TMI Tax Updates - e-Newsletter
May 16, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Disallowance of Expenses - assessee did not actually provide any professional services at all, but six persons who were employees of the assessee on paper but actually work for the parent company - Disallowance confirmed - AT
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Income Tax:
Exemption u/s 11 - the payment of donation by assessee trust to another registered public charitable trust is not in violation of section 13(1)( c) - AT
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Income Tax:
Unexplained expenditure u/s 69C - it was found that the assessee along with many other persons have given donation to the education society for admission to the courses conducted by the group - Additions only on the basis of entries in a diary without any corroborative evidence cannot be held to be justified - AT
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Income Tax:
Reopening of assessment - Reasons to believe - AO should dispose all the objections - In issues, such as this, where jurisdictional issue is involved, the same must be strictly complied with by the authority concerned. - AT
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Income Tax:
Disallowance u/s 40A(3) - genuineness of the cash payments - consideration paid to agriculturists in respect of purchase of agricultural lands - the case would fall under the exceptions provided in Clause (j) of Rule 6DD - HC
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Income Tax:
Addition to income - scrutiny assessment u/s 143(2) - his statement was recorded from the back of the assessee, and no opportunity to cross-examine the deposer was given to the assessee. Hence, this statement cannot be used against the assessee - AT
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Income Tax:
LTCG - in order to get the benefit u/s 54 of the Income Tax, the assessee need not complete the construction of the house and occupy the same - HC
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Income Tax:
Reopening of assessment - revenue had an efficacious remedy open to it in the form of a rectification u/s 154 for correcting a computational error and consequently recourse to the provisions of section 147 was not warranted - AT
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Income Tax:
Carry forward of business losses - the assessee in the instant case did not file return of income within due date as prescribed u/s 139(1) of the Act and hence , the assessee will not be allowed to carry forward un-adjusted business loss - AT
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Income Tax:
Revenue has no option but to tax the income in the right hands irrespective of the fact that wrong person has already been taxed for the particular income - AT
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Customs:
Confiscation of Paddy/Rice stored by the appellants in two godowns situated close to the Indo-Nepal border - the activities of the appellants have to be considered as an “attempt” to export and not a simple “preparation". - AT
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Customs:
Revokation of CHA licence - present order issued without indicating the disagreement with the enquiry report and getting the response of the appellant, is in clear violation of principles of natural justice - order is unsustainable and set aside - AT
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Finance Act / Amendment Acts:
THE FINANCE ACT, 2016
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Indian Laws:
The Income Declaration Scheme 2016 to open from 1st June 2016.
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Wealth-tax:
Penalty u/s 18(1)(c) of the W.T. Act - the filing of the return was not a voluntary one but after detection by the department. In none of those cases there was detection of unaccounted cash or other assets prior to issue of notice u/s.17 - Levy of penalty confirmed - AT
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Service Tax:
Recall of final order - the final order though passed after examining the merits of the case, has been passed without representative from the appellants side - matter to restored to be heard afresh - AT
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Central Excise:
Clandestine removal of goods - Appellant contended that valuation of stock was on estimation basis and there is bound to be a variation - 10% variation as normal is allowed, but over and above 10%, in absence of cogent explanation, demand of duty confirmed - AT
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Central Excise:
The contention of the appellant that once the case against main noticees is settled in Settlement Commission, a case against all other noticees stands settled, is not correct - if the liability of the co-noticees arise from different act they will not get immunity from further proceeding. - AT
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Central Excise:
Classification - Pontoon with spuds classifiable under Chapter Heading No. 89.05 eligible for exemption from payment of duty - AT
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VAT:
Valuation - Once anti dumping duty is levied, the same becomes part of the sale price, as otherwise the sale price of the product imported into India will be different from the sale price of the product domestically manufactured - Demand of Value added tax (VAT) confirmed - HC
Articles
Notifications
News
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The Income Declaration Scheme 2016 to open from 1st June 2016.
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India’s Foreign Trade (Merchandise): April, 2016
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
Case Laws:
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Income Tax
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2016 (5) TMI 590
Disallowance u/s 40A(3) - genuineness of the cash payments - consideration paid to agriculturists in respect of purchase of agricultural lands - Held that:- All the three authorities have failed to appreciate that when a vast extent of agricultural lands is purchased from several persons, especially in villages, it is not possible to expect the villagers to accept the sale consideration by way of crossed account payee cheque or bank draft. Therefore, so long as the payees are identified and the genuineness of the transaction is not questioned and so long as the payments have been made at the time of registration in the presence of the Sub Registrar, the case would fall under the exceptions provided in Clause (j) of Rule 6DD. Therefore, we are of the considered view that the questions of law are to be answered in favour of the assessee
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2016 (5) TMI 589
Entitlement to exemption under Section 54 - ITAT concluded merely purchasing a flat for the purpose of seeking exemption of capital gain taking within a period of two years would imply taking the actual possession and also completion certificate of such premises within such period - Held that:- The purchase would be computed when the consideration is duly paid by the assessee for the purpose of purchasing the premises and the construction had already commenced by the builder which remained to be completed on account of the litigation. In the present case, Tribunal has noted that the assessee has sold the property on 01.12.2009 and the assessee has made the payment on 16.03.2010. The assessee was required to get the house and occupancy certificate on or before 01.12.2011. But however, the assessee got the occupancy certificate of the property on 17.01.2014. The assessee submitted the documentary evidence to show that after purchasing the property there was a civil suit filed by the other parties and the assessee could not complete the construction and the licence for constructing the house was accordingly delayed. The learned Tribunal further noted that CIT (A) in his order relied upon the decision of the Madras High Court in the case of CIT V/s Sadarmal Kothani (2008 (6) TMI 15 - MADRAS HIGH COURT ) wherein, it is held that in order to get the benefit under Section 54 of the Income Tax, the assessee need not complete the construction of the house and occupy the same. It is further noted that the assessee has invested the money and the occupancy certificate is delayed which is beyond the control of the assessee then the assessee is entitled for deduction under Section 54 of the Act. The learned Tribunal as such found that the assessee was entitled for deduction under Section 54 of the Act - Decided against revenue
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2016 (5) TMI 588
Exemption u/s 11 - violation of section 13(1)( c) - a sum of ₹ 6,76,132/- was received by the assessee society as donation from Society of St. Joseph of Cluny, Kolkata for building construction at Kanchrapara and the assessee society gave donation of ₹ 18,30,000/- to the said Society of St. Joseph of Cluny, Kolkata. - Held that:- When the donation given by one trust to another trust out of current year’s income is permitted in section 11 of the Act as an application of income, the same cannot be curtailed by another provision of the Act (i.e section 13(1)(c ) (ii) read with section 13(3) of the Act) as it would defeat the very purpose of such provision. It is not the case of the revenue that the funds of the trust have been applied /diverted for the private benefit of the trustees, settlors or any individuals /relatives. This is what is the true intention of section 13(1)(c ) of the Act. In the instant case, it is a case of simple donation by one public charitable trust to another public charitable trust, wherein no individual could hold any substantial interest. In view of the above findings, we hold that the payment of donation by assessee trust to another registered public charitable trust is not in violation of section 13(1)( c) of the Act as the said payment is not made for the benefit of any person either directly or indirectly referred to in section 13(3) of the Act. - Decided in favour of assessee
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2016 (5) TMI 587
Claim of business loss - Treatment of business income or income from house property - Held that:- CIT(A) was right to hold that the assessee did not carry on any business activity in the nature of rendering professional services to its parent company as claimed and that the entire arrangement between them was with a view to claim expenses which are not otherwise allowable under the head income from house property and interest income. We, therefore, uphold the impugned order of the ld CIT(A) disallowing the assessee’s claim of business loss.- Decided against assessee Disallowance of Expenses - assessee did not actually provide any professional services at all, but six persons (General Manager, Manager, Executive, Manager, Asst. Manager, Asst. Manager and a Peon) who were employees of the assessee on paper but actually work for the parent company - Held that:- We have upheld the factual findings of the learned CIT(A) that the assessee did not carry out any business activity in the year under consideration and therefore disallowed the assessee’s claim of business loss. In this view of the matter, the assessee had income from only two activities/sources, i.e. earns ‘income from house property’ given on rent and ‘interest income’. The authorities below have also observed that the assessee had already availed deduction of ₹ 26,96,445/- which covered all those expenses the assessee required for day to day maintenance of the assessee company, like statutory obligations of filing fees, audit, etc. The assessee has, in our view, failed to controvert the above factual findings by the authorities below. We find that the expenses which are allowable under its two income heads ‘income from house property’ and ‘income from other sources’, have already been allowed and we therefore, uphold the decision of the learned CIT(A) that no further expenses are to be allowed. - Decided against assessee
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2016 (5) TMI 586
Addition to income - scrutiny assessment u/s 143(2) - statement recorded under section 133A - value of the statement taken during the course of survey - Held that:- The issue regarding evidentiary value of the statement taken during the course of survey, has fallen for consideration before the Hon’ble Kerala High Court in the case of Paul Mathews and Sons (2003 (2) TMI 25 - KERALA High Court) held as during the course of survey, the officer could record the statement of a person under sub-section 3(iii) of section 133A of the Income Tax Act. This clause authorizes the authority to record a statement of any person which may be useful for or relevant to any proceedings under the Act. However, the officer is not authorized to record the statement on oath, and hence, the statement taken during the course of survey, has no evidentiary value. It is simply an information, which can be used for corroboration purpose for deciding any issue in favour or against the assessee. Post survey inquiry statement of PSP recorded under section 131which was on oath - if statement recorded under section 133A was ignored, then, there is a further disclosure by the payer. We find that his statement was recorded from the back of the assessee, and no opportunity to cross-examine the deposer was given to the assessee. Hence, this statement cannot be used against the assessee. We find support from the decision of Hon’ble Supreme Court in the case of Kishanchand Chellaram (supra) wherein it was held that any material not confronted to the assessee would not constitute as admissible evidence and consequently addition made on the basis of such evidence is liable to be deleted. In the present case PSP was not subjected cross-examination. His statement was not recorded in the assessment proceeding of the assessee. It was in post-survey inquiry of his own case. Therefore, this piece of evidence is to be excluded. Loose papers and small diaries impounded during the course of survey carried at the premises of PSP - even at the premises of PSP, no search was conducted. There was no common documents executed between PSP and the assessee was found, which bears the signatures of both the parties. To the extent common document was found i.e. last entry where assessee has confirmed receipt and put his signature in the diary of PSP , assessee has offered the amounts for taxation. If we evaluate the evidence collected by the AO in shape of loose paper impounded during the course of survey, in the light of the decision of Abhalbhai Arjanbhai Jadeja (2013 (4) TMI 731 - GUJARAT HIGH COURT ), then, it would reveal that conclusive evidence was not collected even during the course of survey demonstrating the payment made to the assessee. Therefore, we allow ground of the appeal of the assessee and delete the addition. - Decided against revenue
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2016 (5) TMI 585
Set off of loss from one source against income from another source under the same head of income - adjustment of non-speculative business loss incurred on F & O derivative trading business - Held that:- On perusal of the Section 71 of the Act , it is observed that it deals with set-off of losses incurred under one head of income against another head of income. The language of Section 71(2) of the Act is plain and clear and it allows the losses incurred under any head other than under the head ‘capital gains’ to be set off against income under any other head of income including head ‘capital gains’. The language is clear and plain and we do not see any bar or prohibition on adjustment of losses incurred by the assessee in F & O trading business against the short term capital gains earned by the assessee on sale of shares and other income earned by the assessee except salary income as there is a specific bar and prohibition raised by the statute by virtue of Section 71(2A) of the Act which debar adjustment of losses incurred under the head ‘Profits and gains of business or profession’ to be set off against salary income. Section 71(2A) has a non-obstante clause and creates a bar notwithstanding what is contained in Section 71(1) and 71(2) of the Act. The assessee has incurred losses in F & O trading in derivatives which is assessable as non-speculative business loss under the head ‘Profit and Gains of business or profession’ and bar as contained in Section 71(2A) of the Act shall operate and the assessee will not be entitled to set off losses in F & O derivative trading business against salary income earned by the assessee , while assessee will be entitled to set-off such losses in F & O derivative trading business losses which are non-speculative business losses against capital gains on sale of shares and other income earned by the assessee except salary income Belated return filed - Held that:- Assessee did not file return of income with Revenue with-in due date stipulated u/s 139(1) of the Act , rather the return was filed belatedly u/s 139(4) of the Act. Provisions of Section 139(3) of the Act read with Section 80 of the Act ,post amendment by the Direct Tax Laws (Amendment) Act ,1987 w.e.f. 01-04-1989, clearly stipulate that for losses sustained by the tax-payer under the head ‘Profit and gains of business or profession’ or ‘Capital gains’ whereby the tax-payer claims to take benefit of carry forward of such losses u/s 72(1),73(2) , 74(1),74(3) or 74A(3) of the Act , the tax-payer has to file return of income as per provisions of Section 139(1) of the Act within due date specified in Section 139(1) of the Act and any non-compliance will disentitle carry forward of such losses by virtue of Section 139(3) read with Section 80 of the Act. The recourse in such a case is to approach CBDT u/s 119 of the Act for allowability of carry forward of such losses which are claimed vide belated return of income filed with Revenue. Admittedly, the assessee in the instant case did not file return of income within due date as prescribed u/s 139(1) of the Act and hence , the assessee will not be allowed to carry forward un-adjusted business loss arising from F & O derivative trading business chargeable to tax under the head ‘Profit and gain of business or profession’ which remained un-adjusted after adjusting the same under the other heads of income except salary income , as per our decision in preceding para’s
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2016 (5) TMI 584
Unexplained expenditure u/s 69C - it was found that the assessee along with many other persons have given donation to the education society for admission to the courses conducted by the group - Held that:- Additions in this case only on the basis of entries in a diary without any corroborative evidence cannot be held to be justified. It is pertinent to mention here that in this case the statement of the assessee was recorded by the Assessing Officer and specific questions were put regarding the diary entry/capitation fee. However, the assessee has specifically denied regarding making of any cash payment to the institute and the Assessing Officer has failed to bring any evidence on the file to show that the statement made by the assessee before him was wrong. In view of this, the additions made by the lower authorities in this case do not seem to be justified and the same are accordingly ordered to be deleted. - Decided in favour of assessee
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2016 (5) TMI 583
Reopening of assessment - excess claim of depreciation which had resulted from the wrong claim of the brought forward depreciation as against the correct claim - whether it is an apparent arithmetic error or computational error? - Held that:- In the present case to correct a simple apparent mistake which could have been rectified by the AO by exercising his power u/s 154 of the Act, the AO choose to re-open the entire assessment and thus assumed the unlimited jurisdiction and various additions were made apart from the excess claim of depreciation as recorded in the reasons u/s 148(2) of the Act which in our opinion is against the scheme provided in the Act. We find merits in the argument of the ld. AR Mr. Joshi that an effective and efficacious remedy available with the AO was u/s 154 of the Act to rectify the wrong claim by the assessee on account of excess unabsorbed depreciation claim which empowers the tax authorities including the AO to amend any order passed by them with a view to rectify any mistake apparent from the record. In the case of Hindustan Unilever Ltd. vs. Deputy Commissioner of Income-Tax (2010 (4) TMI 206 - BOMBAY HIGH COURT ) the Hon’ble Bombay High court has clearly held that the revenue had an efficacious remedy open to it in the form of a rectification under section 154 for correcting a computational error and consequently recourse to the provisions of section 147 was not warranted. Also excessive claim on account of brought forward depreciation was sought to be rectified by the re-opening of the entire assessment is also against the ratio laid down by the Hon’ble Jurisdictional High Court in the above decision. In the case of J.C. Thakkar vs. CIT [ 1955 (2) TMI 9 - BOMBAY HIGH COURT ] We, therefore annul and quash the re-opening of the assessment u/s 147 of the Act and consequent reassessment order without going into the merit of the case and . - Decided in favour of assessee
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2016 (5) TMI 582
Taxability of capital gain in the hands of the partnership firm - assessee contended that the partners have already paid taxes in their individual hands and taxation on the firm for the same capital gains would amount to double taxation - Held that:- We notice that the issue is squarely covered against the assessee by the decision of the jurisdictional High Court in the case of CIT vs. A N Naik Associates, (2003 (7) TMI 46 - BOMBAY High Court ) discussed by the CIT(A) in its order. The consideration received on transfer of the property by the partnership is taxable in the hands of the partnership firm in view of the expression ‘otherwise’ employed in S. 45(4) of the Act. Accordingly, we are in agreement with the view of the CIT(A) that the impugned capital gains are taxable in the hands of the partnership firm. We also do not find any merit seeking relief on the ground that the partners have already paid taxes in the individual capacity. The Hon’ble Supreme Court in the case of ITO vs. Ch. Atchaiah (1995 (12) TMI 1 - SUPREME Court ) has held that the Revenue has no option but to tax the income in the right hands irrespective of the fact that wrong person has already been taxed for the particular income. Hence, we decline to interfere with the order of the CIT(A) appealed against. - Decided against assessee
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2016 (5) TMI 581
Reopening of assessment - Reasons to believe - Held that:- Rule with regard to furnishing of reasons by the AO is to be followed strictly, as the power given to the AO for reopening of a completed assessment under the Income Tax Act, is an exceptional power and whenever Revenue seeks to exercise such power, it must strictly comply with the prerequisite conditions i.e. ‘Reasons’ must be recorded and these recorded ‘Reasons’ must be furnished to the assessee, when sought for, so as to enable the assessee to object to the same, during the course of assessment proceeding. Thus, in absence of ‘Reasons’ provided by the AO to the assessee, the reassessment order shall be bad in law. The recording of ‘Reasons’ and furnishing of the same has to be strictly complied with, as it is a jurisdictional issue. This requirement is very salutary as it ensures that reopening is not done in a casual manner. In addition to that, in case reopening has been done on some misunderstanding/misconceptions, then, the assessee is given opportunity to point out that reasons to believe, as recorded in the ‘Reasons’, do not warrant reopening, before the assessment proceedings are commenced. The AO can dispose all these objections, and if satisfied with the objections, the impugned reopening notice issued u/s 148 of the Act can be withdrawn; otherwise it can be proceeded with further. In issues, such as this, where jurisdictional issue is involved, the same must be strictly complied with by the authority concerned. Thus we hold that reopening of this case, in the given facts and circumstances of the case, is invalid - Decide in favour of assessee.
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2016 (5) TMI 580
Reopening of assessment - share capital received - Held that:- The present case is one of change of opinion. The questionnaire and particularly question B.1 specifically raise the issue with regard to share capital. It requires the petitioner to give a list, source, genuineness, identity of the share holders along with confirmation copies of the ledger account of the party including confirmation of the mode, date, address and acknowledgement of return, etc. from the said party along with source and relevant bank entries. The said information was provided by the assessee. After receipt of the said information, Assessing Officer did not think it fit to make an addition and, under these circumstances, no addition itself amounts to forming an opinion as has been held in Usha International Ltd. (2012 (9) TMI 767 - DELHI HIGH COURT ). Therefore, in our view, the present exercise of issuing the notice under Section 148 of the Act would amount to nothing but a change of opinion, which is not permissible.In the present case also, there is not even a whisper of any allegation that there has been a failure on the part of the assessee to disclose fully and truly all material particulars necessary for assessment. - Decided in favour of assessee
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2016 (5) TMI 579
Seizure of the stock of gold and cash challenged - release of seized goods seeked - Held that:- The premises of the petitioners was raided on 11.07.2005 nearly 11 years ago. 6 Kilograms of gold bars and currency was seized therefrom. Till date, there is no justification forthcoming for either the conduct of the raid or for seizure of the said articles. There is nothing on record to show that any proceedings for assessment/re-assessment were initiated till date against the petitioners in respect of the articles seized in 2005. We find no justification for any further retention of the seized gold bars as well as the currency amounting to ₹ 1,49,000/-. The respondents are accordingly directed to forthwith release the 6 Kilograms gold bars as also the Indian currency amounting to ₹ 1,49,000/- in favour of M/s J.P. Goel and Sons Private Limited through its Director, Sh. Gauri Shankar Goel.
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2016 (5) TMI 578
Transfer pricing adjustment - whether the Tribunal is right in law in setting aside the issue of transfer pricing to the file of the TPO for reconsidering the issue on the adoption of the most appropriate method and to arrive at the ALP after making the adjustment after taking the appropriate comparables, as even for computation of ALP by adopting CUP method? - Held that:- Even if we consider that under Section 92 of the Income Tax Act, such an exercise is available read with the decision of Delhi High Court in the case of EKL Appliances Ltd (2012 (4) TMI 346 - DELHI HIGH COURT ) then also, the Tribunal after examining the record has found that the services rendered were concerning the business and once the nexus is found and the factual aspect is considered by the Tribunal, it cannot be said that the Tribunal ought to have remanded the matter by keeping that question once again open for consideration by the TPO. Further, the Tribunal has rightly considered and examined the decision of Delhi High Court in case of EKL Appliances Ltd (supra). As such, in our view, no substantial question of law arises for consideration, as sought to be canvassed.
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2016 (5) TMI 577
Disallowance under Section 36(1)(vii) - Held that:- In the first round of disptue with regard to the subject income of the appellant, the fact finding Authority has come to the conclusion that the disputed amount was not actually received by the appellant, nevertheless, the learned Tribunal, whilst passing the impugned order dated 15/1/2015, has taken a view that such amount was actually received by the appellant. There is no material on record to come to such a conclusion and the finding to that effect is based on no evidence and consequently, is a perverse finding of fact. As the impugned order passed by the learned Tribunal stands vitiated on that count, the impugned order deserves to be quashed and set aside and the matter be remanded to the learned Tribunal to examine the appeal preferred by the Respondent/Revenue afresh, in accordance with law.
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2016 (5) TMI 576
Disallowance made u/s. 14A r. w. Rule 8D - Held that:- There is no doubt that the assessee had not earned exempt income during the year under consideration, so, in our considered opinion, no disallowance can be made u/s. 14A of the Act. - Decided in favour of assessee.
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2016 (5) TMI 575
Revision u/s 263 - Non deduction of tds on payments made in pursuance of Cost Allocation and Recharge Agreement’- disallowance u/s. 40(a)(ia) - Held that:- When the Assessing Officer examined the material called for and placed before him by the assessee, which fact is admitted by the Ld. CIT, and the Assessing Officer took a correct possible view in the matter, the order of assessment cannot be termed to be erroneous and prejudicial to the interest of the Revenue. We, therefore, hold that the Ld. CIT was not justified in assuming jurisdiction u/s. 263 of the Act for assessment year 2010-11 in the case on hand and, therefore, cancel the impugned order passed u/s. 263 of the Act on 18/2/2015 for assessment year 2010-10 in the case on hand. Even on merits, we concur with averments of the assessee that where expenses incurred by ‘GSISPL’on its behalf and the same are reimbursed, it is a mere-recoupment of expenses. It would not constitute income of the recipient so as to cast a liability upon the assessee for deduction of tax at source on such payments and, therefore, disallowance u/s. 40(a)(ia) of the Act is not warranted. We find that the very same issue was considered by a Co-ordinate bench of this Tribunal in the assessee’s own case for the assessment year 2009- 10 holding that payments made by the assessee in pursuance of Cost Allocation and Recharge Agreement’ between the assessee and ‘GSISPL’ was purely on account of reimbursement of expenses which were incurred by GSISPL and hence there being no income element involved in such payments, there was no requirement to deduct TDS thereon. - Decided in favour of assessee
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2016 (5) TMI 574
Eligibility of deduction u/s.80IB(10) - Held that:- Respectfully following the decision of Hon. Jurisdictional High Court in the case of CIT vs. Radhe Developers (2011 (12) TMI 248 - GUJARAT HIGH COURT) and applying the ratio of the decision to the facts of the case before us, we are of the considered opinion that assessee is a developer of the project and not merely a works contractor and is eligible for deduction u/s 80IB(10) of the Act - Decided in favour of assessee.
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2016 (5) TMI 573
Setting off of losses against income from STPI unit while computing deduction under section 10A - Held that:- Assessee was claiming deduction under section 10A of the Act in respect of export of software in eight units at different places, out of which five units had declared positive profits and balance three units had declared losses for the captioned assessment years. The assessee had claimed deduction under section 10A of the Act unit-wise, whereas the Assessing Officer was of the view that the said deduction under section 10A of the Act is to be allowed to the assessee after setting off of losses of three units against the profits of five units and on the balance, the assessee was entitled to claim the said deduction. Assessee is entitled to claim the deduction under section 10A of the Act in respect of its STPI unit and the losses from non - STPI units are to be carried forward to the succeeding years. See M/s. KPIT Cummins Infosystems Ltd. Vs. DCIT [2015 (12) TMI 398 - ITAT PUNE] - Decided in favour of assessee.
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2016 (5) TMI 572
Additional depreciation under Section 32(1)(iia) in respect of the new plant and machinery installed and used for manufacturing activity - asset put to use - Held that:- The assessee is eligible for remaining 10% additional depreciation under Section 32(1)(iia) of the Act. The orders of the lower authorities are set aside and the Assessing Officer is directed to allow the balance 50% depreciation, namely, 10% additional depreciation during the year under consideration.
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2016 (5) TMI 571
Reopening of assessment - receipt of on-money - Held that:- When no evidence is available for receipt of on-money during assessment year 2008-09, extending the analogy to other assessment years for re-assessment proceedings may not be justified. As rightly found by the CIT(Appeals), there is no base for the reasons to believe that the income otherwise chargeable to tax has escaped assessment. In the absence of any material to suggest that the income chargeable to tax escaped assessment, this Tribunal is of the considered opinion that the Assessing Officer cannot believe that the income chargeable to tax escaped assessment. Since the statement recorded from Shri A.B.S. Sanjay does not indicate any receipt of on-money during assessment year 2008-09 and no material is available on record for assessment years 2007-08 and 2009-10, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that there is no justification in reopening the assessments. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided in favour of assessee.
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Customs
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2016 (5) TMI 602
Revokation of CHA licence - Disagreement with the enquiry report - advice to the client to comply with the provisions of Customs Act and exercise of due diligence to ascertain the correctness of any information with reference to work relating to clearance of cargo - Import of deodorants, perfumes - Held that:- the enquiry report analyzed various evidences with reference to these allegations and found that they are not proved. The enquiry report in full was communicated to the appellant by the Assistant Commissioner. A perusal of the said communication indicates that it enclosed the enquiry report and requested the appellant to submit their representation, if any, within 30 days in terms of Regulation 20(6) of CBLR, 2013. There is no indication or reference to any possible difference of opinion with reference to the enquiry report as entertained by the Original Authority. In other words, the enquiry report which exonerated the appellant totally, was communicated to the appellant for representation. Apparently, the appellant gave a reply reiterating their defence and supporting the findings of the Inquiry Officer. There is nothing to indicate that the appellant has been put to notice on the disagreement of the Original Authority with any part of the enquiry report. Therefore, it is clear that the present impugned order issued without indicating the disagreement with the enquiry report and getting the response of the appellant, is in clear violation of principles of natural justice by referring the decision of Hon'ble Bombay High Court in the case of Commissioner of Customs (General) vs. Dominic and Co. [2015 (8) TMI 142 - BOMBAY HIGH COURT]. The impugned order is unsustainable and set aside. - Decided in favour of appellant
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2016 (5) TMI 601
Confiscation of goods under section 113(c) and imposition of penalty under Sec 114 of the Customs Act 1962 - Paddy/Rice stored by the appellants in two godowns situated close to the Indo-Nepal border - Appellant contended that goods seized from the godowns situated in India can at best be a preparation but can not be said to be an act indicating attempt to export the same out of India. Held that:- there are two statements of Sh. Vijay Kumar Bajaj & Smt Soni Jaiswal that the seized goods were meant for illegal export to Nepal. It is also observed that there are documentary evidences to the effect that on earlier occasions also appellants have illegally exported similar goods to certain Rice Mills in Nepal on tractor trolleys. There are also documentary evidence to that effect collected by investigation during search. Denying the relevance of these documents later on can only be considered as an after thought on the part of the appellants. Appellants did not cross examine the persons whose statements were implicating them. There is no reason to brush aside the statement of Smt Soni Jaiswal, wife of Sh. Umeshwar Prasad Jaiswal to the effect that the seized goods were meant for export to Nepal. Further the words dutiable or prohibited existing in Sec-113 (c) have been deleted with effect from 14.05.2003, making the provision applicable to any goods brought near to the land fromties for the purpose of being exported. Therefore, on the basis of the existing evidences in these proceedings the activities of the appellants have to be considered as an “attempt” to export and not a simple “preparation.” This bench, therefore, does not find it proper to interfere with the orders passed by the first appellate authority which is based on cogent reasoning. - Decided against the appellant
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2016 (5) TMI 600
Confiscation of goods and imposition of penalty - Section 112 of the Act - Import of mobile phones of different brands, both Indian and Chinese - Mobile phones detained from the shop premises of appellant are smuggled and not legally imported as per revenue. Held that:- it is found that this is a new case being made out by the revenue at this stage, that the revenue had verified the documents, like bill of entry produced by the sellers of the respondents, wherein the import documents verified by the revenue and found to be correct. In absence of any adverse observation in the show cause notice that the goods in question do not relate to the import documents produced in the course of investigation, no new case can be made out before the Tribunal in the second appeal. Further, it is also found that the ld. Commissioner (Appeals) has dealt with the issue in detail and recorded the findings. Therefore, there is no error in the findings of the ld. Commissioner (Appeals)and accordingly, the impugned order is upheld. - Decided against the revenue
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2016 (5) TMI 599
Settlement of a case - Demand of Custom duty and imposition of penalty - Section 112, 114A & 114AA of Custom Act, 1962 - Evasion of Special Additional Duty - Goods imported through Free Trade Warehousing Zone without payment of SAD by claiming exemption under Notification No. 45/2005-Customs, dated 16-5-2005 and were used in their factory for manufacturing of PVC flooring - Clearances made during the period from 12-3-2013 to 30-7-2013 - Revenue objected that the application is inadmissible because of the bar provided in Section 127L. Held that:- the words and phrases used in the Section 127L are “shall not be entitled to apply”. The bar is on applying subsequent to order of settlement imposing the penalty. The applicant’s case is not clearly hit by this bar as in their case the present application has been filed before the order imposing penalty was passed. Thus, the Bench’s earlier order allowing the application to be proceeded with is unaffected. Whether the benefit of exemption from SAD under this notification would be available when a DTA unit imports goods and routes it through SEZ/FTWZ for self-consumption i.e. in the nature of stock transfer from SEZ/FTWZ” - Held that:- the Board through circular 44/2013, dated 30-12-2013 has clarified that the benefit of the notification is not available to the goods which are for self-consumption and consequently SAD is attracted. In the instant case, the goods were for self-consumption and condition of the notification was not satisfied. As such the provisions of Section 111(o) get attracted rendering the liable to confiscation and the applicant/co-applicant liable to penalty under Section 112. The goods are not available for confiscation but the applicant/co-applicant are liable to penalty under Section 112. As there was no misstatement, fraud, etc., neither Section 114A nor Section 114AA is attracted. Quantum of penalty under Section 112 - Held that:- the opening paragraph of the Board’s circular confirms the claim of the applicant that there was confusion about the applicability of SAD. This fact will have a bearing on the quantum of penalty. The immunities to the applicant and the co-applicant are granted under Section 127H(1) of the Act. Their attention is also invited to the provisions of sub-section (2) and (3) of Section 127H ibid. This order shall be void and immunities withdrawn if the Bench, at any time finds that the applicant had concealed any particular material from the Commission or had given false evidence or had obtained this order by fraud or misrepresentation of facts.
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2016 (5) TMI 598
Seeking declaration for the respondent's action violating the petitioner's fundamental right and Constitutional mandate - Article 19(1)(g) and Article 14 of the Constitution of India - not allowing the normal operation of the Customs Broker License as per order of CESTAT - prohibitory orders. Held that:- interest of justice would be served, if we direct the Commissioner at Kanpur to conclude the proceedings as expeditiously as possible and within two months from the date of receipt of a copy of this order. If the proceedings could not be concluded for reasons other than non cooperation of the petitioner, then, the Commissioner may consider the petitioner’s request for restoration of the license, pending enquiry and such application shall be dealt with on its own merits and in accordance with law without being uninfluenced by a prior prohibitive order and pendency of the enquiry. We also clarify that the enquiry shall be concluded by the Commissioner by applying his mind independently to the charges in the show cause notice, the explanation given by the petitioner thereto and the documents and materials relied upon by the petitioner. The Commissioner should not influence himself by any preliminary enquiries or findings in any preliminary report. Equally, the Commissioner is free to decide the issue uninfluenced by any prima facie or tentative observation of the Tribunal. - Petition disposed of
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Corporate Laws
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2016 (5) TMI 595
Scheme of Amalgamation - Held that:- Perusal of the reports of the Official Liquidator and the Regional Director, the replies filed on behalf of the petitioner Transferee company and having considered the Scheme of Amalgamation together with the relevant documents on record, the Court considers it appropriate to grant sanction to the present Scheme of Amalgamation. In view of the above, the Scheme of Amalgamation is sanctioned. It is, however, directed that the Transferor Companies shall preserve their books of accounts, papers and record and shall not dispose of the records without the prior permission of the Central Government under Section 396 A of the Companies Act, 1956. The costs of all three petitions are determined at ₹ 7,500/each, payable to Shri Devang Vyas, Learned Assistant Solicitor General of India. The Transferor Companies are directed to pay an amount of ₹ 7,500/each to the office of the Official Liquidator.
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2016 (5) TMI 594
Scheme of Arrangement in the nature of Demerger - Held that:- The observations made by the Regional Director, Ministry of Corporate Affairs do not survive. In fact, most of the observations are frivolous and unwarranted. This Court, therefore, arrives at the conclusion that the present Scheme of Arrangement is in the interest of its Shareholders and Creditors as well as in the public interest and the same deserves to be sanctioned. The Scheme is, accordingly, sanctioned. The Reduction of Issued, Subscribed and Paid up share capital of the Demerged Company viz. Zenith Silk Mills Private Limited as envisaged under clause 14 of the Scheme is specifically granted. The prayers in terms of Paragraph Nos. 17(a) and 17(b) as well as the Minutes under Section 103(1) of the Companies Act, 1956, in terms of Paragraph 14 of the Company Petition No. 340 of 2015 for the Demerged Company viz. Zenith Silk Mills Private Limited and prayers made in Paragraph 15(a) of the Company Petition No. 341 of 2015 for the Resulting Company viz. Zenitex Mill Private Limited are granted.The petitions are disposed, of accordingly. So far as the costs to be paid to the Central Government Standing Counsel are concerned, they are quantified at ₹ 7,500/per petition. The same may be paid to Mr.Devang Vyas, learned Assistant Solicitor General of India. The Petitioner Companies are further directed to lodge a copy of this Order, the Schedule of immovable assets of the demerged undertakings being transferred to the Resulting Company, as on date of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of Stamp Duty, if any, on the same within 60 days from the date of the order. The Petitioner Companies are directed to file a copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with INC–28 in addition to physical copy as per relevant provisions of the Act.
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2016 (5) TMI 593
Scheme of Amalgamation deserves to be sanctioned. The proposed Scheme of Arrangement in the nature of Buy Back of the Equity Shares and consequential Restructure of Capital is hereby sanctioned.
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Service Tax
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2016 (5) TMI 612
Recall of final order - Final order passed without hearing their side - Held that:- the final order though passed after examining the merits of the case, has been passed without representative from the appellants side. Considering the submission made by the appellant and also the principle laid down by Hon’ble Supreme Court in the case of J.K. Synthetics Ltd. Vs. CCE [1996 (8) TMI 110 - SUPREME COURT OF INDIA], it is found fit and justifiable to recall the final order and to restore the appeal to its original number for due disposal afresh. - Decided in favour of appellant
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2016 (5) TMI 611
Service tax liability - Transport of goods by road received by the appellant for the period in question - Refusal of 75% abatement under the notification dated 1st July, 2006 as claimed - Appellant contended that the said notification even though was withdrawn on 1st March, 2008 yet the benefit of 75% abatement was available for the period in question which has been disallowed on the ground that the transporters did not give any declaration or certificate for providing such services and in the absence of such evidence the abatement could not have been claimed. Held that:- the applicability of abatement of 75% under the notification dated 1st March, 2006 which is in effect an exemption ought to have been considered in accordance with the instructions issued by the department itself on 27th July, 2005. What had to be seen by the Tribunal was substantial compliance, and if the statute had been followed sufficiently, then in that event the benefit claimed should not have been denied. In other words, it should not be an automatic or mechanical levy and consequently no penalty could have been imposed. Rejection of adjournment - Non-availibility of counsel - Tribunal proceeded without a proper opportunity of hearing - Held that:- it is not the case of the department that the appellant had indulged into any excessive adjournment or was deliberately trying to delay the hearing of the appeal. This was necessary to be observed as the Tribunal is the last court of fact and a finding of fact has to be recorded on consideration of relevant material and not on irrelevant considerations or else it can be impeached as being perverse. Therefore, the appeal deserves to be allowed on account of the impugned judgment having been rendered in violation of principles of natural justice adversely affecting the appellant which is clearly raises a substantial question of law. - Appeal allowed by way of remand
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2016 (5) TMI 610
Period of limitation - Refund of Service tax - Section 11B of the Central Excise Act, 1944 with Section 83 of the Finance Act, 1994 - Held that:- CESTAT ought to have first satisfied itself that the services rendered by the appellant was, on facts, amenable to service tax and different from the other three appeals which were heard together - in view of the decision of Tribunal in the case of Alar Infrastructures Pvt. Ltd. Versus Commissioner of C.Ex., Delhi-I [2015 (9) TMI 783 - CESTAT NEW DELHI], in so far it has dismissed the appeal of the present appellant is set aside and the appeal of appellant is restored to the file of the CESTAT for a decision afresh in the above terms in accordance with law. - appeal restored
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Central Excise
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2016 (5) TMI 609
100% EOU - shortage of 7734.79 meters of fabrics noticed when the fabrics cleared was received after job work - shortage is approximately 3% of the total quantity of fabrics sent for job work and the shrinkage in the fabrics of the type sent for job work ranges from 2.01% to 8.49% - Held that:- it is evident that there has been no illegal diversion of the goods sent for job work and the goods sent for job work were duly processed by the job workers and the resultant product (i.e. the processed fabrics) was either exported or sent back to the appellant; indeed there is no allegation of illegal diversion either. Therefore, there is no question of recovery of any differential duty on the shrinkage in this case. As a result, the impugned demand is not sustainable. When the impugned demand itself is not sustainable, the question of penalty in relation thereto under Rule 25 of Central Excise Rules, 1944 would not arise. Imposition of penalty under Rule 25 - Contravention of the provisions of Notification 52/2003-Cus dated 31.03.2003 and Notification 22/2003 date 31.03.2003 - Held that:- the foremost consequence of contravention of provisions of an exemption notification is denial of benefit thereof. It is found that the adjudicating authority has allowed benefit of the said notification to the appellant. It means that the so called contravention of the provisions of the said notifications were treated to be so insignificant as not to result in denial of the benefit thereof. In these circumstances, to impose penalty for the said contravention of the provisions of the said notifications cannot be called reasonable by any stretch of imagination. Therefore, the impugned order is not sustainable and set aside. - Decided in favour of appellant
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2016 (5) TMI 608
Demand of duty and imposition of penalties - Appellant contended that once the case against main noticees is settled in Settlement Commission, he argued that, a case against all other noticees stands settled and since there is no confiscation of goods, no penalty under Rule 26 of the Central Excise Rules can be imposed - Held that:- by applying the decision of Hon'ble Supreme Court in the case of Yogesh Korani Vs Union of India [2003 (7) TMI 703 - SUPREME COURT], if the liability of the co-noticees arise from different act they will not get immunity from further proceeding. Also there was a proposal for confiscation of goods and the matter was settled by the settlement Commission. Thus it is recognized that an offence was committed which required invocation of provisions for confiscation of goods. In the instant case the provisions of law for confiscation were invoked, the offence has been admitted before the Settlement Commission by the main party and settled. Thus it cannot be said that no offence meriting confiscation of goods was committed. Therefore, the penalty is imposable. - Decided against the appellant
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2016 (5) TMI 607
Manufacturing of Pan Masala / gutkha - Seeking abatement as per provisions of PMPM Rules 2008 - for the period when there was no production i.e. from 01.07.2008 to 16.07.2008 - Held that:- the rule says that they have to give intimation at least 7 days prior non-production of goods in their factory. From the facts it is clearly proved that appellants had intimated well in advance to claim the benefit of this Rule and they were entitled to the facility of abatement in respect of non-production for 16 days in the month of July from 1st July to 16th July, 2008. In this regard it is to be noted that the appellants (their predecessor M/s Jalaram Industries) paid duty of ₹ 78,75,000/- for the month of July on 17.07.2008 for the production of 17.07.2008 to 31.07.2008 whereas the department assessed the duty for the month of July as ₹ 1,57,50,000/- without giving any abatement facility, which has been found to be not correct, when the appellants are entitled for the said abatement. Demand of excise duty - Manufacturing gutkha falling under CETA 2403990 - Period of dispute is 1st July 2008 to 16th July 2008 - Appellants took over the present manufacture unit from M/s Jalaram Industries, Bangalore, who surrendered their registration certificate and intimated the Department about their stopping of production work at the closing hours on 15.11.2008 - Held that:- when it is found that the appellants are entitled to the abatement, the demand of ₹ 78,75,000/- confirmed by the impugned order under Section 11A of Central Excise Act read with Rule 9 of PMPM Rules 2008 does not stand scrutiny of law and is hereby, therefore, set aside. Demand of interest - Appellants pleaded that as they were not knowing when they will commence production, they paid duty for the whole month manufacture when they commenced production, which in this case is 17th July (after making adjustments for the abatement) - Held that:- the laws and rules are same for everyone, whether it is the appellants or others, who are in the industry of manufacturing pan masala or other such items. The appellants cannot take the plea of not knowing when it will commence production when others in the same industry are to follow the same rules; the appellants therefore cannot claim any unfair advantage by taking this plea. Here the appellants delayed their payment for July by two days, when the Rule 9 of PMPM Rules 2008 fixes the responsibility of payment for the month of July as on or before 15th July 2008. There is clearly liability for payment of interest on the duty which was paid after the due date in the month of July 2008. This liability of interest on the said duty was confirmed by the impugned order and the same is hereby sustained under Rule 9 of PMPM Rules 2008 read with Sections 3A (2&3) of Central Excise Act 1944 is hereby sustained. Imposition of penalty - Section 11AC of the Act - Held that:- when we are setting aside the main demand imposed by the impugned order there can not be imposition of any penalty under Section 11AC read with Rule 17 of PMPM Rules 2008 and penalty therefore, is hereby dropped. - Appeal disposed of
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2016 (5) TMI 606
Clandestine removal of goods - Levy of duty alongwith interest - deposited tax on the stock found short - Appellant contended that valuation of stock was on estimation basis and there is bound to be a variation - Held that:- the method of valuation adopted being in the nature of estimation/approximation, there is bound to be some variation. Further, it is found that the balance difference in the weight of ingots is approximately 10%, which I consider normal variation and no adverse inference can be drawn. So far as the difference in the stock of MS TMT Bars is concerned, it is found that the difference is more than 10%. Accordingly, 10% variation as normal is allowed, but over and above 10%, in absence of cogent explanation, I hold that the assessee is liable to duty on the same. Period of limitation - Held that:- in view of the difference of more than 10% in the stock of MS TMT Bars and for want of cogent explanation, the extended period of limitation is applicable and invokable. Imposition of penalty - Rules 25,27 of CER, 2004 read with Section11AC of the Act - Held that:- so far as the penalty is concerned under Rule 26, in absence of any confiscation of goods and in absence of any evidence of clandestine removal except a strong presumption, penalty is set aside. Penalty under Rule 27 is confirmed. - Decided partly in favour of appellant with consequential relief
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2016 (5) TMI 605
Classification - Pontoon with spuds - Whether to be classifiable under Chapter Heading No. 89.05 eligible for exemption from payment of duty or under Chapter Heading 89.07 attracting rate of duty of 20% ad valorem - Product is a self elevating platform - Held that:- as per HSN explanatory notes, the floating articles which answer to description as self-elevating platform get covered under CH. 8905 and floating structure which has drilling or production platform are covered under 8905.20 and any other floating structure is covered under 8905.90. The factual matrix as reproduced herein indicates that the floating structures as manufactured by the appellant and assembled at site are supported by spuds for resting on the sea bed and can be raised or lowered depending on the water level, is undisputed. Therefore, the claim of the Revenue that the product would merit classification under chapter Heading No. 89.07 is incorrect, as the reliance placed by the department that products are pontoon, is misplaced as the very same explanatory notes exclude pontoons having the character of vessel falling under Heading No. 89.01 or 8905. In the case in hand, it is found that Indian Registrar of shipping has registered the floating structure manufactured by the appellant as “self-elevating platform” and has given at the registration as “AF-SEP-RANI & AF-SEP-RAJA”. We find strong force in the contention raised by the appellant that same product self-elevating platform was imported back into India after its foreign voyages, was sought to be classified by the department under CTH 8905.2020, the Tribunal has upheld classification under 89.05.9090. Therefore, the arguments by the appellant are acceptable as the classification of the same products when re-imported into India after its foreign voyage would be the same as is manufactured. Hence, the classification of the products manufactured by the appellant is to be held as the products falling under 89.05.90. - Decided in favour of appellant
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2016 (5) TMI 604
Invokation of extended period of limitation - Section 11A(1) of the Central Excise Act, 1944 - Classification of goods - Classification as shampoo or ayurvedic liquid soap - Deliberate suppression of production and clearance of excisable goods - evasion of central excise duty - Petitioner contended that the goods being classifiable under chapter heading 3003.20, approved by this Court in Meghdoot Gramodyog Sewa Sansthan v. C.C.E., Lucknow [2004 (10) TMI 93 - SUPREME COURT OF INDIA], and the said shampoos have been declared as ayurvedic medicines where excise duty is not payable - Held that:- there shall be interim stay of the impugned order, subject to the petitioner depositing fifty per cent of the demanded duty before the Department within eight weeks.
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2016 (5) TMI 603
Seeking directions and rectification/modification of order - Clandestine manufacturing and removal of goods - dummy job work units - Supreme Court decided the matter in favour of revenue for the reason being no evidence on record to prove the allegation against the respondent reported in [2015 (9) TMI 356 - SUPREME COURT] - Supreme Court dismissed the application as not maintainable and giving directions to the applicant that the appropriate remedy is to file review petition.
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CST, VAT & Sales Tax
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2016 (5) TMI 597
Valuation - Whether the Anti-Dumping Duty levied on the imported components and paid by a company which purchased the finished products from the petitioner herein would form part of the sale price of the goods manufactured and sold by the petitioner to such buyer under the provisions of TNVAT Act, 2006 - Petitioner located in a Special Economic Zone, enjoying exemption under Section 26 of the SEZ Act, 2005 and the goods manufactured and sold by the petitioner were cleared by the buyer by filing a Bill of Entry, indicating thereby that such a buyer is the importer and that as a consequence, he paid the Anti-Dumping Duty. Held that:- the petitioner, though located in a Special Economic Zone, is nevertheless in India, to whom a company from China has exported goods. But, the petitioner enjoyed exemption from payment of anti dumping duty only because of being located in a Special Economic Zone. This exemption was available just like a shelter so long as the goods were in the Special Economic Zone. The moment the goods got removed from out of the shelter into a Domestic Tariff Area, Section 15 of the Tamil Nadu Special Economic Zones Act and Section 30 of the Central enactment came into play. As a consequence, the anti dumping duty became payable. The purchaser paid the same or the fact that the sale had taken place prior to the clearance of the goods, is of no consequence, since the point of first import was when the goods came to India from China. Assuming that the clearance of goods by the buyer of the petitioner, which happened at the gate of the Special Economic Zone is also equivalent to an import, it could be taken only to be a second incidence of import. Anti dumping duty was leviable on the first incidence of import. This is why the expression "leviable" appearing in Section 15 of the State enactment and Section 30 of the Central Special Economic Zones Act is of significance. Therefore, the anti dumping duty actually became leviable from the time of export from China into India, but was not actually collected due to the protective cover given by the Special Economic Zones Act. The moment the goods went out of this protective cover, the duty automatically got attached to the goods and hence, the inclusion of the same in the sale price for the purpose of levy of value added tax is in order. Once anti dumping duty is levied, the same becomes part of the sale price, as otherwise the sale price of the product imported into India will be different from the sale price of the product domestically manufactured. Validity of penalty levied - Petitioner contended that when there is a confusion or bona fide doubt with regard to the inclusion of an item in the sale price of a product or in the turnover, the levy of penalty should be avoided - Held that:- penalty is leviable under Section 27(3), if certain conditions are satisfied. They are (i) the assessing authority should be satisfied, (ii) that the escape from the assessment was due to wilful non disclosure of assessable turnover by the dealer. Sub-section (4) of Section 27 also deals with penalty, in relation to the reversal of input tax credit under Section 27(2). The penalty under Sub-section (4) is on a graded scale, with the rate of penalty for second and subsequent detections, higher than the rate in the case of first detection. No finding of fact was recorded by the Assessing Officer (i) as to how he was satisfied, and (ii) as to whether there was wilful non disclosure of assessable turnover. In fact, no finding to this effect could have been recorded by the Assessing Officer in view of the fact that the whole thing was brought to the notice of the Assessing Officer by the petitioner themselves by their letter dated 06.9.2010 seeking a clarification. Before the Appellate Deputy Commissioner, the assessee raised an objection with regard to penalty. In one paragraph, the Appellate Authority held that there was a wilful intention on the part of the assessee to evade the taxes by adopting a device and by filing incorrect and incomplete returns. In other words, the Appellate Authority did not also address himself to the question as to whether there was wilful non disclosure or not. Unfortunately, the Tribunal also misdirected itself on this issue. Therefore, the imposition of penalty at the rate of 150% under Section 27(3)(c) of the TNVAT Act, 2006 is set aside. Entitlement for refund claim - Tax inadvertently paid on the CVD component discharged on the finished goods cleared from the petitioner's SEZ unit - Held that:- What was cleared by the ultimate purchaser, namely Huawei India from the unit of the petitioner in the Special Economic Zone was the finished product manufactured by the petitioner. In chronology, this was the second clearance, assuming that it is a clearance. There was actually a first clearance of the imported goods. This first clearance was made by the petitioner, when they imported the components from Huawei Technologies Co. Ltd., China. This clearance was allowed to be made without payment of duty because of the location of the petitioner in a Special Economic Zone. Therefore, the petitioner is not entitled for refund of tax inadvertently paid on CVD component. - Decided partly in favour of petitioner
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2016 (5) TMI 596
Seeking direction to decide the application for exemption from payment of advanced tax to 0% - Engaged in manufacturing of tax-free commodities - Advance tax paid on wheat on import is being accumulated as excess Input Tax Credit (ITC) as it is not having any tax liability on the sale of tax free goods - Held that:- the present petition is being disposed of by directing the respondent no. 3 to decide the application dated 31.3.2016, in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of three weeks from the date of receipt of certified copy of the order. - Petition disposed of
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Wealth tax
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2016 (5) TMI 613
Penalty u/s 18(1)(c) of the W.T. Act - Held that:- In the instant case, although the assessee has filed the return disclosing the amount of ₹ 90 lakhs prior to issue of notice u/s.17, however, the same was already detected by the department during the course of search and the assessee had admitted the same to be unaccounted cash. Thus the filing of the return was not a voluntary one but after detection by the department. In none of those cases there was detection of unaccounted cash or other assets prior to issue of notice u/s.17. In the instant case there was a search and unaccounted cash of ₹ 90 lakhs was found which was admitted by the assessee during the course of search as unaccounted. Under these circumstances, the various decisions relied on by the Ld. Counsel for the assessee are not applicable. In our opinion, the Ld.CWT(A) is fully justified in upholding the penalty levied by the AO. See Sheikh Hassan Hotels [2008 (6) TMI 598 - BOMBAY HIGH COURT] - Decided against assessee.
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Indian Laws
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2016 (5) TMI 592
Offence under Section 120B of the Indian Penal Code (IPC) and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 - Held that:- In the present case, no evidence at all is led by the prosecution to show that the appellant had abused his position and as a public servant, foreign currency which was found in his possession was the result of such abuse of position. It was not even the case set up by the prosecution that he had taken that money from some person and had obtained any pecuniary advantage thereby. It was the obligation of the prosecution to satisfy the aforesaid mandatory ingredients which could implicate the appellant under the provisions of Section 13(1)(d)(ii). The only argument which is sought to be raised is that when the aforesaid foreign currency was found in the possession of the appellant, he did not come out with any explanation as to from where he got this currency. This argument is beyond our comprehension. It is stated, at the cost of repetition, that it is the prosecution which has to prove its case in a criminal charge leveled against the accused person and it is not the accused person who has to put up his defence. Only when there is sufficient evidence placed on record by the prosecution which may prove the guilt of the accused person, the accused person may come out with the defence if he wants to meet the circumstances which have been proved against him at the time of trial. In the present case, when no such evidence is produced at all on the trial and when not even a case of this nature is set up by the respondent-prosecutor, there was no such obligation on the part of the appellant to state what could be his defense. We, thus, are of the opinion that on the basis of material collected by the prosecution, no case under the Act could be made out.
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2016 (5) TMI 591
Claim of incorrect categorization of the electricity meters installed at the Petitioner's premises - Held that:- The categorisation of electricity tariff is on the basis of 'usage' and not 'the terms of usage'. If a gymnasium uses electricity, it is usage for running a gymnasium, irrespective of the terms of such usage, namely, whether for a charge or not and whether on a profit motive or no profit principle. It is usage clearly falling within 'Non-residential or Commercial' usage. A non-residential or commercial establishment for the purposes of electricity tariff does not cease to be non-residential or commercial if it is run on a no profit basis. Even the usage of electricity categorized as commercial is not because there is a profit motive, but because the activity is commercial as opposed to residential or individual. In the premises, electricity used by the Petitioner for the Sports Complex, which houses an athletic track, a gymnasium and a tennis court is correctly assessed and charged under the tariff item LTII, which is for 'Non-residential or Commercial' use. No fault can be found with respect to such categorization or billing.
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