgamation Scheme, all the property, rights and power of Super Agro Tech. Ltd., having its office at 184/170, Jajmau Kanpur was transferred without further act or deed to M/s Super Tannery (India) Ltd. - Thus it is clear that by the order of the Court the premises in question was transferred in favour of the other Company. In view of the aforesaid facts as noticed in each case, we hold that the appellant rightly issued notice demanding transfer fee from each of the respondents and there was no reason for the High Court to interfere with the same. - Decided in favour of appellant.
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