TMI Tax Updates - e-Newsletter
April 9, 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:
Exemption u/s 10(26) - scope and ambit of the words “residing” in the opening portion of section 10(26) - A member of Scheduled Tribe is bound to obtain a certificate of exemption in terms of Section 197 for no TDS - HC
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Income Tax:
Additions u/s 69 - So long as the explanation is not sufficient and it can be termed as deemed income of HUFs, it is not necessary to further examine the aspect as to whether there was any income earned by the Company and as to whether there was diversion of money to the HUFs or not? - HC
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Income Tax:
Disallowance u/s40A(2)(b) - commission paid to his son, daughter and daughters-in-law - the fact that the recipients of the alleged commission in the present case had paid tax at the highest level is irrelevant to the question whether the appellant was entitled to deduct the amounts paid to them as commission - HC
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Income Tax:
Disallowance u/s 40A(2)(b) - huge salary paid to partner - it is not that the said person was taxed at a lower rate than that of the assessee-firm - the AO could not substitute the wisdom of the partners of the firm to hold that the salary was excessive and unreasonable - HC
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Income Tax:
Revision u/s 263 - CIT was not able to make up his mind and he has remanded the matter back to the Assessing Authority to find out whether it constitutes capital gain or business income. Thus Commissioner had no justification to invoke Section 263 - HC
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Income Tax:
Registration certificate under Section 12AA - the respondent-trust had already applied for amendment in the trust deed providing "dissolution clause" and the same is pending before the learned Charity Commissioner - CIT to reconsider the request - HC
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Income Tax:
Trust - The beneficiaries have not set up the Trust. Therefore it cannot be said that the beneficiaries have come together with the object of carrying on investment in mezzanine funds which is the object of the trust. The beneficiaries are mere recipients of the income earned by the trust. They cannot therefore be regarded as an AOP - AT
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Income Tax:
Unexplained cash credit u/s.68 - For a scrip to trade at nearly 50 times its’ face value, only a few months after its issue, only implies, if not price manipulation, trail blazing performance and/or great business prospects is conspicuous by its absence, i.e., even years after the transaction/s - The company is, by all counts, a paper company - AT
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Income Tax:
TDS - payment of channel placement charges to cable operators/MSOs - assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a sub-contractor - TDS to be deducted u/s 194C and not u/s 194J - AT
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Customs:
Refund - Unjust enrichment - he records maintained did not reflect the duty paid on the raw materials as the amount due/receivable from the department. In the absence of such an evidence, an inference drawn by the Cost Accountant cannot be said to be reasonable rebuttal of the statutory presumption - refund denied - AT
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Service Tax:
Exemption to Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation - Retrospective or prospective - it cannot be considered as clarificatory in order to give retrospective effect - HC
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Service Tax:
Challenge to the show cause notice - CENVAT Credit - no reason to interfere at this stage in exercise of our extra-ordinary jurisdiction when the issue can be raised before the appellate Tribunal - HC
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Service Tax:
CENVAT Credit - Commercial training and coaching services - Once the students pass their coaching classes, the activities of catering, photography and tent services cannot be said to have been used to provide output service - benefit of credit denied as not an input service - HC
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Central Excise:
Marketibility of goods - sale of spare part of automobile procured locally and imported after packing or unpacking - MRP based levy u/s 4A - prima facie case is against the appellant - AT
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VAT:
Claim of refund - activation of SIM cards - levy and collection of VAT is without authority of law and violative of Article 265 of the Constitution of India. - Authority of state to levy VAT - State of Haryana shall transfer the amount of VAT collected from the petitioner to the Service Tax Department of the Union of India - HC
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VAT:
Classification of goods - the honeycomb partition frames manufactured and supplied by the assessee to the railways, form part of a rail coach and falls within Entry No.76 to the Third Schedule of the KVAT Act. - HC
TMI Short Notes
Articles
Notifications
Customs-
10/2015 - dated
7-4-2015
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ADD
Seeks to levy anti-dumping duty on import of Poly Vinyl Chloride Resin, originating in or exported from Norway and Mexico.
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09/2015 - dated
7-4-2015
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ADD
Seeks to levy anti-dumping duty on import of Flexible Slabstock Polyol of molecular weight 3000-4000, originating in or exported from Australia, EU and Singapore.
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08/2015 - dated
7-4-2015
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ADD
Seeks to extend the validity of notification No 12/2012- Customs (ADD) dated 08.02.2012 for a further period of one year.
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36/2015 - dated
7-4-2015
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Cus (NT)
Amends Notification No. 12/97-CUSTOMS (N.T.), dated the 2nd April 1997
DGFT-
02 /2015-2020 - dated
7-4-2015
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FTP
Export Policy of Onions- reduction in Minimum Export Price (MEP)
Income Tax-
112/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Shri Annapurna Trust, Gujarat
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111/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sundaram Medical Foundation, Tamil Nadu
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110/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Jain Social Federation's Anandrishiji Hospital & Medical Research Centre, Maharashtra
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109/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Cancer Patients Aid Association, Mumbai
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108/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Amar Seva Sangam, Tamil Nadu
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107/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Delhi Association of the Deaf, New Delhi
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106/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –National Association for the Blind, Gujarat
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105/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Delhi Council for Child Welfare, Delhi
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104/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Hinduja Foundation, Mumbai
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (4) TMI 270
Entitlement to grant of exemption under section 10(26) - scope and ambit of the words “residing” in the opening portion of section 10(26) - Whether a member of a Scheduled Tribe as defined in Clause 25 of Article 366 of the Constitution of India is entitled to grant of exemption under section 10(26) only when he is working in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or when he is posted anywhere in the country? - Obtain a certificate of exemption from the Income Tax Authorities in terms of section 197 of the Act and validity of certifaicate Held that:- A member of a Scheduled Tribe would be entitled to the benefit of Section 10(26) only when he is posted in the specified areas. Once he is posted outside the specified areas then he ceases to reside in the specified area and the income does not accrue to him in the specified area. The scope and ambit of the word ‘residing’ has to be given its natural meaning that a person has an abode and is living in a particular area for his work and livelihood for a reasonably long length of time. However, whether a person is actually residing or not is a question of fact to be decided on the facts of each case. Any member of a Scheduled Tribe declared to be so under Article 342 of the Constitution, even though he does not belong to the specified area, would be entitled to benefit of Section 10(26) when posted to at a station in the specified area and residing therewith in connection with his employment. A member of Scheduled Tribe originally hailing from the specified area would not be entitled to the benefit of exemption under Section 10(26) when he is residing outside the specified areas. A member of Scheduled Tribe is bound to obtain a certificate of exemption in terms of Section 197. - Validity of the certificate will be for one assessment year only. - Decided in favour of assessee.
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2015 (4) TMI 269
Additions under Section 69 in the hands of the appellant - HUF on substantive basis? - ITAT confirming estimate of agricultural income made by the respondent and further confirming the quantum of agricultural income based on inaccurate method of calculating the same - Held that:- We find that the submissions made by the learned Counsel appearing for the Assessee(s) as well as the Revenue on the point of taxable liability, whether as that of the HUFs or of the Company are on nonexistent premise. Once the explanation is not found to be satisfactory and the finding is recorded, as per the provisions of Section 69 of the Act, it would be the deemed income of the HUFs - Assessee(s). Once it is treated as to be deemed income of the HUFs - Assessee(s), naturally the taxable liability would be upon HUFs - Assessee(s). So long as the said finding that the explanation is not sufficient and it can be termed as deemed income of HUFs remains, it is not necessary for us to further examine the aspect as to whether there was any income earned by the Company and as to whether there was diversion of money to the HUFs or not? If it is found on facts that the income was as that of the Company, such question may be required to be examined as to whose liability would be to pay tax. Under these circumstances, we find that the decision upon which reliance has been placed by the learned Counsel for the Assessee(s) on the point of taxable liability would be of no help to the appellant(s). The contention raised by the Assessee(s) on the quantification of the agricultural income of the HUFs as assessed by the A.O., and upheld by the Tribunal, in our view, could again be in the arena of appreciation and reappreciation of evidences on record. After considering the material on record, once the ultimate fact-finding Authority has arrived at the reasonable assessment of the income, we do not find that the same should be upset by undertaking the process of re-appreciation of the evidence. At the level of A.O., earlier assessment returns filed by the Assessee(s) for agricultural income of HUFs are considered, the mode adopted is of the average income and thereafter index is applied. Such cannot be said to be as unreasonable approach on the part of the Assessing Officer, nor can it be said that the finding recorded by the Tribunal was unreasonable or perverse to the record, which may call for interference in the present appeals wherein the judicial scrutiny is limited to only substantial question of law. - Decided in favour of the Revenue
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2015 (4) TMI 268
Disallowance under Section 40A(2)(b) - commission up to 5% aggregating to ₹ 16 lacs to his son, daughter and daughters-in-law - Held that:- Assessing Officer’s finding that the alleged commission was not an expenditure incurred by the appellant wholly and exclusively for the purposes of the business as per the provisions of Section 37 of the Act cannot be faulted. It is an inference which can reasonably and legitimately be drawn. The Assessing Officer accordingly justifiably disallowed the expenditure of ₹ 16 lacs and added the same to the assessed income. He also initiated penalty proceedings under Section 271(1)(c) of the Act.In the present case, it has been held that the appellant had not established that the payments by him to the said persons were by way of commission. The appellant’s case in this regard has been disbelieved. As we mentioned earlier, this was purely an issue of fact and raised no question of law. In the circumstances, the fact that the recipients of the alleged commission in the present case had paid tax at the highest level is irrelevant to the question whether the appellant was entitled to deduct the amounts paid to them as commission. - Decided in favour of the Revenue. Disallowance on account of rent paid - appellant claimed a deduction of a sum of ₹ 10,50,806/- as rent paid to three persons who also fall within the ambit of Section 40A(2)(b) of the Act - Held that:- C.I.T. (Appeals) upheld the disallowance of deduction for the same reasons, namely, that there was no evidence to support/justify the deduction. The view that the payment of TDS on the said amount is irrelevant is correct. he Tribunal observed that the appellant had paid ₹ 14,40,000/-towards rent which was approximately 370% more than the rent paid in the preceding year namely ₹ 3,89,194/-. This is purely a question of appreciation of facts which in the facts of this case cannot be held to be perverse. No question of law arises in respect thereof. - Decided against assessee.
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2015 (4) TMI 267
Conversion of interest into a term loan - whether the Tribunal was justified in holding that conversion of interest into a term loan can be taken as a deemed payment for the purpose of Section 43B of the Act? - Held that:- As from reading of Explanation 3C, in our opinion, the question as raised in the present appeals stands answered without further discussion. This provision was inserted for removal of doubts and it was declared that deduction of any sum, being interest payable under clause (d) of Section 43B of the Act, shall be allowed if such interest has been actually paid and any interest referred to in that clause, which has been converted into a loan or borrowing, shall not be deemed to have been actually paid. Thus, the doubt stands removed in view of Explanation 3C. This provision was considered by the Madhya Pradesh High Court in Eicher Motors Limited Vs. Commissioner of Income Tax (1996 (8) TMI 517 - MADHYA PRADESH HIGH COURT) to hold that in view of the Explanation 3C appended to Section 43B with retrospective effect from 01.04.1989, conversion of interest amount into loan would not be deemed to be regarded as actually paid amount within the meaning of Section 43B of the Act. It is not in dispute that the assessment years with which we are concerned in the present appeals are covered by Explanation 3C, which was inserted by the Finance Act, 2006 with retrospective effect from 01.04.1989. In this view of the matter, the appeals filed by the Revenue deserve to be allowed. - Decided in favour of the Revenue
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2015 (4) TMI 266
Disallowance u/s 40A(2)(b) - huge salary paid to Mr. R.S.Saluja vis-avis the profits & turnover of the firm as well as average salary being paid to the management personnel by its group company, i.e. SEL Manufacturing Ltd. which has more than 13 times the turnover than the assessee firm - ITAT deleting the disallowance - Held that:- The said person is successfully running the business of the group which had a return of more than thousand crores, on account of his experience. The main company he had established way back in 1969 and due to his experience of over four decades, he had also been able to help the respondent/assessee concern to achieve the sale level of ₹ 48 crores. Merely because the company was, at present, earning low monthly taxable profits, would not be a ground, as such, to disallow the salary to the tune of ₹ 2 lacs per month, which Shri R.S.Saluja was being paid, keeping in view his background, experience and therefore, it cannot be said that he was a man of straw. The CIT and the Tribunal both have recorded a finding that it is not that the said person was taxed at a lower rate than that of the assessee-firm and therefore, they had correctly held that the AO could not substitute the wisdom of the partners of the firm to hold that the salary was excessive and unreasonable. The findings which have been recorded are purely on facts arising out of the peculiar circumstances of the case and no question of law, as such, arises out of the facts of the case which would require adjudication as has been sought to be contended. - Decided against revenue.
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2015 (4) TMI 265
Reopening of assessment - Held that:- As the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, thus of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details/copy of the statement based on which the impugned assessment order has been passed. - Decided in favour of assessee.
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2015 (4) TMI 264
Revision u/s 263 - amount claimed on share transaction as Capital Gain to be treated as income from business - Tribunal holding that the assessee has sold the shares in a solitary transaction and the same was not treated as stock in trade, the income arising from sale of shares has to be assessed under the head 'Capital Gains' - Held that:- The material on record clearly establishes that the share which is sold by the assessee was held by the assessee a decade back which has been reflected in the audited account as investment. It was never considered as part of stock-in-trade. It was a solitary transaction. In the light of this undisputed facts, when a possible view is taken by the Assessing Authority and accepted the case of the assessee that it has resulted in capital gains, as rightly held by the Tribunal, the Commissioner was in error in treating it as a business income. In fact, he was not able to make up his mind and he has remanded the matter back to the Assessing Authority to find out whether it constitutes capital gain or business income. Thus Commissioner had no justification to invoke Section 263 of the Income Tax Act to initiate proceedings - Decided in favour of assessee.
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2015 (4) TMI 263
Registration certificate under Section 12AA - whether on the ground that the trust deed does not provide for "dissolution clause", whether the Commissioner can deny the registration under Section 12AA? - Held that:- As respondent-trust has stated that as such the respondent-trust had already applied for amendment in the trust deed providing "dissolution clause" and the same is pending before the learned Charity Commissioner. The impugned judgment and order passed by the learned tribunal is hereby quashed and set aside and the original order passed by the Commissioner refusing to grant the registration sought by the respondenttrust under Section 12AA of the Act are hereby quashed and set aside and the matter is remitted to the file of the Commissioner of Income Tax (Exemptions),to consider the application of the respondent-trust afresh in accordance with law and on its own merits and to consider the request made by the respondent-trust to grant the registration certificate under Section 12AA of the Act on the same terms and conditions on which the registration certificate has been granted in the case of Shree Bai Education and Charitable Trust, Manavadar - Decided in favour of assessee for statistical purposes.
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2015 (4) TMI 262
Assessment under Section 143 (3) read with Section 153C - the whole assessment procedure was vitiated on account of the fact that the assessing authority had relied on the materials obtained during the course of the search and the search was not witnessed by any 'Panchas' - Held that:- It would be incumbent upon the appellate authority to consider the contention of the petitioners with regard to the validity of the search, as also on the aspect of whether the assessing authority had jurisdiction to initiate proceedings under Section 153A on the basis of that search, prior to deciding the issue on merits. The appellate authority would also be required to consider the request of the petitioners for cross examining the Authorised Officer of the Department in accordance with the provisions of law applicable. Therefore, dispose the writ petition with a direction to the 2nd respondent appellate authority to consider the said contention of the petitioners, including the contention regarding validity of search and consequent lack of jurisdiction. The appellate authority shall also consider the request of the petitioners for an opportunity to cross examine the witnesses and the Authorised Officer of the Department in accordance with the applicable provisions. The 2nd respondent appellate authority shall do this prior to proceeding with the appeal on merits.
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2015 (4) TMI 261
Disallowance u/s 14A - CIT(A) deleted part addition - Assessee has investment of ₹ 5,93,02,505/- in mutual funds, shares/share application money and earned dividend amounting to ₹ 45,371/-. The Assessee has not made any disallowance in the computation - AO applied Rule 8D for estimating the disallowance - Assessee claims that out of interest expenditure of ₹ 2.60 crores, ₹ 1.63 crores has been paid for availing of packing credit and this loan is availed only for export, ₹ 43 lacs are paid to VAT authorities, interest on overdrawn account, processing of loan for hotel and packing credit limits - Held that:- As per CIT(A), Assessee has furnished the ledger account of interest paid to substantiate his claim. These facts have not been denied by the ld. DR even though he vehemently relied on the order of the AO. The investment has been reduced during the impugned assessment year from ₹ 6.30 crores to ₹ 5.93 crores. Out of the investment of ₹ 5.93 crores, sum of ₹ 1.80 crores constitutes share application money and ₹ 2.83 crores comprises of Bajaj Insurance, Aviva Insurance, ICICI Prudential, ING Vysya Life Insurance and investment in firm in which Assessee is not a partner which, in our opinion, does not fall within the ambit of Sec. 14A. Therefore, balance investment remains only ₹ 1.30 crores out of which disallowance @ 0.5% can be only of ₹ 65,000/- as per Rule 8D(2)(iii). CIT(A), therefore, reduced the disallowance to ₹ 65,000/-. In our opinion, there is no error in the order of CIT(A) reducing the disallowance to ₹ 65,000/- which may warrant our interference - Decided against revenue. Disallowance u/s 40(a)(i) - non deduction of TDS on destination sampling charges to the parties of Hongkong and Singapore - CIT(A) deleted the addition - Held that:- Source of the income in the hands of the non-resident was outside India. Even the place of business which earned the income was also outside India. Since the technical fees was not deemed to accrue or arise in India at the time when the Assessee made the payment as there was no provision under Sec. 9(1), the income received by the non-resident as per the existing law at the time when the Assessee made the payment, in our opinion, was not taxable in India under the Income Tax Act. The legal position prevailing at the relevant time has to be considered when the payment was made by the Assessee to the non-resident party. Accordingly, we hold that the Assessee was not liable for deduction of tax u/s 195 of the Income Tax Act. Since the Assessee was not liable at that time to deduct the tax, the disallowance u/s 40(a)(i) cannot be made. We accordingly confirm the order of CIT(A) deleting the addition though on a different ground pleaded by the ld. AR. - Decided against revenue. Disallowance u/s 40(a)(i) - non deduction of TDS on demurrage paid - CIT(A) deleted the addition - Held that:- It in the case on hand, there are no pleadings or material brought on record to show that the case is governed by occasional shipping within the meaning of section 172 of the Act, 1961 and said section applies. The AO in view of the decision in the case of CIT vs. Orient Goa Co. (P) Ltd., 325 ITR 554 correctly took the view that the Assessee is liable to deduct TDS on the demurrage if DTAA is not in existence and therefore, disallowed the said amount of ₹ 68,67,067/-. Circular dated 19-9-1995 issued by the CBDT cannot be considered in the facts and circumstances of the present case, in aid to the respondent-assessee. The learned Assessing Officer, in fact, has passed a legal, proper and reasoned order, holding that the provisions laid down under section 40(a)( i) of the 1961 Act apply to the case on hand. - Decided against assessee. Disallowance on account of cash purchases - CIT(A) deleted part addition - Held that:- the quantitative details of opening stock, sales and closing stock as has been given in the Tax audit report has not been disputed by the AO. Sales have duly been accepted. Without making the purchases, in our opinion, the Assessee cannot make the sales. We are of the opinion that even the addition to the extent of 10% should have not been sustained by the CIT(A). In our opinion, it is a case where the whole of the addition made by the AO does not have any leg to stand. Since the Assessee has not come in appeal nor filed cross objection, we confirm the order of CIT(A) sustaining the addition to the extent of ₹ 6,02,808/- - Decided against revenue. Addition u/s 41(1) - CIT(A) deleted the addition - as per the details furnished by the Assessee it is seen that almost all the creditors are more than 4 years old and till date the Assessee has not paid the above liabilities as held by A0 - Held that:- This is not a fit case which warrants our interference. The onus is on the AO to prove that the liability stands ceased or remitted. No legal enforcement cannot mean cessation of liability. We accordingly confirm the order of CIT(A). Thus, this ground stands dismissed. - Decided against revenue. Inguine sales - addition on the ground that the sales to sister concern at rate lower than the rate adopted for valuation of the closing stock is not genuine and therefore he added the difference between the two rates - CIT(A) deleted the addition - Held that:- The addition has been made on account of undervaluation of the closing stock. It is not denied that the Revenue has accepted the sale. The Assessee has explained to the AO that the ore sold to the sister concern did not have screening and transport cost loaded on it while the closing stock was inclusive of the transport cost as well as screening cost as the iron ore which was in stock was screened ore. In our opinion, the AO has not appreciated the facts and once the sale of the goods has been accepted, how there can be addition on the basis of undervaluation of closing stock. We, therefore, hold that this is not a fit case which warrants our interference. We accordingly confirm the order of CIT(A) on this ground. - Decided against revenue. Disallowance of stacking and handling expenses and blending and screening charges paid to sister concern - CIT(A) deleted the addition - Held that:- It is a fact that when ore is extracted from the mines in raw form it is known as Run of Mines. This block form needs to be crushed to arrive at the desired size, and as contended by the ld. AR, as per the market practice 10% positive tolerance limit is provided. If the size exceeds the tolerance limit, same is to be crushed to bring it within the desired size and tolerance limit. Raw ore contains various impurities which need to be removed before exporting. This process of removing the impurities is known as screening. M/s. Karishma Impex has charged at the same rate to M/s. Karishma Exports towards crushing and screening charges. It is not a case where the AO has applied the provisions of Sec. 40A(2). We, therefore, do not find any illegality or infirmity in the order of CIT(A) deleting the addition of ₹ 2,19,49,850/-.- Decided against revenue. Disallowance of charges incurred in cash for transportation of iron ore - as per AO the identity of the payees are not proved - CIT(A) deleted the addition - Held that:- Assessee has incurred expenditure on transportation to the extent of ₹ 8.33 crores out of which only a sum of ₹ 13,93,640/- has been incurred in cash. It is not a case where the AO has invoked the provisions of Sec. 40A(3) i.e. in no case the expenditure incurred in cash does not exceed ₹ 20,000/-. CIT(A), we noted, has given a clear-cut finding of fact that on every voucher truck number is mentioned and the signature of the driver/cleaner has been obtained and the expenditure is clearly verifiable. Even we noted that the cash expenditure is only to the extent of 3.6% of the total expenses. CIT(A), in our opinion, has given a finding of fact. No cogent material or evidence was brought to our knowledge which may compel us to take a view different from the view taken by the CIT(A)- Decided against revenue. Disallowance of claim of commission - CIT(A) allowed the claim - Held that:- . Payment has been made through banking channels, TDS has been deducted and there is no allegation of any back flow of money. Assessee has filed confirmation during the course of the assessment proceedings. Same was duly verified by the AO. The invoice raised by the agent gives details of the services rendered. Mr. Rane has also rendered services as commission agent to various parties and is acting in the same capacity since long. Under these facts and circumstances, we find that CIT(A) has correctly deleted the disallowance. - Decided against revenue.
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2015 (4) TMI 260
Unaccounted gifts - Additional evidence entertained - addition to income deleted by CIT(A) - Held that:- FAA has followed the procedure provided in sub-rules (1) and (2). We find that Dr.Shetty appeared before him and confirmed the gift made by him in favour of the assessee. It is not the case of the assessee that Dr. Shetty appeared before the Commissioner of Income-tax (Appeals) on the direction of the Commissioner of Income-tax (Appeals) while exercising the powers contemplated in sub-rule (4). He appeared along with the assessee as a witness for the assessee. The learned Commissioner of Income-tax (Appeals) in such situation ought to have directed the parties to appear before the Assessing Officer for cross-examination. If his statement was recorded by the Commissioner of Income-tax (Appeals) under sub-rule (4), then probably there could not be any violation. He appeared along with the assessee as a witness for the assessee, in such a situation, the requirement of sub-rule (3) remained unfulfilled. The learned Commissioner of Income-tax (Appeals) has committed an error in considering the evidence on the merits without giving an opportunity of hearing to the Assessing Officer. - Decided in favour of revenue. Advance received towards site sale - CIT(A) deleted the addition - Held that:- On perusal of the statement of Shri H. B. Krishnappa suggest that he has responded to the query of the Assessing Officer and explained that he has advanced sum of ₹ 5 lakhs. The defects pointed out by the Assessing Officer based on circumstances are not directly flowing from the transaction. His grievance is why the assessee has not mentioned the name of the person in the books of account against the amount. To our mind, this is not a defect which is of such a nature which can falsify the claim of the transaction because the assessee has mentioned the amount as advance. Similarly the Assessing Officer has alleged that why the assessee failed to explain about this issue on August 9, 2010. This amount was taken before the closure of the assessment year 200304, the learned Assessing Officer wants an instant reply in the year 2010. Further the assessee has a right to analyse the details and then respond. It is not such a serious issue. Thus we are of the view that the learned first appellate authority has appreciated the facts and circumstances in right perspective on this issue and no interference is called for. - Decided against revenue. Gift from Shri Lalit Kumar Mehta - Held that:- Since the learned Commissioner of Income-tax (Appeals) did not accept the contention of the assessee and found as a matter of fact that it was a professional charge from Shri Lalit Kumar Mehta, dismissed the appeal. We do not find any error in the order of the learned Commissioner of Income-tax (Appeals). - Decided against revenue. Unexplained credits - CIT(A) deleted the addition - Held that:- The learned Assessing Officer has appreciated the controversy with a limited perspective of section 68 without applying his mind about the nature of the transaction and how it could have happened in a place like Mandya where a senior practicing doctor must have influenced all the local medical fraternity. The learned first appellate authority has appreciated that the assessee is a gynaecologist having a practical experience of more than 20 years. He is having his own hospital and the learned Assessing Officer had made irrelevant comments on the competence of such a senior person. We do not have any hesitation in concurring with the observation of the Commissioner of Income-tax (Appeals) because before doubting the version put forth by the assessee as well as the trust, the learned Assessing Officer ought to have collected some material or assigned some plausible reasons. He has simply raised the suspicion without any substance. The entity, who had given ₹ 30 lakhs to the assessee had stood with its stand. A sum of ₹ 12 lakhs was repaid by the assessee through account payee cheque on July 22, 2005, much prior to any investigation started in his case. The cheque was also cleared. For substantiating this claim the assessee has placed on record photocopy of the cheque as well as the bank statements.The remaining amount was not remitted by the assessee simply for the reason that there was lot of disputes going on with the trust and the trust has disclosed that a large number of cases have been initiated against it, therefore the college ultimately could not be started. The facts ought to have been appreciated keeping in view these circumstances. - Decided against revenue. Loan from Shri P. Ramesh - CIT(A) deleted the addition - whether is to be treated as unexplained credit under section 68 of the Income-tax Act or not? - Held that:- The case of the assessee is that during investigation, Shri P. Ramesh was called by the Assistant Director of Income-tax and his statement was recorded. He was little confused as to why he had been called again by the Income-tax Officer. Before the Assistant Director of Income-tax, he had confirmed the transaction. Thus, his identity is not in dispute. The next ingredient is his creditworthiness. He paid the amount to the assessee through account payee cheque and his bank account was disclosed to the Assessing Officer. He is assessed to tax also. Particulars of his assessment were also given to the Assessing Officer. Thus his creditworthiness cannot be doubted because the money was given through account payee cheque and he is an Income-tax assessee. The genuineness of the transaction was also not doubtful because both parties have confirmed the transaction and it is through banking channel. The assessee has already repaid a sum of ₹ 15 lakhs just after one month of the receipt. The remaining ₹ 10 lakhs has been paid during the pendency of the appellate proceedings. In the findings of the learned first appellate authority extracted (supra), it is discernible that all these factors have been considered by the learned first appellate authority before deleting this addition. On due consideration of the record, we do not find any error in the order of the learned Commissioner of Income-tax (Appeals) - Decided against revenue. Computation of capital gain claim by the assessee on sale of J. C. Road property - whether a sum of ₹ 50 lakhs paid to M/s. Blue Cross is to be added towards the cost of acquisition? - Held that:- Once the vendor has executed the specific power of attorney in favour of the assessee, which is running into five pages, the vendor has nowhere mentioned that it has to receive ₹ 50 lakhs from the assessee. The assessee and the vendor both acted as a vendor for Mr. Rajendra Kumar Jain,It is a very detailed document running into 24 pages and nowhere it has been mentioned that the Blue Cross Builders in the capacity of vendor would receive ₹ 50 lakhs apart from the consideration received from the assessee. The other important factor is what executionable cause is available to the vendor after executing the specific power of attorney as well as the sale deed to recover the amount of ₹ 50 lakhs from the assessee except bald assertion of the assessee to say that he would have to pay ₹ 50 lakhs to Blue Cross Builders, there is no corroborative material on the record. Therefore, the learned Commissioner of Income-tax (Appeals) has erred in holding that ₹ 50 lakhs be added in the cost of acquisition. - Decided in favour of revenue. Interest expenses of ₹ 7 lakhs incurred - whether has to be added towards the cost of acquisition while computing the capital gain? - According to the assessee he has received a sum of ₹ 30 lakhs from Dr. Y. S. Manjunath. ₹ 5 lakhs was received on March 29, 2005 and ₹ 25 lakhs on June 3, 2005. These amounts have been repaid on July 25, 2007 with an interest of ₹ 7 lakhs - Held that:- The assessee had paid a sum of ₹ 2 crores through account payee cheque by May 31, 2005 meaning thereby the amount received on June 3, 2005 did not travel towards payment made for this property. The first cheque is dated May 5, 2005 and last May 31, 2005. Thereafter the assessee did not make payment and a dispute arose that led to cancellation of the agreement vide legal notice dated November 10, 2006. The new agreement was executed on January 2, 2007. The assessee had started making payments thereafter. He has returned this amount to Dr. Y. S. Manjunath on July 25, 2007. Therefore we do not find any nexus between this loan, vis-a- vis investment in the property. The findings of the CIT(Appeals) is set aside. This amount of ₹ 7 lakhs is not to be included in the cost of acquisition. - Decided in favour of revenue. Liquidated damages paid to Gurushree Properties as expenses towards earning the short-term capital gain on the sale of J. C. Road property - Liquidated damages paid to Gurushree Properties ₹ 10,00,000 as held by CIT(A) or ₹ 30 lakhs - Held that:- There is no dispute about the transaction and the payment made by the assessee. The only dispute is the quantum. The Assessing Officer is giving credit of ₹ 20 lakhs, whereas the assessee claimed that he has paid ₹ 30 lakhs. To our mind, the Assessing Officer failed to collect the conclusive evidence suggesting that only ₹ 20 lakhs was paid. The sum of ₹ 10 lakhs was paid through account payee cheque and this aspect cannot be ignored. There cannot be any reason to the assessee to pay ₹ 10 lakhs to Gurushree Properties. Therefore, we do not find any error in the findings of the learned Commissioner of Income-tax (Appeals). - Decided against revenue. Capitalisation of interest - assessee had borrowed money from the banks and made investment in the properties - Held that:- Assessing Officer has not pointed out any specific defect in the claim of the assessee. He has referred certain circumstances, but those circumstances also do not exhibit any specific details. They are in the shape of suspicion only. Contrary to his observation the learned Commissioner of Income-tax (Appeals) has observed that loan was taken when investment in J. C. Road property was in progress. The suspicion of the Assessing Officer is that the assessee must have used the money in purchase of some other property but he has not pin pointed out, whether that property was purchased or not. He also observed that money has not been borrowed with any specific purpose. It is difficult to bring demonstrative proof of this nature. The assessee had borrowed the money and used it. It is for the Assessing Officer to demonstrate that this borrowed money was used somewhere else and not for purchase of the property. While disallowing the claim of the assessee with regard to the interest paid to Shri Manjunath, we have observed that money paid by the assessee for purchase of the property was prior to the loan taken by him and that money was not used. Therefore, we did not allow addition of that amount in the cost of acquisition. But here no evidence is available to dispel the claim of the assessee. Therefore, we do not see any error in the findings of the CIT(Appeals). The assessee will be entitled to claim this expenditure as a part of cost of acquisition while computing the capital gain - Decided against revenue.
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2015 (4) TMI 259
Trust assessed as an AOP - whether Asset Management entity came into existence by virtue of a Trust deed? - whether the assessee trust , is a revocable trust and it need not be subjected to tax, as the tax obligation have been fully discharged by the beneficiaries of the assessee trust? - whether names of the Beneficiaries and the shares of the beneficiaries are not identifiable in the original trust deed? - applicability of the provisions of Sec.60, 61 and 63 of the Act to the facts and circumstances of the case - Held that:- Sec.61 read with Sec.63 of the Act which mandates that income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as income of the transferor will apply to the facts and circumstances of the present case and therefore the assessment in the hands of the transferee/representative assessee was not proper.” As we have already mentioned, the terms of the Trust Deed, the Contribution Agreement and the Memorandum of private placement are identical in substance and there is no dispute on this aspect either before the Revenue authorities or before the Tribunal. Assessment of trust - applicability of Sec.164(1) - Held that:- CBDT Circular No.281 dated 22.9.1980 wherein the CBDT has explained the scope of Sec.164 with regard to stating the name of the beneficiaries in the trust deed. In the said circular the provisions of Expln.-1 to Sec.164 of the Act regarding identification of beneficiaries has been explained to the effect that for identification of beneficiaries it is not necessary that the beneficiary in the relevant previous year should be actually named in the order of the Court or the instrument of trust or wakf deed, all that is necessary is that the beneficiary should be identifiable with reference to the order of the Court or the instrument of trust or wakf deed on the date of such order, instrument or deed. We find that Clause 1.1.13 of the Trust Deed clearly lays down that beneficiaries means the Persons, each of whom have made or agreed to make contributions to the Trust in accordance with the Contribution Agreement. We are of the view that the above clause is sufficient to identify the beneficiaries. The persons as well as the shares must be capable of being definitely pin-pointed and ascertained on the date of the trust deed itself without leaving these to be decided upon at a future date by a person other than the author either at his discretion or in a manner not envisaged in the trust deed. Even if the Trust deed authorises addition of further contributors to the trust at different points of time, in addition to initial contributors, than the same would not make the beneficiaries unknown or their share indeterminate. Even if the scheme of computation of income of beneficiaries is complicated, it is not possible to say that the share income of the beneficiaries cannot be determined or known from the trust deed. In view of the aforesaid decision of the AAR[1996 (8) TMI 512 - AUTHORITY FOR ADVANCE RULINGS], with which we respectfully agree, we hold that the provisions of Sec.164(1) of the Act would not be attracted in the present case Assessment as an “AOP" - whether there is no separate status of Trust for making assessment envisaged under the Act? - Held that:- There is no inter se arrangement between one contributory/ beneficiary and the other contributory/beneficiary as each of them enter into separate contribution arrangement with the Assessee. Therefore it cannot be said that two or more beneficiaries joined in a common purpose or common action and therefore the tests for considering the Assessee as AOP was satisfied. The beneficiaries have not set up the Trust. Therefore it cannot be said that the beneficiaries have come together with the object of carrying on investment in mezzanine funds which is the object of the trust. The beneficiaries are mere recipients of the income earned by the trust. They cannot therefore be regarded as an AOP The form of return of income as it existed for the relevant assessment year did not contain a clause for filing return of income by a “Trust” in the status other than AOP. The CBDT realised this difficulty faced by 'private discretionary trusts' having total income exceeding ten lakh rupees facing problem in filing their return of income electronically in cases where they are filing their return in the status of an individual because status of a private discretionary trust has been held in law as that of an 'individual' gave instructions in Circular No.6/2012 dated 3.8.2012 to the effect that it will not be mandatory for 'private discretionary trusts', if its total income exceeds ten lakh rupees, to electronically furnish the return of income for assessment year 2012-13. Form No.49A which was the prescribed form of application for allotment of Permanent Account Number (PAN) also did not contain a separate status “Trust” but contained a column “AOP (Trust)”. The revised Form No.49A later notified contains a column for status as “Trust”. Therefore the argument of the revenue that all“Trusts” are AOPs is not correct. If the contention of the Revenue as raised in Ground No.9 is accepted than the provisions of Sec.161(1) of the Act would become redundant. The charge to tax in the hands of the representative Assessee has to be in accordance with Sec.161(1) of the Act and therefore the status of the Assessee cannot be that of AOP In the present case, however, we are concerned with a case of assessment of representative assessee or the person in respect of whom some other person is considered as representative assessee. Sec.161(1) by implication permits assessment of either the beneficiary or the Trustee. When the Trustee is assessed as representative assessee in respect of income received on behalf of the beneficiary, the section provides that tax shall be levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him. Refund of TDS - application u/s.154 - CIT(A) allowed the claim - Held that:- We are of the view that the CIT(A) rightly directed the AO to allow the application of the Assessee u/s.154 of the Act. We may also point out that the Assessee has not filed any revised return in this case and had declared ‘Nil” taxable income in the return of income filed and did not file any revised return of income. Therefore the issue raised by the revenue does not arise for consideration at all. - All the appeals by the revenue are dismissed.
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2015 (4) TMI 258
Deduction allowable under S.80HHC - CIT(A) in confirming the action of the Assessing Officer in excluding interest income while computing the profits of the business for the purpose of determining the deduction allowable - Held that:- This issue is squarely covered in favour of the Revenue and against the assessee by the decision of the coordinate bench of this Tribunal in assessee’s own case for assessment year 2003-04 rendered vide order dated 23.7.2009 passed in ITA No.662/Hyd/2006 and others wherein it was held by following the decision of Hon'ble Delhi High Court in the case of CIT V/s. Shriram Honda Power Equipment Ltd. (2007 (1) TMI 86 - HIGH COURT, DELHI), that interest income received on deposits was chargeable to tax in the hands of the assessee under the head ‘income from other sources’ and the same, therefore, was liable to be excluded from the profits of the business for the purpose of computing the deduction under S.80HHC allowable to the assessee. Thus uphold the impugned order of the learned CIT(A) - Decided against assessee. Allowing deduction under S.80HHC with reference to the eligible profits of the business as reduced by the amount of deduction allowed under S.80IB - Held that:- A similar issue has been decided in favour of the assessee by the Hon'ble Bombay High Court in the case of Associated Capsules P. Ltd. V/s. DCIT (2011 (1) TMI 787 - BOMBAY HIGH COURT) holding that the amount of profit allowable as deduction under S.80IA of the Act is not required to be reduced from the profits of the business of the undertaking, while computing the deduction under any other provisions under Heading C in Chapter VI-A of the Act, which also includes S.80HHC. Also see CIT V/s. Vegetable Products Ltd.(1973 (1) TMI 1 - SUPREME Court). - Decided in favour of assessee. TP adjustment - international transactions of the assessee company with its AE involving export of manufactured goods - Held that:- set aside the impugned order of the learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer/TPO with a direction to do the exercise of transfer pricing analysis afresh by comparing the average price (Arithmetic Mean) charged by the assessee company to its non-AEs other than in Sudan with the price charged by the assessee company to its AE for the similar products. The AO/TPO shall determine the Arm’s Length Price by taking the arithmetic mean of the prices charged by the assessee company to its non-AEs and apply the same to the relevant international transactions of the assessee company to its AE, in order to determine the transfer pricing adjustment, if any, that is required to be made on account of these transactions - Decided in favour of assessee for statistical purposes. TP adjustment in relation to the international transactions with AE involving payment of commission amounting to ₹ 20,60,722 and disallowance of commission of ₹ 2,70,424 - Held that:- We have also gone through the documentary evidence filed by the assessee in the paper book in support of the claim of the assessee on this issue, and find that the same mainly comprising of e-mails and correspondence exchanged with the concerned tow parties is only self serving evidence, which is not sufficient to establish the claim of the assessee of having received the services from the concerned two parties, especially when there is no third party evidence like any correspondence or communication from M/s. Sudan Gezeria Board recognizing the said two parties as the agents of the assessee company or of any services rendered by them in connection with the procurement of the orders by the assessee company from M/s. Sudan Gezeria Board. Thus we find ourselves in agreement with the learned CIT(A) that the claim of the assessee of having paid the commission to the concerned two parties for the services rendered in connection with procurement of export order from M/s. Sudan Gezeria Board was not established either on evidence or even in the facts of the case, and hence, upholding the order of the CIT(A) confirming the disallowance made by the Assessing Officer on this issue, we dismiss grounds of the assessee’s appeal. - Decided against assessee.
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2015 (4) TMI 257
Unexplained cash credit u/s.68 - CIT(A) deleted the addition accepting the assessee’s explanation of the same as representing the sale proceeds of equity shares - Held that:- CIT(A) picks up one incident or aspect of the transaction at a time to note of it being backed by documentary evidence/s and, therefore, genuine. The approach is fallacious. Firstly, documentary evidences, in the face of unusual events, as prevailing in the instant case, and without any corroborative or circumstantial evidence/s, cannot be regarded as conclusive. Two, the preponderance of probabilities only denotes the simultaneous existence of several ‘facts’, each probable in itself, albeit low, so as to cast a serious doubt on the truth of the reported ‘facts’, which together make up for a bizarre statement, leading to the inference of collusiveness or a device set up to conceal the truth, i.e., in the absence of credible and independent evidences. For a scrip to trade at nearly 50 times its’ face value, only a few months after its issue, only implies, if not price manipulation, trail blazing performance and/or great business prospects (with of course proven management record, so as to be able to translate that into reality), while even as much as the company’s business or industry or future program (all of which would be in public domain), is conspicuous by its absence, i.e., even years after the transaction/s. The company is, by all counts, a paper company, and its share transactions, managed. We, accordingly, reversing the findings of the first appellate authority, confirm the assessment of the impugned sum u/s.68 of the Act. - Decided against assessee.
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2015 (4) TMI 256
Short deduction of TDS - payment of channel placement charges to cable operators/MSOs - TDS u/s 194J @ 10% or 194C @ 2% - CIT(A) held that assessee was not in default on account of short deduction of tax u/s 201(1) as well as interest levied thereon u/s 201(1A) - Held that:- The assessee had utilized the services of dubbing studio Ninety Degrees by using their equipments as well as the artists who were working for Studio Ninety Degrees. The assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a sub-contractor. The findings of the CIT(A) in this regard are not in challenge before us. In such circumstances we are of the view that the provisions of section 194C were applicable and the assessee has rightly deducted tax at source at 2 per cent treating the payment as a payment to sub-contractor for carrying out a work. We do not find any ground to interfere with the order of CIT(A). Respectfully following the order of the Tribunal in assessee’s own case we hold that channel replacement charges paid by assessee were liable for deduction of tax u/s 194C of the Act and the assessee has correctly deducted tax at source u/s 194C of the Act, therefore, there is no liability u/s 201(1) and 201(1A) of the I.T. Act. - Decided in favour of assessee.
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Customs
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2015 (4) TMI 279
Imposition of penalty - Overvaluation of goods - Fraudulent availment of DEPB Credit - Held that:- Goods were liable for confiscation under sub-section (d) of Section 113 of the Act, and therefore penalty could be imposed under Section 114(I) of the said Act, next question that arises for consideration is as to whether on the facts of this case penalties were rightly imposed by the Commissioner . Though this aspect is not considered by the Tribunal it may not be necessary to refer the case back to the Tribunal for this particular purpose. Counsel on both sides agreed that the order of the Commissioner can be gone into to determine this aspect - Commissioner has imposed the order of payment of penalty of ₹ 25,000 /- upon him only on the ground that the goods were cleared for export by his son Alok Jaiswal . That can hardly be the ground to fasten the liability or attribute abetment on the part of respondent no.1 . Likewise, insofar as respondent no.2 Mr. Rakesh Mishra is concerned, the only allegation against him is that he had supervised the stuffing of the goods at ICD Varanasi and received the payment. Only on this allegation, it cannot be attributed that he became party to the over invoicing of the goods. Penalty in respect of these two respondents, therefore, has to be set aside. As far as respondent no.3 is concerned, he was working as Superintendent ICD - The allegation which has been established against him is that he had a direct role in obtaining the report of M/s. Saraswati Plastics, New Delhi, and it is on that basis the exporter, namely, M/s. Yash Export fraudulently claimed high DEPB to their credit. It is recorded that without the aforesaid report it was not possible for M/s. Yash Export to fraudulently import high DEPB. Therefore, penalty against M/s. Yash Export is accordingly maintained. - Decided partly in favour of Revenue.
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2015 (4) TMI 278
Denial of refund claim - Unjust enrichment - Duty paid under protest - refund ordered by Apex court [2006 (9) TMI 181 - SUPREME COURT OF INDIA] - whether the appellant has crossed the bar of unjust enrichment in this case - Difference of opinion - Majority order - Held that:- Court have perused the certificate dated 25-5-2009 given by the Cost Accountant M/s Dinesh Jain & Co. The said certificate merely states that based on the audited financial statements of Ispat Industries for the respective years contained in the attached statement and further based on the information and explanations furnished to us by the Company, we wish to confirm that the incidence of customs duty has not been passed on by Ispat Industries Ltd. to any other person. - There is no analysis whatsoever about the cost of production of the steel products sold, the factors that constituted the cost of production, whether the duty incidence on the raw materials was considered while taking the cost of production and other relevant factors. In the absence of any such analysis, the said certificate has no evidentiary value whatsoever and at best, it can be taken as merely inferential. If the duty incidence had not been passed on, the same should have been recorded as amounts due from the customs department in the receivables account. It is an admitted position that the records maintained did not reflect the duty paid on the raw materials as the amount due/receivable from the department. In the absence of such an evidence, an inference drawn by the Cost Accountant cannot be said to be reasonable rebuttal of the statutory presumption of passing on of the duty incidence. Whenever a question of fact is to be proved, the same has to be established by following the process known to law. I do not find any such establishment of fact by the appellant in the present case. - appellant has not discharged the statutory obligation cast on him of rebutting the presumption of unjust enrichment in any satisfactory manner acceptable to law. In this view of the matter, I agree with Hon'ble Member (Technical) that the appellant has not crossed the bar of unjust enrichment and therefore, not eligible for the refund. - Decided against assessee.
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2015 (4) TMI 277
Waiver of pre deposit - Confiscation of goods - Misdeclaration of goods - consignment received in name of bogus company and bogus owner - Held that:- From the material facts and evidence as well as enquiry conducted by investigation prima facie shows that the importer M/s Planet Overseas was not in existence and IEC was obtained fraudulently using fabricated and fake documents. There was racket of a group of persons as stated herein before who were operating the smuggling and brought endangering item of fire cracker illegally without license from Explosive Authority. The racket was busted out only due to investigation. They have deceived Revenue. When customs was defrauded and all these racketeers in adjudication do not appear to be innocent and they had hand in glove in the fraudulent design as described herein before, all of them are liable to make pre-deposit as follows with in 4(four) weeks of pronouncement of the order - Partial stay granted.
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Corporate Laws
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2015 (4) TMI 273
Composite application under Section 59 of the Companies Act, 2013 read with Section 397, 398 and 402 of the Companies Act - Fraudulently transfer of shares - Notice not served of Annual General Meeting or any EOGM - Contradictory statements - Held that:- I have considered the rival submissions and perused the record. Upon a careful examination of the petition and the rejoinder filed by the Petitioner, it is seen that the statements made by the petitioner are self contradictory. In para No. 6(d) of the petition, the Petitioner has admitted having received two share transfer forms from the company on or about 15/03/2007 whereby the Petitioner's entire shareholding i.e. 505 shares and 1500 shares-In-question was sought to be transferred to the Respondent Nos. 3 and 4. However, according to the Petitioner, she did not sign the said transfer forms as she never intended to transfer the shares in question held by her in the Company and till date the said unsigned transfer forms are in the possession of the Petitioner as the same was never executed or send back to the Company, whereas in para No.6(i) she has admitted that she received a sum of Rs,20,05,000/- towards part payment of the sale consideration for transfer of the said shares and the balance amount was to be paid upon valuation of the shares by a Chartered Accountant in terms of Articles of Association of the Company. In the instant case, it is a established fact that the Petitioner was paid ₹ 20,05,000/- as sale consideration, which according to case of the Petitioner towards the part payment of the total safe consideration to be determined by the Chartered Accountant in terms of AOA of the Company. However, admittedly the said amount is still lying with the Petitioner and she has not refunded the same till date to the respective Purchasers of the shares-in-question i.e Respondent Nos. 3 and 4 despite her own admission that she never intended to transfer the said shares, as contended by her. Moreover, she has not deposited this amount anywhere including this Board prior to filing of the instant petition. In my view, the Petitioner is therefore a party to such sale transaction having received the said amount which although according to her, is a part payment only. In addition to the above, In the original share certificates the names of the transferees have been duly recorded. The Register of Members of the company has been rectified accordingly. Furthermore, in the instant case, the transfer deeds were partly executed and were handed over to the Petitioner for her signatures. This possibility cannot be ruled out that the Respondents might have forgotten to receive back the said transfer deeds and now the Petitioner out of greed by misusing the same, is trying to resile from the sale transaction in which she herself was a party. The contention of the Petitioner, therefore, in my view is not tenable that the transfer of shares-in-question by way of sale is bad-in-law. I would further like to add here few authorities, wherein it has been laid down that where the Parties have acted upon the transaction of sale, assuming there was some irregularity, such transfer cannot be disown by a person who himself/herself was party to such transaction. it is clear that the Petitioner has failed to prove that the impugned transfer of shares as invalid, ineffective, void and ultra vires and has no value in the eyes of law and thus, liable to be ignored. I am further of the view that non-compliance of Section 108(1) of the Act is not fatal in this case, having regard to peculiar facts of the case stated above. A party who has gained benefit cannot be allowed to disown her own act. It is an old maxim that a person who seeks equity must do equity. Therefore, It is established that the petitioner has not come to the Court with clean hands and therefore, she is not entitled to be heard with respect to her grievance and in any case, is not entitled to discretionary relief by the Court. It is further established that the Petitioner has filed this petition with ulterior motive and collateral purpose to exert pressure on the Respondents and not with genuine objective and on this ground also the petition deserves to be dismissed. - Application dismissed.
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Service Tax
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2015 (4) TMI 290
Effect of amendment of Notification - Retrospective or prospective - Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation - Notification No. 25/2012 dated 20.6.2012 as amended by 4/2014-ST dated 17.2.2014 - Exemption in the nature of clarificatory or not - Held that:- services provided by the petitioner, viz., collection of umbilical blood and tissue and preserving in cold storage, has not been included in the "Negative list of service" to claim exemption of service tax. However, according to the petitioner, pursuant to the efforts taken by the petitioner and the Association of Stem Cell Banks of India, the Ministry of Health & Family Welfare, issued a memorandum dated 22.5.2013 to the first respondent recommending that the services rendered by the stem cell banks are part of health care services and based on which, the said mega exemption notification dated 20.6.2012 was subsequently amended by inserting Entry No.2A which read "Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation" and thereby the services of the petitioner are recognized as fallen within the ambit of "health care services" and exempted from the whole of the service tax leviable under Section 66 B of the Finance Act. If the amendment introduced by Notification No.4/2014-ST, dated 17.2.2014, is declaratory or clarificatory in nature, it is no doubt, it will have retrospective effect and if the amendment is remedial in nature it can have only a prospective effect unless specifically expressed to the contrary. - amendatory statutes, like original statutes, will not be given retroactive construction, unless the language clearly makes such construction necessary. In other words, the amendment will usually take effect only from the date of its enactment and will have no application to prior transactions, in the absence of an expressed intent or an intent clearly implied to the contrary' and that where a statutory provision is in its nature clarificatory, it will be presumed to be retrospective unless the contrary intention is clearly indicated by the Legislature, the reason being that its underlying purpose of explaining or clarifying the existing law will be effectively served only by giving it such a retrospective construction. So-called amendment, admittedly, has been inserted by way of Entry 2A into the exemption Notification, dated 20.6.2012 by Notification No.4/2014-ST dated 17.2.2014 to the effect that "Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation". Therefore, the intention of the legislature is clear that bringing the services provided by cord blood banks by way of preservation of stem cells under the exemption Notification in order to give exemption of service tax, however, it has not been specifically mentioned that the said amendment should be with effect from the date of exemption Notification. i.e. 20.6.2012, wherein, originally, Entry No.2 has been inserted, giving exemption towards healthcare services by clinical establishment, an authorised medical practitioner or para-medics. Therefore, by virtue of such amendment, it should be construed that the establishments which provides the above said services will get exemption of service tax with effect from the date of amendment, i.e. 17.2.2014 only and they cannot claim it with retrospective effect. - so-called amendment is only a remedial nature and it can have prospective effect only. If at all the legislature thought it fit to extend exemption with retrospective effect, it would have certainly expressed by mentioning specifically to the effect that the amendment would be with effect from 20.6.2012. Since the amendment having been brought into force from a particular date, i.e. 17.2.2014, no retrospective operation thereof can be contemplated prior thereto. Supreme Court in WPIL Ltd [2005 (2) TMI 137 - SUPREME COURT OF INDIA], having considered the fact that already, the Government issued Notification dated 1.3.1994, giving exemption from imposing excise duty on parts of power driven pumps used in the factory premises for manufacture of power driven pumps and to clarify the position, the subsequent notification dated 25.4.1994 was issued giving exemption towards the goods that are used within the factory of production in the manufacture, held that the subsequent notification was not a new one granting exemption for the first time in respect of parts of power driven pumps to be used in the factory and therefore, the subsequent notification is clarificatory nature and it has to be given with retrospective effect. - The said judgement is not applicable in the present case and distinguished. But in the present case, it is not in dispute that the so-called amendment Notification issued by the Government, giving exemption for the first time towards the services provided by cord blood banks by way of preservation of stem cells and hence, it cannot be considered as clarificatory in order to give retrospective effect. - Decided against Petitioner.
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2015 (4) TMI 289
Challenge to the show cause notice - CENVAT Credit - summarization of the credits taken on capital goods - petitioner had not provided any details in respect of the usage of certain goods and also did not supply sample copies of invoices of such goods - Availability of alternate remedy - Held that:- Commissioner has held that the petitioner has suppressed material with an intent to evade payment of duty. The petitioner contends that the fact of having availed of CENVAT duty was disclosed in the returns. It is necessary, however, to see whether the extent of disclosure in the returns was sufficient compliance. It would be necessary to ascertain whether the extent of disclosure would have enabled the assessing authority to determine whether in law the petitioner was entitled to CENVAT credit or not. There are various issues of fact which would be required to be considered. Even assuming that there was a disclosure of the fact of the petitioner having availed the credit, it would be necessary to ascertain whether there were other relevant facts which were necessary to be disclosed and whether the non-disclosure thereof constituted suppression. It is obviously for this reason that the petitioner rightly did not challenge the show cause notice itself at the outset. The petitioner rightly answered the show cause notice by filing a detailed reply therein. Even on merits, the petitioner thereafter appeared before the Commissioner and made detailed submissions. The petitioner filed detailed written submissions in this regard as well. - no reason to interfere at this stage in exercise of our extra-ordinary jurisdiction when the issue can be raised before the appellate Tribunal. It would be appropriate for the petitioner to challenge the order by filing an appeal before the Tribunal. - Decided against assessee.
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2015 (4) TMI 288
CENVAT Credit - Commercial training and coaching services - Various other services used to provide facilities to students - Held that:- Appellant is essentially providing commercial training and coaching services to the students. It is not permitted to confer educational degrees on the students. The services of catering, photography and tents are used by the appellant to encourage the successful students in coaching. These services are used only after commercial training or coaching is over. The celebrations are organized by the appellant during the academic sessions to encourage the existing students and motivate new students. In these celebrations, catering, photography and tents are used by the appellant and these celebrations are held only when students pass commercial training or coaching classes. The appellant is paying service tax under the output service of commercial training or coaching. Once the students pass their coaching classes, the activities of catering, photography and tent services cannot be said to have been used to provide output service. Similarly, the appellant maintain and repair its motor vehicle during the course of the business and there is no material to show that maintenance and repairs have any nexus to commercial training or coaching. Likewise, the travelling expenses incurred by the appellant for the business tours cannot be related to provision for commercial training or coaching. - Decided against assessee.
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2015 (4) TMI 287
Levy of penalty - waiver of the penalties in terms of Section 80 of the Finance Act, 1994 - appellant is not contesting the demand of service tax which they have admittedly paid along with interest - sale of SIM Cards of BSNL - Receipt of commission - Held that:- Following decision of G.R. Movers vs. CCE, Lucknow reported in [2013 (6) TMI 339 - CESTAT NEW DELHI], Daya Shankar Kailash Chand vs. CCE&ST, Lucknow reported in [2013 (6) TMI 340 - CESTAT NEW DELHI] and CCE, Meerut vs. Virendra Electric Works reported in [2013 (6) TMI 317-CESTAT New Delhi] - service in question itself is held as non-taxable. Therefore, the bona fide of the appellant stands proved. In the facts and circumstances of the case and other non-taxable nature of the service, Section 80 is clearly invokable. - invoking Section 80, the appellant is not liable for penalties under Sections 76, 77 and 78 of the Finance Act - Decided in favour of assessee.
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Central Excise
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2015 (4) TMI 282
Waiver of pre deposit - Marketibility of goods - sale of spare part of automobile procured locally and imported after packing or unpacking - MRP based levy u/s 4A - Held that:- goods shall be brought under the purview of section 2(f)(iii) of Central Excise Act, 1944. - Appellant failed to show the percentage of sale without labeling and repacking and otherwise. Therefore, prima facie it enables us to construe that the entire clearing was made packing, repacking and labeling the goods for marketability thereof. Therefore, there is nothing to doubt the finding of Adjudicating Authority at this interim stage but to endorse to his view as well as contention of Revenue. We fail to understand why cross-examination is necessary in the present case when the appellant did not justify before the authority below as to necessity thereof. Since cross-examination is not a right to cause prejudice to the other side following dilatory tactics, that is deniable. There was nothing incredibility in the depositions brought out by the appellant. Statements recorded under section 14 of Central Excise Act, 1944 is in the course of Judicial proceeding. That cannot be brushed aside. Therefore, we are prima facie of the opinion that Revenue has a prima facie case for directing predeposit due to shifting of the unit - Decided against assessee.
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2015 (4) TMI 280
Validity of Tribunal's order - Non consideration of crucial aspect - Held that:- there was no question of the respondent acting in accordance with Rule 57H(7) as the notification under which the respondent availed of the exemption was not based on the value or quantity of clearances. If that is so, it is possible that the demand made against the respondent would not survive at all. This issue goes to the root of the matter. The Tribunal has not considered this crucial issue at all. If the appeal is admitted on the other grounds, the respondent may well be precluded from raising this contention in this appeal. That would be unfair to the respondent. - Matter remanded back - Decided in favour of Revenue.
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2015 (4) TMI 276
Waiver of pre deposit - Denial of benefit of Notification 8/2003 as SSI exemption - applicants clearing the goods which are bearing the brand name of others - Held that:- there were several amendments given to clause (e) of Notification 8/2003 and from those amendments we find that it was the intention of the legislature to give the benefit to the manufacturer of packing material which bears the brand name of their customs or the persons to use them as packing material for packing of their final product and the same is to be given retrospective effect. Prima facie we are of the view that the applicant has made out a 100% case for waiver of pre-deposit. Accordingly, we waive pre-deposit of the dues and stay recovery thereof during the pendency of the appeal. - Stay granted.
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2015 (4) TMI 275
Denial of SSI exemption - Notification No.8/2003-CE dt. 01/03/2003 - Invocation of extended period of limitation - case of the Revenue is that plastic bottles were not specified for SSI benefit during the period of dispute - Held that:- appellant believed bona fide that the subject goods were specified for SSI purpose during the material period. Such belief is said to have been occasioned by the Board s Circular No.71/71/94-CX dt. 27/10/1994 wherein it had been clarified that, so long as the branded castings were supplied to the customer for further manufacture and were not otherwise traded, the benefit of SSI exemption in such cases should not be denied merely on the ground that it was bearing the brand name of another unit. The learned counsel points out that this Circular was withdrawn only on 01/09/2008 vide Circular No.354/124/2008-TRU - good case for the appellant on the ground of limitation as well inasmuch as the circumstances stated by the learned counsel appear to have made them believe that the benefit of Notification No.8/2003-CE as amended was admissible to them in respect of plastic bottles which were cleared under Shalimar brand during the material period. Hence there will be waiver and stay as prayed for. - Stay granted.
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2015 (4) TMI 274
Waiver of pre deposit - Denial of SSI benefit - Specified goods which were found to have been cleared under brand name shalimar belonging to M/s Shalimar Chemical Works Ltd - Held that:- on a similar set of facts, this Bench granted waiver of predeposit and stay of recovery in the case of Anuradha Industries Vs Commissioner of Central Excise Hyderabad (2015 (4) TMI 275 - CESTAT BANGALORE). He further points out that, in the stay order passed by this Bench on 30.4.2013 in the case of Anuradha Industries, the view taken by the coordinate Bench at Mumbai in the case of Kaysons Plasto Print Industries Vs. Commissioner of Central Excise, Kolhapur (2015 (4) TMI 276 - CESTAT MUMBAI) was followed. It is further submitted that a major part of the impugned demand is beyond the normal period of limitation and that the amount of duty within the normal period is only ₹ 3,15,715/-. - Hence, following the stay order passed by this Bench in the case of Anuradha Industries, we grant waiver and stay in the instant case as well. - Stay granted.
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CST, VAT & Sales Tax
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2015 (4) TMI 286
Claim of refund - Levy of VAT on activation of SIM cards - Authority of state to levy VAT - whether the State of Haryana has collected Value Added Tax on activation of SIM cards, without authority of law - unjust enrichment - Held that:- State of Haryana does not deny that in Bharat Sanchar Nigam Limited (2006 (3) TMI 1 - Supreme court), the Supreme Court has held that activation of SIM cards is a service and not a sale. The State of Haryana also does not deny that the collection of VAT on activation of SIM cards is not relatable to any statutory provision. As postulated by Article 265 of the Constitution of India a tax shall not be levied except by authority of law i.e., a tax shall be valid only if it is relatable to statutory power emanating from a statute. The collection of VAT on the sale of SIM cards, not being relatable to any statutory provision, must be held to be without authority of law and as a consequence non-est Factual situation so permitting, particularly where the levy and collection of tax is without authority of law, Article 226 of the Constitution of India would come to the aid of an aggrieved party, even where the assessment order has not been challenged by appeal or revision, to undo a collection of tax made without authority of law. As held by the Supreme Court [1996 (8) TMI 113 - SUPREME COURT OF INDIA], no State has the right to receive or retain taxes or monies realised from citizens without authority of law. To hold otherwise would, in our considered opinion, perpetuate an un-constitutional levy, an unconstitutional collection of a tax, and an unconstitutional retention of monies. The mere fact that orders have been passed levying and collecting tax would not confer legitimacy, on the acts of the State of Haryana in seeking to retain the amount of tax collected and retained, without authority of law. The State of Haryana would have been justified in raising such a plea if the judgment in Bharat Sanchar Nigam Limited (2006 (3) TMI 1 - Supreme court) had been held to be prospective. A perusal of the aforesaid judgment reveals that the declaration of law is not prospective and like all general declarations of law, would be deemed to apply from the inception of the statute. The judgment having clearly held that VAT cannot be collected on activation of SIM cards, the assessment orders levying and collecting VAT, are from their inception a nullity and, therefore, the levy and collection of VAT is without authority of law and violative of Article 265 of the Constitution of India. - Decided in favour of assessee. The argument that refund of this amount would amount to unjust enrichment of the petitioner is without foundation in fact or in law. The Union of India has raised a demand for service tax for the period for which the State of Haryana has levied and collected VAT. If the petitioner is called upon to pay VAT and service tax, it would be the case of double taxation. Even otherwise all that we propose to do is to direct the State of Haryana to forward this amount to the Union of India. - State of Haryana shall transfer the amount of VAT collected from the petitioner to the Service Tax Department of the Union of India
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2015 (4) TMI 285
Exemption from payment of tax under Section 13-B of the Haryana Sales Tax Act read with Rule 28-A of the Haryana General Sales Tax Rules, 1975 - Held that:- The exemption is to be sought by and in respect of a unit, inter alia, of a company and is granted to the unit. The distinction between the juristic entity, namely, the company and a unit thereof has been drawn throughout the Rules. The Rules we quoted earlier are only a few illustrations of this. The exemption is given to the unit and not to the company. The refusal of the exemption to the second unit makes no difference in determining whether the provisions of sub Rule (11) of Rule 28-A had been met by the unit to which the exemption was granted. For this reason, it is irrelevant whether the registration certificate in respect of the second unit is granted or not and if granted whether it is subsisting or not. Even if it is not subsisting or not granted, it would be irrelevant while determining whether the unit in respect of which exemption is granted has achieved the production figures and has met the other requirements. - Decided against assessee.
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2015 (4) TMI 284
Classification of goods - Whether honeycomb partition frames manufactured and supplied by the assessee to the Indian Railways is a part of rail coach, falling under Entry No.76 of Third Schedule to KVAT Act - Held that:- If a particular good is enumerated to the Schedule of the Act, then, levy of tax should be according to the said specification. Infact, a Division Bench of this Court in the case of ‘STATE OF KARNATAKA v. M/s. MYSORE THERMO ELECTRIC P. LTD.’ dealing with the question of battery being the part of the railway which falls under Sl.No.76 of the Third Schedule, held that if battery sold to the railways under the expression ‘part thereof’, were manufactured as per the specifications of the railways, the dealers are liable to collect tax at the rate of 4% falling under Entry 76 of the Third Schedule as the battery is an integral part of the rail coaches, engines and wagons and falls under ‘part thereof’. On the same analogy, the honeycomb partition frames used for partition of the rail coaches becomes a part thereof of the rail coaches and therefore, the Tribunal was justified in holding that the honeycomb partition frames manufactured and supplied by the assessee to the railways, form part of a rail coach and falls within Entry No.76 to the Third Schedule of the KVAT Act. We do not see any error committed by the Tribunal. - Decided against Revenue.
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2015 (4) TMI 283
Validity of order passed - Order passed without giving time for production of Declaration Form in Form-C - Held that:- as the Declaration Form in Form-C is now readily available with the petitioner and also the contention of the petitioner that if the same is allowed to be produced before the respondent, then, he will be able to substantiate that he is not liable to pay any tax at all and also the fact that the assessee can be permitted to produce the Declaration Form in Form-C, within five years from the assessment year, with sufficient reasons, I am inclined to set aside the impugned order and the matter is remitted back to the respondent only to the limited extent to decide the matter afresh after taking into consideration the reply of the petitioner dated 17.11.2014 along with Form-C, if it is within time. - Matter remanded back - Decided in favour of assessee.
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Indian Laws
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2015 (4) TMI 281
Debarring of petitioner from dealing with excise department of the State in any manner for a period of five years - business of foreign liquor - Balcklisting of petitioner - held that:- Excise Commissioner was satisfied with the fact that the petitioners have obtained the label registration on the basis of false affidavit and forged documents and accordingly debarred them from dealing with the excise department of the State of Rajasthan in any manner for a period of five years. It is on that basis that the District Excise Officer has passed the order of blacklisting of the petitioners. The impugned order has been passed after due compliance of principles of natural justice and factual foundation of the impugned order has not been disputed. Blacklisting of the petitioner firm for a period of five years cannot be said to be in any manner excessive of harsh penalty. - None of the impugned orders passed by the Excise Commissioner and the District Excise Officer suffer from any illegality - Decided against Petitioner.
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2015 (4) TMI 272
Refusal of the Comptroller and Auditor General of India (CAG) to maintain the GPF accounts of the employees of the College - altering of service conditions - Held that:- the petitioners were employees of the Chandigarh Administration and as a sequitur the office of the CAG was duty-bound to maintain the accounts including the GPF accounts. The circumstances under which the College attained the status of a deemed University and thereafter its functioning was put under a registered society form a part of the notification dated 8.7.2004 from which we have extracted in extenso to the extent applicable to the issue in question. This notification sets out the terms and conditions qua the employees and the very essential substratum qua the employees is the continuation of their service conditions. Thus, it is really not in issue that the service conditions of the petitioners cannot be altered to their determent in view of the specific Clause-29 and other clauses. It is not as if it is for the first time that the audit is sought to be entrusted to the CAG’s office so as to invite Section 20 of the Comptroller and Auditor-General (Duties, Powers and Conditions of Service) Act, 1971, which has a proviso that such a request made qua a body which has not been entrusted to the CAG would be with the consultation of the CAG. The CAG has been carrying on the audit in the present case earlier and the conditions of the notification converting the College into a deemed University and thereafter entrusting its management to a Society registered for the said purpose itself require a continued role of the CAG. - order of the Accountant General (A&E), Punjab and Union Territory of Chandigarh conveyed under the cover of the letter of the PEC is quashed and a direction is issued that the GPF accounts of the employees of the PEC (now a deemed University) would be maintained by the office of the CAG. The respondents will take the consequent action qua transfer of funds from the private Trust to the CAG. - Decided in favour of Appellant.
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2015 (4) TMI 271
Acquisition of power company - Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 - Held that:- It is observed that as the Acquirers have only a small presence in power generation in India, the proposed acquisition of the Target SPVs by the Acquirers, is not likely to have any appreciable adverse effect on competition in India. Considering the facts on record and the details provided in the notice given under sub-section (2) of Section 6 of the Act and the assessment of the combination after considering the relevant factors mentioned in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination under sub-section (1) of Section 31 of the Act. - Acquisition approved.
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