TMI Tax Updates - e-Newsletter
May 17, 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:
Taxability of payment received by Non-Resident for providing web hosting services to Indian entity, with all back up, maintenance, security and uninterrupted services - Not taxable - AT
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Income Tax:
TCS - Sale of sawn timber does not fall under the ambit of tax collection at source within the meaning of section 206C - AT
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Income Tax:
Claim of additional depreciation allowed where the Machines were acquired during the previous financial year but put to use during the current financial year
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Income Tax:
Estimation of rate of commission earned on the accommodation cheques - estimation of commission @3% on cheque amount and 20% on expenditure will be fair and reasonable - AT
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Income Tax:
LTCG - assessee is entitled for claim of benefit u/s 54 of expenditure incurred by the assessee to make the said new residential house purchased by the assessee ‘habitable’ fit for living for residential purposes by the assessee - AT
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Income Tax:
Transfer pricing adjustment - Nature of amendment - prospective or retrospective - It does not make sense that someone tells you today as to how you should have behaved yesterday, and then goes on to levy a tax because you did not behave in that manner yesterday. - AT
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Income Tax:
Assessee's gains were profits from sale of specified agricultural land which does not come within the definition of asset as prescribed under s. 2(14) and by virtue of s. 2(lA)(a) r/w s, 2(14)(iii) r/w s. 10(1) the assessee's gains from sale of such agricultural land are exempt income - AT
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Income Tax:
Additional depreciation - conditions as stipulated u/s 32(1)(iia) are duly complied with by the assessee company and the assessee company cannot be denied the benefit of the claim of additional depreciation merely because new plant and machinery was acquired partly prior to 31-3-2005 and partly post 31-03-2005 - AT
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Income Tax:
Addition u/s 41 - conversion of unsecured loan from the sister as gift by book entry - in the earlier years, interest paid to sister was claimed as deduction - whether remission / cessation of liability u/s 41(1) - Held No - AT
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Income Tax:
Where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, then penalty u/s 271(1)(c) is not attracted - AT
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Income Tax:
Transfer pricing adjustment - Profit Level Indicator (PLI) - No adjustment is to be made on account of depreciation in the hands of assessee while computing PLI of the assessee. - AT
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Customs:
Amendment to Ch IX of the Customs Act, 1962 – removal of goods from a customs station - instructions regarding affixation of one-time-lock - Circular
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Customs:
Since the goods were detained by the Customs Department, revenue liable to release the cargo stored in E1 Shed without insisting for any payment towards demurrage charges. - Refund shall be granted of the amount received by them towards the demurrage charges for the 20% of the cargo - HC
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Customs:
Stay of recovery of redemption fine - Confiscation in lieu of redemption fine - Seizure of imported yacht - Mis-declaration - As there are no provisions, we do not find any merits in the miscellaneous application - AT
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Customs:
Export of prohibited goods - Red sanders in lieu of plastic pipes - Appellant found to be involved in the illegal activity on the basis of statements of various persons involved as well as its confessionary statement - liable for confiscation and penalty under Section 114(i) and 114AA - AT
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Wealth-tax:
The cars used in the business are considered as productive and should be treated similar to ‘plant and machinery’. In our view, these cars are not assets u/s 2(ea)(ii) of the Wealth Tax Act - AT
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Service Tax:
Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Short and delayed payment of duty of ₹ 439/- - Amt short paid at the time of making first instalment but was subsequently paid at the time of second instalment - bonafide mistake pertaining to calculation of tax - Govt. of India to take final decision - HC
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Service Tax:
Eligibility for refund of Service tax - Notification No. 41/2007 - GTA service was rendered during October, 2007 to December, 2007. During the said period, the said service was not eligible for exemption under that notification as it was added in the said notification for the purpose of exemption w.e.f. 19-2-2008 - AT
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Service Tax:
Cenvat credit - Whether the benefit of admissibility of catering service as eligible input services can only be given to the establishments employing more than 250 employees - Held No - HC
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Central Excise:
Cenvat Credit - While there are plethora of judgements which way one to one co-relation is not necessary while availing credit. However, the issue of nexus between the inputs and services used for export goods is a different issue altogether. - AT
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Central Excise:
Cenvat Credit - most of the credit claimed by the appellant pertains to the period prior to 1/03/2006, during which period credit of service tax paid on services used for manufacture of goods exported was not permissible at all - AT
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Central Excise:
Invocation of extended period of limitation - The Show Cause Notice (SCN) was issued on 23.06.2010 which is within a period 1(one) year from the date of intimation (26.06.2009) given by the Appellant - demand issued to the Appellant is not time barred - AT
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VAT:
Condonation of delay of 335 days in preferring the revision - Section 81(1) of the Assam Value Added Tax Act, 2003 - the applications filed under Section 5 of the Limitations Act, 1963 are not maintainable in law - HC
Articles
Notifications
Central Excise-
27/2016 - dated
14-5-2016
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CE (NT)
Seeks to replace the references to sub-clauses to clause 159 of the Finance Bill, 2016 with sub-sections to section 162 of the Finance Act, 2016 in the notification No. 23/2004 – Central Excise (N.T.) dated 10th September, 2004
Customs-
72/2016 - dated
14-5-2016
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Cus (NT)
Special Warehouse Licensing Regulations, 2016
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71/2016 - dated
14-5-2016
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Cus (NT)
Private Warehouse Licensing Regulations, 2016
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70/2016 - dated
14-5-2016
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Cus (NT)
Public Warehouse Licensing Regulations, 2016
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69/2016 - dated
14-5-2016
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Cus (NT)
Special Warehouse (Custody and Handling of Goods) Regulations, 2016
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68/2016 - dated
14-5-2016
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Cus (NT)
Warehouse (Custody and Handling of Goods) Regulations, 2016
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67/2016 - dated
14-5-2016
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Cus (NT)
Warehoused Goods (Removal) Regulations, 2016.
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66/2016 - dated
14-5-2016
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Cus (NT)
Specifies the class of goods which shall be deposited in a special warehouse licensed under sub-section (1) of Section 58A of the Customs Act, 1962
Income Tax-
28/2016 - dated
26-4-2016
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IT
U/s 35(1) (ii) - Approved organization - ONGC Energy Centre Trust, New Delhi
SEZ-
S.O. 1699(E) - dated
27-4-2016
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SEZ
De-notification of sector specific Special Economic Zone for Mineral and Mineral based products sector at Village-Hargarh, Tehsil-Sihora, District-Jabalpur, Madhya Pradesh
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (5) TMI 640
Tax Collection at Source (TCS) - Violation of provisions of section 206C - assessee in default - levy and collection of tax at source in respect of profits and gains of trading in Sawn timber - Held that:- The sawn timber were sold by the assessee to the persons who were engaged in manufacturing and processing furniture and such other products. Hence the assessee’s case falls under the exception provided in provisions of section 206C(1A) of the Act. Sale of sawn timber does not fall under the ambit of tax collection at source within the meaning of section 206C of the Act - Decided in favour of assessee
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2016 (5) TMI 639
Claim of additional depreciation - Machines were acquired during the previous financial year but put to use during the current financial year - Held that:- The facts brought on record shows that the plant and machinery does not a new plant and machinery acquired in the assessment year under consideration. The first requirement for claiming additional depreciation is that it should be a new plant and machinery. The machinery was new only when it is first put to use. When it is already installed in earlier assessment year, it was no more new machinery or plant. Once it was not a new machinery or plant, the additional depreciation u/s.32(1)(iia) cannot be allowed. The additional depreciation itself is only for a new machinery or plant. The intention of the legislature was to give such additional depreciation in the year in which assets were put to use and not for any succeeding assessment year. There is nothing in the statute, which allows such claim of additional depreciation in succeeding year on machinery, though it was acquired in earlier year. That cannot be any presumption that unless a claim is specifically denied, it has to be allowed. In our opinion, each assessment year is separate and independent assessment year. The provisions of the section 32 of the Act do not provide for postponement or carry forward of the residual additional depreciation, if any, in subsequent assessment years. Further, it is to be noted that when an allowance, which is ordinarily not available under normal commercial principles of accounting, is made specifically allowable, through enactment for certain specific provisions of the Act, it is also a requirement that there should be similar specific provisions, which shows its applicability every year, unless the context strongly calls for such an interpretation. Being so, we are not in agreement with the order of the Ld.CIT(A) in granting additional depreciation, though the plant and machinery was not new in the assessment year under consideration. Thus in the present case, this plant and machinery already capitalized in the earlier assessment years and also appeared in the block of assets. In our opinion, the assessee is not entitled to additional depreciation u/s.32(1)(iia) of the Act on the machineries acquired not in the Financial year 2010-11 relevant to the assessment year 2011-12. - Decided against assessee
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2016 (5) TMI 638
Estimation of rate of commission earned on the accommodation cheques - Held that:- as a result of search and survey, the AO has found that assessee was engaged in giving accommodation entry on which assessee has earned commission income of 5 to 7%. Accordingly the AO estimated assessee’s income in the form of commission @5% on the amount of cheques issued. In an appeal filed by the assessee before CIT(A), the CIT(A) after consideration entire seized material as well as statement of various persons recorded during search came to the conclusion that assessee has earned commission income of 3%. Thereafter CIT(A) also allowed expenses of 20% of gross commission, thus, arrived at net commission of ₹ 2.6% as against commission income of 0.4% as offered by the assessee. We found that CIT(A) has dealt with the issue in great detail and after considering entire material on record reached to the finding that estimation of commission @3% on cheque amount and 20% on expenditure will be fair and reasonable. Nothing was brought on record so as to persuade us to deviate from the findings recorded by CIT(A) for arriving at this conclusion. Accordingly, we do not find any reason to interfere in the order of CIT(A) for upholding the net commission to the income of 2.4%. In view of the above, ground taken by the assessee with regard to estimation of commission rate are hereby dismissed.
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2016 (5) TMI 637
Addition u/s 41 - conversion of unsecured loan from the sister as gift by book entry - in the earlier years, interest paid to sister was claimed as deduction - whether remission / cessation of liability u/s 41(1) - Held that:- There was no remission of liability u/s 41(1) of the Act, because the gift was genuinely made by Smt. Kiranben Gandhi and accepted by the assessee out of natural love and affection and there was no business consideration in this transaction. Therefore, the provisions of Section 41(1) of the Act cannot be invoked for the interest payment made in earlier years. Also see 2012 (8) TMI 620 - ITAT COCHIN [2012 (8) TMI 620 - ITAT COCHIN] - Decided in favour of assessee
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2016 (5) TMI 636
Penalty u/s 271(1)(c) - tax on total assessed income was lesser than the tax paid by the assessee on the basis of book profit u/s 115JB - Held that:- Assessee squarely falls within the four corners of the CBDT Circular No.25/2015 [F.NO.279/MISC./140/2015/ITJ] which clearly says that where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, then penalty under section 271(1)(c) of the Act, is not attracted with reference to additions /disallowances made under normal provisions and same is the case of assessee and, therefore, assessee should not have been visited with penalty u/s 271(1)(c) of the Act - Decided in favour of assessee
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2016 (5) TMI 635
Taxability of royalty - payment received for providing web hosting services, with all back up, maintenance, security and uninterrupted services - Indo US tax treaty - Held that:- When a scientific equipment is used by the assessee for rendering a service, the receipt will be construed as a receipt for use of scientific equipment. Undoubtedly, when the assessee receives an income on account of allowing a customer to use a scientific equipment, it does become taxable for the reason of its being characterized as such, but the use of a scientific equipment by the assessee, in the course of giving a service to the customer, is something very distinct from allowing the customer to use a scientific equipment. The true test is in finding out the answer to the fundamental question- is it the consideration for rendition of services, even though involving the use of scientific equipment, or is it the consideration for use of equipment simplictor by the assessee? In the case of former, the consideration is not taxable, in the case of the latter, the consideration is taxable. A payment cannot be said to be consideration for use of scientific equipment when person making the payment does not have an independent right to use such an equipment and physical access to it. In the present case also, what the assessee is providing is essentially web hosting service, though with the help of sophisticated scientific equipment, in the virtual world. The scientific equipment used by the assessee enable rendition of such a service, and such a use, which is not even by the Indian entity, is not an end in itself. In this view of the matter, even though the services rendered by the assessee to the Indian entities may involve use of certain scientific equipment, the receipts by the assessee cannot be treated as “consideration for the use of, or right to use of, scientific equipment” which is a sine qua non for taxability under section 9(1)(vi) read with Explanation 2 (iva) thereto. - Decided against revenue
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2016 (5) TMI 634
Disallowance of profit in sale of agriculture land - whether transaction in property by assessee company should not be treated as business activity - Held that:- There is no enabling provision in the income-tax law prescribing that even if the assessee's income is exempt by a provision, then it can be forcibly brought into the tax net by assuming the assessee's activity to be adventure in the nature of trade. It is a settled position by Hon'ble Delhi High Court in Delhi Apartments (P) Ltd. (2013 (3) TMI 330 - DELHI HIGH COURT ) that real estate companies can also hold separate portfolio of land as stock-in-trade and as investment portfolio; the sale of investment portfolio is always taxed as capital gains. Thus, assuming worst against assessee, even if it is inferred that it has carried on business activity so long as it holds specified agricultural land in terms of s. 2(14) in,i,e. not being an asset, its transfer will neither attract capital gain tax nor can be treated as business income. In view of the foregoing and respectfully following the case law cited by the assessee we have no hesitation but to held that the assessee's gains were profits from sale of specified agricultural land which does not come within the definition of asset as prescribed under s. 2(14) and by virtue of s. 2(lA)(a) r/w s, 2(14)(iii) r/w s. 10(1) the assessee's gains from sale of such agricultural land are exempt income - Decided in favour of assessee Disallowance under section 40A(3) - Held that:- The activities of the assessee was not in the nature of adventure of trade. However the purchase of land was an investment and was not stock in trade. The cash payment made by the assessee exceeding ₹ 20,000/- have duly been explained by the assessee. The AO has neither doubted the transaction nor it has doubted even the registration of sale deed nor it has doubted the amount. Since the AO has not doubted any of the above and further the land purchase was in the nature of investment and, therefore, following the judgment of the Hon’ble Supreme Court in the case of Attar Singh Gurmukh Singh vs. ITO (1991 (8) TMI 5 - SUPREME Court ) and also following the Hon’ble Jurisdictional High court in the matter of Smt. Harshila Chordia vs. ITO, (2006 (11) TMI 117 - RAJASTHAN HIGH COURT) which was relied upon by the Hon’ble Punjab & Haryana High Court in the matter of Gurdas Garg vs. CIT,(2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT) whereby it has been held that the rigour of section 40A(3) are not attracted - Decided in favour of assessee
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2016 (5) TMI 633
Transfer pricing adjustment - addition on guarantees given to the bankers on behalf of overseas subsidiaries of the Appellant - Held that:- It is very important to bear in mind the fact that right now we are dealing with amendment of a transfer pricing related provision which is in the nature of a SAAR (specific anti abuse rule), and that every anti abuse legislation, whether SAAR (specific anti abuse rule) or GAAR (general anti abuse rule), is a legislation seeking the taxpayers to organize their affairs in a manner compliant with the norms set out in such anti abuse legislation. An anti-abuse legislation does not trigger the levy of taxes; it only tells you what behavior is acceptable or what is not acceptable. What triggers levy of taxes is non-compliance with the manner in which the anti-abuse regulations require the taxpayers to conduct their affairs. In that sense, all anti abuse legislations seek a certain degree of compliance with the norms set out therein. It is, therefore, only elementary that amendments in the anti-abuse legislations can only be prospective. It does not make sense that someone tells you today as to how you should have behaved yesterday, and then goes on to levy a tax because you did not behave in that manner yesterday. At best the amendment in Section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1st April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of Section 92 B have no application in the matter. For this reason also, the impugned ALP adjustment must stand deleted. We must, however, make it clear that what we have stated above, in the context of retrospective amendment, is specifically in the context of transfer pricing legislation which, as we have observed earlier, being an anti-abuse legislation, seeks a degree of compliant conduct by the taxpayers rather than being primarily a source of revenue. - Decided in favour of assessee
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2016 (5) TMI 632
Renovation expenses disallowed by way of benefit u/s. 54 - Exemption from LTCG - Held that:- The expenditure incurred by the assessee are towards the extensive civil, plumbing , electrical and painting works including new flooring, tiles, fittings in the new residential house property purchased by the assessee in Pune in July 2008 and are not towards purchase or installation of items of comfort such as air-conditioners, consumer electronics and entertainment equipments, electrical and other equipments, furniture etc. We have also seen the photographs of the new residential house at Pune when it was purchased by the assessee in July 2008 which is also placed in paper book which clearly reflects that the said house was not in the habitable conditions and was in dilapidated condition when it was purchased by the assessee in July 2008, which is also corroborated by the clause 8(ix) in the purchase agreement dated 23-07-2008 entered into by the assessee for acquiring the new residential house property at Pune in July 2008. Thus based on the peculiar facts and circumstances of this case and on the basis of our discussion and reasoning above , we hold that the assessee is entitled for claim of benefit u/s 54 of the Act of expenditure incurred by the assessee to make the said new residential house purchased by the assessee at Pune in July 2008 ‘habitable’ fit for living for residential purposes by the assessee. - Decided in favour of assessee.
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2016 (5) TMI 631
Transfer pricing adjustment - Profit Level Indicator (PLI) - adjustment on account of foreign currency loss to the profit margins which are adopted for working out the PLI - Held that:- While computing PLI for the year under consideration, the loss arising on account of foreign exchange fluctuation to the tune of ₹ 35,31,729/- is to be excluded. However, the loss arising on account of export proceeds realized from exports of relevant year are to be considered while computing PLI of the assessee. In view thereof, we modify the order of CIT(A) and direct the Assessing Officer to re-compute the PLI in the hands of assessee and foreign exchange fluctuation losses of the earlier years are to be kept out of calculation of PLI for the year under consideration. No adjustment is to be made on account of depreciation in the hands of assessee while computing PLI of the assessee.
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2016 (5) TMI 630
Entitlement to additional depreciation on plant and machinery - Held that:- Acquisition of the entire set of new machineries and plant whether acquired prior to or post 31-03-2005 was an integrated event in the chain of activity undertaken with common and sole goal of setting up new coke production plant by the assessee company which process got completed in April 2005 i.e. financial year 2005-06 with the completion of installation of the entire new machinery and plant as composite , so acquired by the assessee company whether pre or post 31-03-2005 with the commencement of the production of coke production plant becoming operational in April 2005. We find that the conditions as stipulated u/s 32(1)(iia) of the Act are duly complied with by the assessee company and the assessee company cannot be denied the benefit of the claim of additional depreciation merely because new plant and machinery was acquired partly prior to 31-3-2005 and partly post 31-03-2005 as the entire activity of acquisition of new plant and machinery was an integrated and composite activity in the chain of events with the common and sole objective of setting up new coke production plant by the assessee company, as the installation of new machinery and plant which started in financial year 2004-05 got completed after 31-3-2005 with the commencement of commercial production starting in financial year 2005-06 i.e. post 31-03- 2005 with the plant becoming operational. Thus, in our considered view, the assessee company is entitled for claim of additional depreciation u/s 32(1)(iia) of the Act during the assessment year 2006-07. - Decided in favour of assessee
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2016 (5) TMI 629
Disallowance of claim of exemption under section 11 - Held that:- Assessee’s claim that it is imparting education or engaged in educational activity requires examination by verifying the entire documentary evidences brought on record. As the Departmental Authorities have not verified or applied their mind to the documentary evidences which according to the assessee demonstrate that it is involved in educational activities, we are inclined to restore the matter back to the file of the Assessing Officer for deciding afresh. The Assessing Officer must consider the submissions of the assessee and the ratio laid down in the decision relied upon by the assessee while deciding the issue whether or not the assessee is engaged in imparting education. In case the Assessing Officer comes to the conclusion, albeit with proper reasoning, that the assessee is not involved in educational activity but is engaged in advancement of any other object of general public utility, then he must establish on record that the dominant object of the assessee is to earn profit by engaging itself in business or commercial activity and it is not a charitable institution. - Decided in favour of assessee for statistical purposes.
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2016 (5) TMI 628
Application of provisions of Section 50C on the transaction entered by assessee by way of sale of agricultural land - Held that:- As far as the facts are concerned, there is no dispute that assessee had purchased the property way back in 1984 but failed to mutate the property in his favour in the Revenue records. Assessee purchased only Acr1.20 cents of land from Shri K. Joseph Reddy, however, Shri Mundla Narayana Reddy, Proprietor, Sudha Enterprises has purchased more land, about four acres, vide the registered deed dt. 26-08-1996, got his name entered in the Pahanis in 1999 itself and is in continuous possession of the land. Assessee filed a petition before Special Grade Dy. Collector for mutating the land in his favour. The Ld. Dy. Collector while recording that assessee has prior claim over the land having been registered in 1984, however, stated that there is a title dispute between two parties and therefore, the entries made in the register were set aside and aggrieved parties were directed to seek remedy before the Civil Court. This order was issued in 15th March 2008. Subsequently, an appeal was filed before the Joint Collector by Mr. Mundla Narayana Reddy. In those proceedings, a compromising memo was undertaken wherein it is clearly stated that the respondent (assessee) has received an amount of ₹ 5 Lakhs and executed a registered sale deed bearing Document No. 8799/2008 dt. 26-07-2008 in favour of the Managing Partner of Sudha Enterprises, transferring his right of ownership. It is clear that even though the sale deed is stating that assessee had full ownership and transferred in favour of Shri Mundla Narayana Reddy, what actually transpired between the parties and the claims made before the authorities is that assessee has a title over the property but not complete ownership and possession of the property. It is alleged by the other party i.e., Mundla Narayana Reddy that the documents are fabricated. Whatever may be the contentions before the authorities, the fact is that assessee had indeed settled the issue by accepting the consideration of ₹ 5 Lakhs and parted with the claim of ownership on the said property. The record indicates that assessee is not complete owner of the property as in the Govt. records Shri Mundla Narayana Reddy was already shown as owner of the property and continues to be in possession of the property by virtue of registered sale deed in his favour dt. 26-08-1996. In view of this, we agree with the contentions that assessee has transferred only a right of ownership but not the land and building. Provisions of Section 50C are not applicable in the given case. Accordingly, AO is directed to compute the capital gains on the value received only. - Decided in favour of assessee.
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2016 (5) TMI 627
Deduction under sec. 80P(2)(a)(i) - claim of the assessee for deduction under sec. 80P(2)(a)(i) was rejected by AO on the ground that the assessee was a cooperative bank, and hence, not entitled to claim deduction by virtue of sec. 80P(4) - Held that:- The Commissioner of Income Tax (Appeals) has allowed the claim of deduction under sec. 80P(2)(a)(i) of the Act after following the decision in the case of M/s. The Quepem Urban Cooperative Credit Society Ltd. Vs. ACIT [2015 (6) TMI 573 - BOMBAY HIGH COURT ] wherein held that the contention of revenue that the appellant is not entitled to the benefit of Section 80P (2)(a)(i) of the Act in view of the fact that it deals with non-member cannot be upheld. This for the reason that section 80P(1) of the Act restricts the benefits of deduction of income of co-operative society to the extent it is earned by providing credit facilities to its members. Therefore, to the extent the income earned is attributable to dealings with the non-members are concerned the benefit of Section 80P of the Act would not be available. Thus restrict the benefit of deduction under section 80P of the Act only to the extent that the same is earned by the appellant in carrying on its business of providing credit facilities to its members.
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2016 (5) TMI 626
Penalty u/s. 271(1)(c) - no allowability of claim of expenses - Held that:- Where the difference between the assessee and the Revenue is merely on account of difference in the year of allowability of claim, and in the absence of any finding or doubt with regard to the genuineness of the expenses claimed, the penal provisions of Sec. 271(1)(c) of the Act are not attracted. In our considered opinion, the aforesaid proposition clearly covers the instant case and the penalty levied u/s. 271(1)(c) of the Act deserves to be deleted. Apart therefrom, on the issue of uniformity of approach, it has also been established by the appellant that similar disallowance made in the Assessment Years 2006-07 and 2008-09 have not resulted in levy of penalty by the Assessing Officer itself. This fact-situation also justifies the assertion of the assessee that the impugned penalty deserves to be set-aside, and we do so. - Decided in favour of assessee
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2016 (5) TMI 625
Validity of reopening of assessment - information received from the investigation wing - introduction of own unaccounted money in its bank by way of accommodation entry - Held that:- There was lack of application of mind by the Assessing Officer while acting upon the information received from the investigation wing of the department. The Assessing Officer did not appreciate that there was repetition of same entries and the Assessing Officer has totally banked upon the investigation made by the Investigation Wing of the Department. He did not bother himself to verify the veracity of the information received nor had he confronted the assessee with the claimed various material and report received from the investigation wing of the department, on perusal of which the Assessing Officer has claimed in the reasons recorded that, it was evident before him that the assessee had introduced its own unaccounted money in its bank by way of accommodation entry. We thus respectfully following the ratio laid down in Pr. CIT vs. G & G Pharma India Ltd. [2015 (10) TMI 754 - DELHI HIGH COURT] hold that the initiation of re-opening proceedings in the present case by the Assessing Officer was not valid and the assessment made in furtherance to such initiation is also held void ab initio. - Decided in favour of assessee
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2016 (5) TMI 624
Reopening of assessment - non explanation of working of the book profit - Held that:- We are of the considered view that assuming of jurisdiction by the AO in this case is bad in law for the reasons inter alia that when the assessee had specifically placed on record profit and loss account and books of account, audited balance sheets, tax audit report and certificate in Form No.29B in response to the query raised by the AO during the assessment proceedings that, “as to why assessment be not made at the book profit u/s 115JB of the Act”, the assessee has duly explained the working of the book profit and it certainly amounts to change of opinion. A bare perusal of the order passed by the CIT according approval for reopening goes to prove that he has accorded the approval in mechanical manner without applying his mind particularly when AO himself has not enunciated the reasons except quoting the language of section 147, the approval accorded by CIT is not sustainable. Where Commissioner approved suggestions made by the audit party, such approval could not be seen as substantial compliance of section 151 where notice for reopening was issued after a period of four years from end of the assessment year. Judgment of Vijay Rameshbhai Gupta vs. ACIT – (2013 (5) TMI 157 - GUJARAT HIGH COURT ) is applicable to the facts and circumstances of this case. Moreover, all the three adjustments on account of provision of diminution of value of assets, loss u/s 10B and provision for doubtful debts and advances respectively have been made by invoking the retrospective amendments made to section 115JB which is not permissible as has already been discussed by us in the preceding paras. - Decided in favour of assessee.
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2016 (5) TMI 623
Valuation of property for the purpose of computation of capital gain - estimation of fair market value as on 1.4.1981 - adoption of report from an expert, i.e. Government Approved Valuer - Held that:- After considering the totality of the facts of the case and material available on record, we are of the view that both the authorities below are not justified in adopting the rate as the assessee had furnished a report from an expert, i.e. Government Approved Valuer. The sale instances as considered by the AO are pertaining to residential properties and such valuation cannot be adopted in respect of the Industrial Land. The estimation of fair market value depends on various factors; namely, location of property, nature of property, usage of property and also future prospects of such property. As per the Government Valuer, the property has potential of appreciation and of commercial usages. The Revenue has not placed any material on record for rebutting this contention of the valuation. Therefore, after considering the totality of the facts and material available on record, it would be proper that an estimation of fair market value as on 01/04/1981 is to be made on the basis of material on record. The Valuer in earlier year, had adopted a higher rate of fair market value and in the subsequent year, he adopted a lower rate. Therefore, the valuation adopted by the Government Approved Valuer, cannot be adopted as the valuation is made solely on the basis of potential of the land but not on the basis of the actual prevalent rate in the close vicinity. The Revenue has also not placed any material on record, demonstrating the prevalent market rate as on 01/04/1981 in the close vicinity of the land in question. The AO has adopted the cost of acquisition as on 01/04/1981 at ₹ 250/- per sq.mtr. and the ld.CIT(A) adopted the cost of acquisition as on 01/04/1981 at ₹ 551/- per sq.mtr., whereas the assessee has claimed the cost of acquisition as on 01/04/1981 at ₹ 1940/- per sq.mtr. Therefore, it can be fairly inferred that the cost of acquisition would be at ₹ 980/- per sq.mtr to ₹ 1050/- per sq.mtr. taking the average. Hence, we direct the AO to adopt a cost of acquisition at ₹ 980/- per sq.mtr. calling for report from expert at his stage would further delay the disposal of the matter. Therefore, in the interest of justice and considering the material available on record, we direct the AO to take the cost of acquisition as on 01/04/1981 at ₹ 980/- per sq.mtr and recompute the gain
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2016 (5) TMI 622
Undisclosed stock found during survey u/s 133A - Held that:- We find that the stock difference is duly explained by the assessee by offering the sum of ₹ 1.80 crores in Asst Year 2008-09 which would offset all the discrepancies found during the course of survey and there is no scope for making further addition towards discrepancies in stock of jewelleries either in Asst Year 2007-08 or in Asst Year 2008-09. Hence we hold that the Learned CIT(A) had rightly deleted the addition made by the Learned AO. - Decided against revenue
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2016 (5) TMI 621
Double taxation - addition in the regular assessment for the asst. year 1999-2000 and once again in the block assessment period from 1989-1990 to 11.2.1999 - Held that:- The amount of ₹ 17,50,008/- is already taxed in the asst. year 1999-2000 vide assessment order dated 22.3.2005 passed u/s.143(3) read with sec.263 of the Act. This order of the assessment was subject matter before the CIT(Appeals). The CIT(Appeals) vide order dated 31.12.2012 observed that the assessment order giving effect to the order of the CIT u/s. 263 cannot be appealed against before him and he dismissed the appeal of the assessee. Thus, it means that an amount of ₹ 17,50,008/- was already considered for addition in regular assessment year 1999-2000 consequent to the order passed u/s.263 of the Act. Being so, the same amount cannot be considered in the block assessment which amounts to double addition. Accordingly, this addition is deleted. - Decided in favour of assessee
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2016 (5) TMI 620
Disallowance of deduction u/s.36(1)(viia) - Held that:- Considering the activities of the bank and the provision of NPA and provisions of Bad debts, the judicial decisions and claim u/s.36(1)(viia) of the Act the assessee claim of Bad debts in the books of accounts and Finance bill 2013, we are of the opinion the matter needs to be re-examined in the light of the decision of Catholic Syrian Bank (2012 (2) TMI 262 - SUPREME COURT OF INDIA ) and supporting judicial decisions. So, we remit the issue to the file of the Assessing Officer to verify the claim of the assessee and compliance of the conditions stipulated u/s.36(1)(viia) of the Act
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2016 (5) TMI 619
Revision u/s 263 - non tds u/s 194A - Held that:- If the AO has adopted one of courses permissible in law which resulted in loss of revenue or where two views are possible and AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue unless the view taken by the AO is unsustainable in law. The assessee in the instant case has not replied to the show cause notice issued by the Ld.CIT, however, the record shows that prior to initiation of proceedings u/s.263 the AO has dropped the rectification proceedings issued u/s.154 on the very same issue. It is also clear from the record that no amount of interest to Tata Finance and Tata Motors Ltd. was outstanding at the end of the accounting year and the entire amount was paid to the above concerns. Under these circumstances no disallowance u/s.40(a)(ia) was called for in view of various decisions in favour of the assessee. Since the issue before the Ld.CIT was a debatable one and since the AO has taken a possible view, therefore, the Ld.CIT in our opinion is not justified in invoking jurisdiction u/s.263 of the I.T. Act. - Decided in favour of assessee.
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2016 (5) TMI 618
Sale of shares - TLCG OR STCG - Held that:- Taking into consideration the documentary evidence which establishes that the assessee was in possession of shares since 1994-95 and the same were being sold in 2005-06 therefore the income from the sale of shares is clearly a Long Term Capital Gain which is exempt from Tax u/s 10(38). Accordingly we are of the view that the AO has failed both in law and on facts in disallowing the claim of Long Term Capital Gain - Decided in favour of assessee
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2016 (5) TMI 617
Penalty u/s.271(1)(c) - the financing or investing in distribution of film is not connected with the main object of the assessee company - Held that:- Since the onus is always on the AO to prove as to what particulars of income has been concealed by the assessee or what inaccurate particulars have been furnished by the assessee. In the present case the ld. DR was not in a position to convince us as to what particulars furnished by the assessee are inaccurate. Except submitting that claiming capital loss as business loss, the assessee has furnished inaccurate particulars. After the co-joint reading of all the arguments cited by the CIT(A) in his order we are of the considered view that mere rejection of legal claim would not amount to furnishing of inaccurate particulars and our view is fortified by Hon’ble Supreme Court judgement of “CIT vs. Reliance Petroprouducts Pvt. Ltd” [2010 (3) TMI 80 - SUPREME COURT] - Decided against revenue
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2016 (5) TMI 616
Addition made on account of foreign exchange loss - Held that:- No reason to interfere with the impugned order passed by the CIT(A) as he has rightly held that loss on account of fluctuation in foreign exchange rate on account of advances received from customers on account of sale realization is related to the revenue account only. The transactions made by the assessee in foreign currency have been accounted for in accordance with AS-11 issued by ICAI and therefore the loss on account of foreign exchange fluctuations is relatable to revenue account only. In this view of the matter, we find no reason to interfere in the orders passed by the CIT(A) and therefore dismiss these grounds of appeal raised by revenue. See Woodword India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT ] - Decided in favour of assessee
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2016 (5) TMI 615
Addition on account of payment of premium of Keyman’s Insurance Policy - Held that:- As for the statement made by the employees of the insurance companies, nothing turns on these statements. What constitutes a keyman insurance policy under section 10(10D) is not dependent on what is it treated even by the insurer; as long as the assessee is allowed to take life insurance policy on its keymen, as have been undisputedly taken in this case, the same satisfies the requirement of Section 10(10D). In view of these detailed discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and delete the impugned disallowance - Decided in favour of assessee.
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2016 (5) TMI 614
Penalty under section 271(1)(c) - book profit under section 115JB of the Act as the income declared and tax levied under section 115JB of the Act is more than the income declared under the normal provisions - Held that:- As evident that the disallowances on the basis of which penalty under section 271(1)(c) was imposed related to determination of income under the normal provisions of the Act. Therefore, they have no relevance at all as far as computation of book profit under section 115JB and levy of tax thereon. In fact, the issue in dispute has been set at rest by the CBDT circular no.25 of 2015 dated 31st December 2015, wherein it has been clarified that in view of the decision of the Hon'ble Delhi High Court in Nalwa Sons Investments Ltd. (2010 (8) TMI 40 - DELHI HIGH COURT) and substitution of explanation 4 to section 271 of the Act, prospectively, if the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profit under section 115JB of the Act, then penalty under section 271(1)(c) is not attracted with reference to additions / disallowance made under normal provisions. - Decided in favour of assessee.
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Customs
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2016 (5) TMI 652
Seeking direction for release of cargo without insisting for any payment towards demurrage charges and refund erroneously paid by the petitioner towards demurrage charges - Import of 13,050 metric tons of Muriate of Potash from Israel - Cargo off-loaded from Vessel and stored in E1 Shed on transit basis in the Port area. Pursuant to the order of the Customs Department, the petitioner cleared 80% of the cargo and remaining 20% of the cargo had to be detained by the petitioner in the transit shed on account of the direction issued by the Customs Department. Petitioner contended that 20% of the cargo could not be moved by them on account of restraint imposed by the Customs Authorities, therefore, they are entitled for 45 free days. Held that:- when the 3rd respondent, Customs Department had specifically stated that the goods were detained for conducting verification and tests and that the detained goods were released on 13.01.2016 after the receipt of the report from the Regional Fertilizer Control Laboratory on 04.01.2016, the contention of the respondents 1 & 2 that unless the goods were detained by the Customs Department, the petitioner is liable to pay the demurrage charges, cannot be accepted. When the counter filed by the Customs Department clearly says that the goods were detained, the respondents 1 & 2 cannot take a different stand stating that the goods were not detained by the Customs Department. Even by the order of the Customs Department, they ordered for the release of only 80% of the cargo and 20% of the cargo was not released by the said order. Therefore, it also implies that 20% of the goods were detained by the Customs Department without issuing an order for release. This stand of the petitioner is also now supported by the counter filed by the Customs Department. When the goods were released only on 13.01.2016, the petitioner approached the respondents on the same day for the release of the goods, however, the respondents 1 & 2 levied demurrage charges stating that there was no order of detention. Since it is clear that the goods were detained by the Customs Department, the stand taken by the respondents 1 & 2 cannot be accepted. The respondents 1 & 2 are liable to release the cargo stored in E1 Shed without insisting for any payment towards demurrage charges. The respondents 1 & 2 should also refund the amount received by them towards the demurrage charges for the 20% of the cargo. Therefore, the respondents are directed to release the cargo stored in E1 Shed without insisting for any payment towards demurrage charges and also to refund the amount paid by the petitioner towards demurrage charges for 20% of the cargo, which was not released pursuant to the order dated 07.12.2015. - Petition disposed of
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2016 (5) TMI 651
Stay of recovery of redemption fine - Confiscation in lieu of redemption fine - Seizure of imported yacht - Mis-declaration - Held that:- the Tribunal has no power to entertain any stay petition against impugned order. The provisions of Section 129E of the Customs Act, 1962, as applicable in this case specifically say so. In Section 129E ibid, there is no provision for filing any application for stay of the impugned order or for waiver of pre-deposit of any amount. If the importer complies with the provisions as reproduced here-in-above there is no requirement of filing any applications for any reason. In the absence of any statutory provision this miscellaneous application cannot be entertained. Secondly, it is found that the provisions of erstwhile Section 129E of Customs Act, 1962 had a proviso for filing an application for waiver of any amount. Exercising these powers, Tribunal used to grant waiver or stay of the impugned order, even in respect of the redemption fine imposed. By invoking inherent powers of the Tribunal orders were passed for staying operation in respect of redemption fine. As there are no provisions, we do not find any merits in the miscellaneous application. - Decided against the applicant
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2016 (5) TMI 650
Imposition of redemption fine and penalty - Section 112 of the Customs Act, 1962 - Import of 19,595 kgs of California Inshell Almonds - sample does not conform to the standards laid down under Regulation No. 2.3.47(5) of Food Safety and Standards Regulations, 2011 - NOC was refused on analysis by FSSAI - Appellant stated that the sample was tested and was found fit by an authorized testing agency in USA, namely, USDA and the second test was got done from another lab, i.e. FSA Lab in USA. Held that:- there is no malafide intention on the part of the appellant. It is a matter of fact that two laboratories in the country of export found that the goods under export were in good condition. It is also a matter of fact that a period of more than two months had expired from the date of shipping to the date of sending the sample for testing and as such, during this period, the goods suffered damage and no malafide is attributable to the appellants. Therefore, the redemption fine and penalty are set aside. - Decided in favour of appellant with consequential benefit
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2016 (5) TMI 649
Imposition of penalty on the basis of third party statement - Confiscation of goods as prohibited goods - Seizure of 9.340 tons of wood logs purported to be red sanders - samples sent were not of red sanders, goods were wood logs as against declared goods i.e. Plastic pipe in the export documents - Held that:- on the basis of statements of various persons involved in attempt of fraudulent export of wood logs as well as confessionary statement of the appellant, it is very clear that role of the appellant in illegal activity is clearly established therefore since prohibited goods liable for confiscation, appellant is also liable for penalty under Section 114(i) and 114AA. On perusal of the Commissioner's order, it is found that he has given proper findings after proper appreciation of facts. Therefore, both the lower authorities correctly and legally imposed penalty under Section 114(i) and 114AA. As regard the quantum of penalty, it is observed that value of the goods i.e. wood logs attempted to be smuggled is ₹ 1.40 Lacs. Considering the value, I am of the view that penalty imposed by the lower authorities is on higher side, therefore in my view penalty of ₹ 50,000/- appears to be proper and reasonable and therefore reduced the penalty from ₹ 1 lacs to ₹ 50,000/-. - Decided partly in favour of appellant
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Corporate Laws
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2016 (5) TMI 645
Doctrine u/s 10 of CPC - request for stay of proceedings - allegations of violation of the principles of corporate governance which has led to payment crisis - Held that:- The remedy under section 388B, 397, 398 is altogether different from the remedy, the investors sought in Civil Cases. Moreover, Section 10 says that the parties must be the same in the prior suit and the matter in issue shall be directly and substantially in issue in a previously instituted suit between the parties. Though, the fact of not making payment to the investors in both the cases is the same, the issues are entirely different in these two proceedings, the parties are different, the remedies are different, the objects are different, the nature of claim is different. Therefore, the bar u/s 10 of CPC is not at all applicable to the present proceeding. FTIL has made hectic efforts to keep these proceedings under carpet by highlighting that subject matter in all these proceedings is one and the same, ignoring the fact when fraud is manifest actions are many to control the damage that has been caused to individuals and to the public as a whole. Here it is managerial personnel against whom an allegation of defrauding investors for an amount of ₹ 5600 crores is made; therefore, an enquiry has to be conducted as expeditiously as possible to decide whether their removal of directors is necessary or not. The doctrine u/s 10 of CPC is not applicable to the present case. - Application dismissed - Decided against the applicant.
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2016 (5) TMI 644
Winding up - whether there is a bona fide dispute as regards the rest of the consignment in respect whereof the respondent makes its claim - Held that:- As there is no bona fide dispute, there is no question of directing the respondent to repay the amount. Thus, in view thereof, while the respondent is entitled to retain the amount, the petition is liable to be dismissed on account of the appellant having satisfied the respondent’s claim to the extent mentioned in the impugned order. The invoices do not provide for interest. Nor is there any other document or agreement that provides for interest. However, the respondent claimed interest albeit for the first time by the statutory notice @ 24% per annum. We are, however, not inclined to enter into the question as to whether the appellant is also liable to pay interest to the respondent. The learned Company Judge has not referred to the issue of interest. Further, the respondent has neither sought a clarification from the learned Judge regarding the quantum to be paid by the appellant to the respondent nor filed an appeal on the ground that the learned Judge has not taken into consideration the element of interest. The question of interest is, therefore, kept open. In the circumstances, the appeal is dismissed and the respondent shall be entitled to retain the amount paid pursuant to the order dated 24.12.2015. It is clarified that in view of this payment, the petition itself does not survive. This is, however, without prejudice to the respondent’s contention regarding interest which may be claimed either by way of an application for clarification before the learned Judge or by way of an appeal or by any other proceedings.
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2016 (5) TMI 643
Scheme of Amalgamation - Held that:- Having heard Mr.Navin K. Pahwa, learned Counsel for the petitioner companies, Mr.Kshitij Amin, learned Central Government Standing Counsel on behalf of Mr.Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the report of the Regional Director and the report of the Official Liquidator, the reply filed on behalf of the Petitioner Transferee Company and having considered the Scheme of Amalgamation together with the relevant documents on record, this Court finds it appropriate to grant sanction to the present Scheme of Amalgamation. In view of the above, the Scheme of Amalgamation is sanctioned. The petitioner Transferor company is directed to preserve its books of accounts, papers and records and not to dispose of the records without prior permission of Central Government as per the provisions of Section 396 (A) of the Companies Act, 1956. The petitioner Transferor company is also directed to ensure all statutory compliance. The cost of these petitions are determined at ₹ 7,500/each payable to Shri Devang Vyas, learned Assistant Solicitor General of India and ₹ 7,500/to the Official Liquidator in the case of the Transferor Company.
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Service Tax
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2016 (5) TMI 662
Eligibility for refund of Service tax - Notification No. 41/2007 - GTA service utilised in respect of export of goods - Appellant contended that it claimed refund after 19-2-2008 when GTA service was included for the purpose refund in Notification No. 41/2007 by amending Notification No. 3/2008-S.T., dated 19-2-2008 and therefore the refund should have been granted - Held that:- it is seen that Notification No. 41/2007-S.T. is an exemption notification and the exemption is operationalised by way of granting refund. Thus, the appellant would be eligible for refund of Service Tax paid on GTA service only if the said service was exempt from Service Tax under Notification No. 41/2007-S.T. at the time when the said service was rendered. It is seen that GTA service was rendered during October, 2007 to December, 2007. During the said period, the said service was not eligible for exemption under that notification as it was added in the said notification for the purpose of exemption w.e.f. 19-2-2008 vide amending Notification No. 3/2008-S.T. It is not anybody’s case that Notification No. 3/2008-S.T., dated 19-2-2008 has retrospective applicability. Thus, there is no doubt that on the date of rendition of GTA service, the same was not eligible for exemption under Notification No. 41/2007-S.T. Therefore, the question of refund of Service Tax paid on the said service in terms of Notification No. 41/2007-S.T. does not arise. - Decided against the appellant
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2016 (5) TMI 661
Denial of Cenvat credit - CHA Services and Outdoor Catering Services - No evidence to show that cost of said services was borne by the appellant - Appellant argued that when the place of removal for the purpose of export is a Port of Export in terms of Circular No. 999/6/2015-CX dated 28.2.2015 then the credit of CHA services needs to be allowed. Also their factory is covered by the Section 92 of the Factories Act, 1948 and hence it is mandatory for them to provide canteen services. Held that:- in view of the circular dated, 28.2.2015, the issue stand settled in favour of the appellant in so far as credit of CHA services is concerned. In view of the decision of Larger Bench of this Tribunal in the case of CCE, Mumbai-V Vs GTC Industries Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI], the credit of Outdoor Catering Services in the proportion in which the expenditure is borne by the appellant would be admissible to them. However, proportion of Service Tax in respect of the cost of such catering services borne by the employees of the appellant would not be admissible. - Decided partly in favour of appellant
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2016 (5) TMI 660
Cenvat credit - Whether the benefit of admissibility of catering service as eligible input services can only be given to the establishments employing more than 250 employees - Held that:- Tribunal after relying on the decision of Bombay High Court in the case of CCE, Nagpur Vs Ultratech Cement Limited [2010 (10) TMI 13 - BOMBAY HIGH COURT] and Gujarat High Court in the case of Commr. of C.Ex., Ahmedabad-I Vs Ferromatik and Milacron India Limited [2010 (4) TMI 649 - GUJARAT HIGH COURT], has held that there is no law providing for catering service to qualify as input service only if number of employees exceed 250. Therefore, there is no reason to interfere with the view taken by the Tribunal. - Decided against the revenue
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Central Excise
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2016 (5) TMI 658
Imposition of penalty - Rule 57I (4) read with Rule 173Q (1) (bb) of the Central Excise Rules, 1944 - Cenvat credit wrongly taken on inputs as soon as duty paying documents were received - No intention/suppression to evade Central excise duty - Held that:- as per the procedure prescribed by the Department, credit with respect to inputs can be taken only on receipt of the finished products/intermediate goods from the job workers, when the inputs purchased by the appellant is directly sent to the job worker without receiving the same in the factory. A violation of a procedure prescribed for the convenience of the assesse will be considered as a violation of the procedure prescribed under Rule 57J of the Central Excise Rules, 1944. In the present case, all the consignments manufactured by the job worker were returned by the appellant for further processing within the prescribed time. After weighing all the evidences, bench is of the considered opinion that penalty upon the appellant is imposable under Rule 173Q (1) (bb) of the Central Excise Rules, 1944. However, appellant has only gained in taking Cenvat Credit for a few months because all the consignments have been received by the appellant for further processing within the prescribed time limit. Therefore, a penalty of ₹ 10,000/- upon the appellant will meet the ends of justice. - Decided in favour of appellant by reducing the penalty
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2016 (5) TMI 657
Invocation of extended period of limitation - Demand of interest raised after one year - time barred - Entire amount of Cenvat credit wrongly taken was suo moto paid as soon as mistake was pointed out themselves - Department argued that the period of 1(one) year, referred to in Sub-Section (1) of Section 11A, is to be counted from the date of intimation given by the Appellant regarding payment of amount by relying on the provisions of section 11A(2B) of Central Excise Act, 1944. Held that:- as per proviso to Section 11A(2B), period of 1(one) year referred to in Sub-section (1) of Section 11A shall be counted from the date of receipt of the information/intimation from an assessee. Therefore, the demand of interest has to be considered as demand of duty to which Section 11A ibid is applicable. Having said that relevant date for calculating period of 1(one) year for demanding interest will have to be calculated w.e.f. 26.06.2009 when Appellant intimated the Department about the payment of duty. The Show Cause Notice was issued on 23.06.2010 which is within a period 1(one) year from the date of intimation (26.06.2009) given by the Appellant. Accordingly it is held that demand issued to the Appellant is not time barred and has been correctly confirmed by the First Appellate Authority. Imposition of penalty - Appellant contended that maximum penalty under relevant Cenvat Credit Rules would not exceed ₹ 2,000/- as per amendment carried out on 11.05.2007 - Held that:- penalty of ₹ 10,000/- imposed by the First Appellate Authority is reduced to ₹ 2,000/-. - Decided partly in favour of appellant
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2016 (5) TMI 656
Clandestine manufacture and clearances - Demand of excise duty - pertaining to documents recovered from the residential premises - Held that:- there is no confessional statement recorded during investigation that Appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the argument of the Appellants that M.S.Ingots alleged to be clandestinely cleared by Aappellant No.2 are not sufficient to manufacture quantities alleged to have been manufactured and cleared by Appellant No.1. Current proceedings only convey a strong suspicion against the appellants that they are undertaking clandestine manufacture and clearance of dutiable goods. As already observed by the Courts any suspicion, however grave, can not take the place of an evidence. In the present proceeding certain documents recovered from the residence of Shri Sanatan Maity etc. are the only indicators to raise suspicion that certain goods might have been manufactured and cleared by the Appellants. In the case of Pan Parag India Ltd. vs. Commissioner of Central Excise, Kanpur (supra), relied upon by the Appellants, also there were 719 loading slips indicating clandestine clearance by that Appellant. Therefore, the appeals filed by Appellant No.1 and 2 are rejected with respect to demands of ₹ 28,53,835/- and ₹ 98,291/- , which shall be payable with interest and equivalent penalty. As no option to pay 25% of reduced penalty under sec. 11 AC has been extended in the Orders-in-Original, therefore, the same is extended to the Appellants if these amounts, alongwith interest and reduced penalty, stand paid within one month of the receipt of this order. In the interest of justice penalty upon Shri Ajay Bansal, Director of Appellant No.2 is reduced to ₹ 30,000/-. Also in view of Bombay High Court's Order in the case of CC(E.P.) vs. Jupiter Exports [2007 (6) TMI 2 - HIGH COURT, BOMBAY], penalties imposed upon partner Shri Ajay Bansal and Shri Rajendra Agarwal are not imposable and are accordingly set aside. - Appeal disposed of
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2016 (5) TMI 654
Waiver of pre-deposit - Clandestine removal of goods - Financial hardship - High Court decided the appeal against the assessee as it has not deposited the amount against the order of the Tribunal reported in [2015 (2) TMI 925 - MADRAS HIGH COURT] - Apex Court dismissed the appeal
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2016 (5) TMI 653
Review petition - Valuation of goods - Related person and favoured buyer - mutuality of interest - Determination of transactional value - Supreme Court held that there was no mutuality of interest reported in [2015 (10) TMI 2150 - SUPREME COURT] - Apex Court dismissed the review petitions as it find no error much less apparent in the impugned order
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CST, VAT & Sales Tax
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2016 (5) TMI 648
Condonation of delay of 335 days in preferring the revision - Applicability of Section 5 of the Limitations Act, 1963 to a revision filed - Section 81(1) of the Assam Value Added Tax Act, 2003 - Held that:- from the various judicial pronouncements it is crystallized that the statutory period for preferring appeal and/or revision under a special Act cannot be enlarged by taking recourse to Section 29(2) of the Limitation Act when there is an express or implied exclusion of the applicability of the provision of Section 5 of the Limitation Act,1963. The language employed in section 84 of the Act of 2003 clearly indicates that the provisions of the Limitation Act, save and except section 4 and 12, have been excluded from their applicability to any proceeding under that chapter and as such Section 5 of the Limitation Act, 1963 would have no applicability in a proceeding filed under Section 81(1) of the Act of 2003. The court cannot interpret the law in such a manner so as to read into the Act an inherent power of condoning the delay by invoking section 5 of the limitations Act so as to supplement the provisions of the Act when the Act of 2003 excludes the operation of section 5 by necessary implications. In the present case whether or not there is an express or implied exclusion of the operation of any of the provisions of the Limitations Act, 1963 is to be considered not on the basis of the language used in Section 29(2) of the Limitations Act but by giving a purposive interpretation to the relevant provisions of the Act of 2003. Therefore, the applications filed under Section 5 of the Limitations Act, 1963 are not maintainable in law. - Decided against the appellant
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2016 (5) TMI 647
Interpretation and validity of Section 62(5) of the Act - against revisional order passed by the Commissioner, revision is maintainable under Section 65(2) of the Act. Further subsection (3) of Section 65 of the Act which is pari materia to Section 62 (5) of the Act provides for mandatory pre-deposit before entertaining of revision by the Tribunal. Sub-sections (2) and (3) of Section 65 of the Act - Held that:- after considering the relevant statutory provisions and the case law on the point, in view of the provisions of Section 65(3) of PVAT Act which were held to be intra vires as per decision of Hon'ble Punjab & Haryana High Court in the case of M/s Ambuja Cements Limited vs. The State of Punjab and Others [2016 (2) TMI 613 - PUNJAB AND HARYANA HIGH COURT] with the rider that the first appellate authority may grant interim protection qua partial or complete waiver of condition of pre-deposit in deserving cases, the present petition is disposed of.
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2016 (5) TMI 646
Demand of tax - Engaged in the manufacturing of sugar, baggage and molasses - Non-payment of purchase tax on sugarcane - Held that:- by following the decision of this Court in the case of M/s AB Sugars Ltd. v. State of Punjab and another [2015 (8) TMI 62 - PUNJAB & HARYANA HIGH COURT], where the issue stands concluded against the appellant. - Decided against the appellant
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Wealth tax
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2016 (5) TMI 659
Treatment to cars used in the business of the assessee as assets for wealth tax purpose - Held that:- There is no doubt the cars were used in the business, which are essential to run the business, which are applied in the business similar to ‘plant and machinery’. The intent of the legislature to exclude the cars which are used in the business for running them on hire. Here, these are excluded because the cars are used as ‘plant and machinery’, simply to generate revenue. Similarly in the assessee’s case, the cars are used as ‘plant and machinery’. In our considered view, when the cars are used in the business which are productive will have the same meaning as running them on hire. The rule laid down by the Hon’ble Supreme Court in the cases of CIT Vs. Kulu Valley Transport Co. P. Lyd. [1970 (4) TMI 14 - SUPREME Court] and Mysore Minerals Ltd. Vs. CIT, [1999 (9) TMI 1 - SUPREME Court] , when the situation demands and there is no clarity, the interpretation which is beneficial to the assessee must be adopted. In the given situation, there is no doubt the cars were utilized in the business to complement the revenue generation. The legislature intends to exclude these assets, as they are productive. In the given situation, the cars are productive, hence, these cars have to be excluded from the definition of assets as specified exclusion. In view of the above discussion and interpretation, the cars used in the business are considered as productive and should be treated similar to ‘plant and machinery’. In our view, these cars are not assets u/s 2(ea)(ii) of the Wealth Tax Act. Accordingly, we direct the AO to exclude these cars from the list of assets for wealth tax purpose.
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Indian Laws
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2016 (5) TMI 642
Entitlement to possession of the entire property including the portion in respect of which the appellant claims to be a tenant - Held that:- Even assuming that the first respondent was aware of the appellant’s use and occupation of the premises it would make no difference. It is not necessary that a party possesses or occupies a property only as a tenant. The possession and occupation may also be on the basis of a licence including a gratuitous licence. If it is a bare licence it can be terminated at any time. It is not the appellant’s case that it occupied the premises under an irrevocable licence. The possession or occupation could also be as a mortgagee such as in the case of usufructuary mortgage. Thus, mere use and occupation of the premises by the appellant does not justify a conclusion that the first respondent was aware that the appellant’s occupation of the premises was as a tenant. The necessity of specifying the tenancy in view of Order 21 Rule 66 (2) (e) of the Code of Civil Procedure is so obvious that it would occur to anyone especially a party such as the appellant who has the benefit of legal advice. We would not assume mala fides on the appellant’s part. If the necessity to specify the tenancy is obvious and if we are not to assume mala fides on the part of the appellant bank, it would follow that had the appellant actually been a tenant of the property it would have disclosed the same. That it did not do so is a strong indication that it was not a tenant. The appellant thereby by its own act and deed led the first respondent to believe that it did not possess any tenancy rights in respect of the property. The learned Judge, therefore, rightly held that the appellant is estopped from contending to the contrary. The first respondent or any auction purchaser would not be able to plead an estoppel against a third party who or which is not responsible for any incorrect statement or a failure to mention the relevant fact in the execution proceedings. The estoppel can certainly be pleaded against the decree holder who fails deliberately or otherwise to mention/disclose the right that it claims to have in respect of the property to be sold in execution. In these circumstances, it is not necessary to consider the provisions of Section 13 of the Haryana Urban (Control of Rent & Eviction) Act, 1973. It was relied upon on behalf of the appellant to contend that a tenant cannot be evicted in execution of a decree. On behalf of the respondents it is, however, contended that the Act does not apply. We are, therefore, entirely in agreement with the learned Judge that the appellant is estopped from setting up its claim as a tenant.
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2016 (5) TMI 641
SARFAESI Act - security interest in agricultural land created - Held that:- Security interest created was in agricultural land, we have no hesitation to hold that all the proceedings initiated under the SARFAESI Act are nullity, as the security interest in agricultural land cannot be enforced inasmuch as the same is exempted under the provisions of Section 31(i), ibid. However, we make it clear that the decision in this matter shall not preclude other proceedings initiated by the bank under the RDDBFI Act, which, seemingly, is pending consideration before the Debts Recovery Appellate Tribunal. In view of this finding, we are not required to advert to the other grounds, viz., whether the Recovery Certificate constitutes Non Performing Asset or other similar grounds. As such, we do not propose to delve into the same in the instant writ petitions.
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