TMI Tax Updates - e-Newsletter
May 6, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
No direction should not have been given by the HC when there is a statutory provision with regard to the payment of interest - the amount of refund should be given to the appellant along with statutory interest, as per the provisions of Income Tax Act, 1961 - SC
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Income Tax:
Penalty u/s 272B of the Act Failure to comply section 139A - Default in quoting of PAN numbers of the deductees in the e-TDS quarterly statement - There was reasonable cause justifying non levy of penalty u/s 272B - AT
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Income Tax:
Disallowance u/s 14A r.w. Rule 8D - The two borrowings were for export business of the assessee and could not be said to be diverted for the purpose of investment in shares - no disallowance - AT
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Income Tax:
Charitable purpose u/s 2(15) - the activity of the assessee is aided by the Government of India itself, in the Ministry of Health, in pursuance of its policies and National Family Planning Programme - the activity cannot at all be said to be a commercial activity - AT
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Income Tax:
Had there been no scrutiny of the assessment, this claim which was ex-facie not tenable could have been allowed on these items and assessee could have got the benefit of 100% depreciation for the year where it does not deserve - additions confirmed - AT
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Income Tax:
Assessment u/s 153C r.w.s 153A - The word belonging may be understood in the sense of ownership or something little lesser than ownership but of course more than mere reference of assesee on a documents found and seized from the possession of others without any corroboration - AT
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Customs:
Classification of Goods imported Whether Goods imported by Assessees are parts and not motherboards, Modems, Fast Ethernet Adapters, Ethernet Cards etc. in CKD Condition - held as parts - AT
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Customs:
Refund of SAD sale as such - Notification No.102/2007-Cus Import of coils -When the deemed sale of the material takes place, the imported goods do not exist as such but what exists is the Proflex Roof - refund denied - AT
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Customs:
Reasoned Order - Exemption of Duty Reasons are a soul of any judicial order and good and proper reasoning makes its body strong - Court remands the matter back to Tribunal - HC
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Service Tax:
CENVAT Credit - The maintenance and cleaning services of the office premises as also the residential colony has been held to be Cenvatable input services - AT
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Service Tax:
When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called Goods Transport Agency - AT
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Service Tax:
Waiver of pre deposit - The pre-deposit of the amount due is applicable to the statutory authority set up by the State Government. When the Legislature has not made any distinction, we cannot make any distinction by judicial order - HC
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Service Tax:
Rate of service tax - Works contract - Since the rate of duty of 2% is extendable to the constructions like buildings, bridges or roads, we see no reason to interfere - HC
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Service Tax:
Waiver of pre deposit - service tax demand - works contract service - The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant - HC
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Central Excise:
Denial of rebate claim - Unjust enrichment - doctrine of unjust enrichment would be applicable to rebate under the excess production scheme in respect of sugar. - AT
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Central Excise:
Denial of refund claim - Time and again the Hon'ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. - HC
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Central Excise:
Duty demand - Once the Tribunal has found that the interim order was secured by the appellant by practicing misrepresentation then no option is left with the Tribunal to nonsuit the appellant on principle and precedent - HC
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VAT:
Re-fixation of taxable turnover Non existant concern - the explanation offered by the assessee was disbelieved and rejected, per se would not lead to imposition of penalty - HC
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VAT:
Works contract or sale - When the primary object of the transaction is sale of bags and the printing of the name or logo is only incidental to the sale, there was no justifiable ground to accept the case of the assessee and hold that the transaction is sale alone - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (5) TMI 119
Validity of direction of HC [2014 (5) TMI 118 - HIMACHAL PRADESH HIGH COURT] Refund to be made without interest Held that:- The direction should not have been given when there is a statutory provision with regard to the payment of interest - the amount of refund should be given to the appellant along with statutory interest, as per the provisions of Income Tax Act, 1961 Decided in favor of revenue.
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2014 (5) TMI 118
Claim of refund of TDS on salary - employer denies all allegations made in the writ petition - Claim of refund of income tax which the petitioner alleges is not due from her - No refund claim was made in the original return - refund claim through revised return - Held that:- without going into the other contentions raised in this petition including one of limitation under the Act, revenue directed that, AO shall re-consider the case of the petitioner for refund, if any, due in accordance with law save and except that limitation will not be used as ground to bar the petitioner from claiming this amount. - If any amount is found due, it shall be refunded to the petitioner but without interest. - Matter remanded back. - Decided partly in favor of assessee.
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2014 (5) TMI 117
Penalty u/s 272B of the Act Failure to comply section 139A of the Act TDS deduction from the payment made to employees - Default in quoting of PAN numbers of the deductees in the e-TDS quarterly statement Held that:- There was reasonable cause justifying non levy of penalty u/s 272B of the Act - In respect of 34 deductees, there is no default on the part of the assessee as the payments to made were below the limits on which no tax had to be deducted - there was no requirement of furnishing PAN numbers in respect of such 34 deductees - In respect of 10 deductees correct PAN numbers were available and once the information is available with the assessee and given effect to, the assessee is not exigible to levy of penalty u/s 272B of the Act the claim of the assessee needs verification at the level of the AO thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (5) TMI 116
Validity of admission of fresh evidence Held that:- The AO issued questionnaire to the assessee on 03.06.2010 which was not responded to - further opportunities were given to the assessee which were not availed of and these resulted in passing of the order u/s 144/147 - Relying upon ITO, Ward-25(4), New Delhi vs Mrs. Pushplata Paliwal, Najafgarh, New Delhi [2014 (4) TMI 813 - ITAT DELHI] - The arguments of the revenue that the finding would not be relevant in the year under consideration as it pertains to the facts in 2006-07 assessment years on consideration of the specific facts mentioned in the assessment order namely June 2010 makes it fully applicable as no doubt the assessment year is 2006-07 the relevant dates in the re-opening make a mention of January 2010 and June 2010 - the hearings were fixed in 2010 for assessment year 2006-07 - the facts that the illness of the very same accountant in the case of a family member of the assessee in the order pertaining to 2008-08 Assessment Year cannot be brushed aside as irrelevant and it further fortifies the view of the CIT(A) in the present proceedings as such his action in admitting fresh evidence cannot be faulted with and the same is upheld Decided against Revenue. Remand for re-consideration of additional evidences seek - Denial of opportunity of holistic examination Held that:- It is a matter of record that fresh evidence has been confronted to the AO by the CIT(A) as per the requirements under law - It is also evidenced by the order itself that after receiving the objections of the AO who opposed the admission of fresh evidence, the CIT(A) exercising the powers vested in him overruled the objections of the AO and held that the assessee was prevented by a sufficient cause in placing the evidence before the AO - The neurological illness of a chronic diabetic person who was acting as ITP/ Accountant for the assessee and its family members was accepted as a sufficient cause - there was no merit in accepting the request for restoring the issue yet again to the AO for his consideration - the relevant documents have been looked into by the CIT(A) and on being satisfied by the correctness of the claim deletion has been ordered - The reasoning of the CIT(A) on examination cannot be faulted with and it is not a case that deletion has been ordered merely because no negative comment is made by the AO. The CIT(A) has gone on to examine these evidences himself and only thereafter on satisfying himself on the basis of the documents qua the depreciation on car or the interest income by way of documents that amounts borrowed from the banks against FDRs has been utilized for giving loans on which interest has been earned and thereafter a finding arrived at that there was a direct nexus with expenditure of interest paid on his borrowing from FDRs - Similarly the investment in property supported by receipt of award of compensation by various members of Mahendra Pal Paliwal HUF and Mahendra Pal Paliwal himself alongwith evidences of agricultural income in the year under consideration wherein such income was being claimed over the years - in the absence of any cogent argument in impeaching the authenticity of the documents relied upon the request for remand merely for the sake of asking cannot be acceded to - the request made whimsically if granted would amount to abuse of the procedures which cannot be allowed Decided against Revenue.
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2014 (5) TMI 115
Disallowance u/s 14A r.w. Rule 8D of the Act Disallowance of interest expenses Held that:- Relying upon The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] if there are funds available, both interest free and overdraft/loans taken, then presumption would arise that investments would be out of the interest free fund generated or available with the assessee - the contention of the assessee is accepted that the major investments were made by the assessee in AY 2005-06 - Total investment in AY 2005-06 was of Rs.7.20 crores as against which capital and free reserves were of Rs.27.00 crores - capital & free reserves exceeded investment - Borrowings were from banks in the form of export bill discounting and packing credit - The two borrowings were for export business of the assessee and could not be said to be diverted for the purpose of investment in shares - the investments in the shares were made from the interest free funds available with the assessee and not from the interest bearing funds thus, no disallowance is called for in relation to interest expenditure under rule 8 D(ii) of the I.T. Rules Decided in favour of Assessee. Disallowance of administrative expenses Held that:- There is no reason to interfere in the order as the assessee himself offered disallowance of 0.5% of the average investment Decided against Assessee.
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2014 (5) TMI 114
Revisionary jurisdiction u/s 263 of the Act Power to set aside TPOs order u/s 92CA(3) of the Act - Held that:- The decision in Essar Steels Ltd. v/s ACIT [2014 (4) TMI 809 - ITAT MUMBAI] followed - the Commissioner has no jurisdiction over the TPO administratively and he could not have revised the order passed u/s 92CA(3) passed by the TPO - the CIT has no jurisdiction over the TPO administratively and the CIT could not have revised the order u/s 92CA(3) passed by the TPO - the Commissioner cannot exercise the revisionary jurisdiction u/s 263 on the order passed u/s 92CA(3) by the TPO - Once the Commissioner cannot exercise jurisdiction, then the order passed by the AO cannot be set aside as the order of the TPO u/s 92CA(4) is binding on the AO the order passed by the Commissioner for both the years are cancelled for want of jurisdiction Decided in favour of Assessee.
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2014 (5) TMI 113
Withdrawal of exemption Scope of section 2(15) of the Act Opportunity of being heard Exemption u/s 80G of the Act - The assessee is engaged in making available health services - This is as per the National Family Planning Programme under the policy of the Ministry of Health and Family Welfare, Government of India - The promotion expenses incurred are partially reimbursed by the Ministry of Health and Family Welfare, Government of India, in order to support the National Family Planning Programme activities - The assessee is receiving grants/donations from Marie Stopes International (UK) and these donations comprise the major income of the assessee - the activity of the assessee is aided by the Government of India itself, in the Ministry of Health, in pursuance of its policies and National Family Planning Programme - the activity carried on by the assessee cannot at all be said to be a commercial activity - the activity is squarely covered by the provisions of Section 2 (15) of the IT Act. The conditions of Rule 11AA of the IT Rules, 1962 stand duly complied with - It has not been shown otherwise - the assessee company stands granted registration u/s 12A of the Act and approval u/s 80G (5) of the Act was granted to it - Relying upon N.N. Desai Charitable Trust vs. CIT [1999 (5) TMI 11 - GUJARAT High Court] and Sonepat Hindu Educational Charitable Trust vs. CIT [2005 (5) TMI 52 - PUNJAB AND HARYANA High Court] - while dealing with an application u/s 80G (5) of the Act, the scope of inquiry extends to eligibility to exemption and that registration u/s 12AA of the Act by itself is sufficient proof that the institution is created or established for charitable purposes thus, the assessees application is allowed Decided in favour of Assessee.
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2014 (5) TMI 112
Validity of order u/s 263 of the Act Allowability of deduction u/s 10B(3) of the Act Suomoto Adjustment made under Transfer pricing provisions Non-reference to TPO Turnover exceeds RS. 5 Crores on international transactions Held that:- The AO enquired about the export turnover and total turnover and called for details u/s 10B(3) of the Act - it is not on record nor it can be deduced from the record whether he has formed any opinion in allowing the deduction of section 10B on the suomoto income/adjustment made by the assessee as seen from the computation of income - The amount was added in the computation of income only while arriving at the income on the STPI unit - Obviously, this working is before the AO - there is nothing on record that AO has applied his mind to the issue as at the point of time there was dispute about the allowance and non-allowance of deduction under section 10B of the Act on the suomoto adjustment. The issue was not decided on merits by the CIT at all - There is no direction given to the AO to do in a particular manner - The issue was analysed only in arriving at the reasoning to establish that the order is erroneous and prejudicial - He simply set aside the order with a direction to refer the matter to the TPO first and then complete the assessment keeping in mind the above issues - It cannot be stated that the CIT has decided the issue on merits - Since the order is to be upheld on the issue of non-reference to the TPO in violation of the Board circular, the order of CIT u/s 263 is upheld - Decided against Assessee. As the CIT has not decided the first issue on merits and left it to the AO for his consideration in re-assessment proceedings, the merits and demerits of the assessee's claim of deduction u/s 10B of the Act cannot be adjudication - This can be examined afresh in the consequential proceedings, which are pending with the ITAT thus, there is no need for adjudication - Even though the assessee's export turnover received in foreign exchange was which the CIT also accepts in the order u/s 263 of the Act, AO wrongly reduced the suomoto adjustment made by the assessee as 'foreign exchange not realized' and reduced the actual sales turnover - this is more erroneous than the original order passed by the AO - This indicates non application of mind by AO even in reassessment proceedings, even after invocation of jurisdiction by CIT u/s 263 Decided against Assessee.
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2014 (5) TMI 111
Disallowance of Various expenses - Motor Car Expenses, depreciation on Motor Car, Staff Welfare Expenses and Conveyance Expenses Held that:- Revenue contended that the disallowances are warranted considering the cash payments, assessee's failure to discharge the onus, rejection of the self-serving vouchers, non-maintenance of the log book etc. - in principle, there is a need for disallowance - However, the unsupported flat rate of 20% adopted by the AO in all the four accounts for making disallowances cannot be appreciated - out of the total debits of Rs. 41,410/-, disallowance of Rs. 25,000/- on the four accounts should be allowed Decided partly in favour of Assessee. Disallowance of Loss on Sale of Motor Car Held that:- The Motor Car is a part of block of asset on which the assessee has already been claimed depreciation in the earlier years - the loss claimed by the assessee is related to a depreciable asset it constitutes capital loss - the loss related to a depreciable asset does not constitute revenue expenditure and the disallowance made by the Revenue of Rs.23,123/- on account of loss on sale of motor car Decided against Assessee. Disallowance of Premises User Expenses Held that:- For the purpose of the examining the annexures submitted by the assessee, the matter should be remanded to the files of the AO thus, the AO is directed to examine the annexures and the relevant material in this regard after providing a reasonable opportunity of being heard to the assessee Decided in favour of Assessee. Disallowance of Interest on Overdraft & Unsecured Loans Held that:- The Revenue has erred in holding that the assessee has given interest free advances but the explanation given by the assessee suggests that there are interest bearing expenses - most of them are Opening Balances and it is not clear whether the similar amounts are added in the year of advancing the alleged interest free advances - For this purpose, the matter is remitted back to the AO for examination of the issue Decided in favour of Assessee.
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2014 (5) TMI 110
Disallowance of claim of 100% depreciation Temporary constructions - Restriction of depreciation @10% on boundry wall - Addition u/s 2(24)(x) r.w.s. 36(1)(va) of the Act - Payment of PF/ESI beyond the time-limit - Penalty u/s 271(1)(c) of the Act Held that:- The assessee is a concern of a big industrial group which has team of tax expert and auditors at its disposal - Very few cases are selected for scrutiny, others are accepted as these are filed by the assessee - Had there been no scrutiny of the assessment, this claim which was ex-facie not tenable could have been allowed on these items and assessee could have got the benefit of 100% depreciation for the year where it does not deserve - the finding of the CIT (A) cannot be accepted that the assessee has disclosed all material facts - The assessee has rather claimed depreciation on these structures which are not covered by the table of rates at which the depreciation is admissible @ 100% under Income-tax Rules where only purely temporary structures, such as, wooden structures deserve for 100% depreciation - The second finding of the CIT (A) is that it was a legal claim and even if it is ultimately found to be legally unacceptable, it cannot amount to furnishing of inaccurate particulars. It was not a legal claim - Claim of depreciation @ 100% is purely based on facts as it depends on type of structure - It is purely a case of ex-facie untenable claim of depreciation @ 100% which cannot be said to be a legal claim - the CIT (A)'s findings with regard to the claim on temporary buildings were not correct thus, there was no merits in the CIT (A) for deleting the penalty on the issue of depreciation of temporary buildings in both the Assessment Years 2002-03 and 2003-04 - with regard to the claim of depreciation on boundry wall and disallowance of PF/ESI u/s 36(1)(va) read with section 2(24)(x) of Income-tax Act, 1961 in Assessment Year 2002- 03 - no penalty u/s 271(1)(c) of the Act can be levied on the assessee Decided partly in favour of Assessee.
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2014 (5) TMI 109
Validity of assessment u/s 153C r.w. section 153A of the Act Incriminating documents - Held that:- The common satisfaction was recorded by the AO for initiation of proceedings u/s 153C of the Act in respect of the 19 parties - action u/s 133A of the Act was taken at the premises of the assessee on the same date - Various documents were found and seized - Statements of various persons including Shri R.K. Miglani were also recorded u/s 132(4) / 133A of the Act - UPDA is a registered society formed by the distilleries of UP for its welfare to jointly take up their cause with various authorities on different issues - the very basis for initiation of the proceedings u/s 153C against the parties remained the incriminating documents found at the residence of Shri Miglani and also from the office of UPDA - The documents mentioned in the satisfaction note are annexure A-1, A-2, in common and B-2, B-3 in the case of the assessee - on perusal of these documents, it could not be understood as to how the case of the assessee stands on different footing than the other 18 assessees in the cases of most of whom the Tribunal on the basis of the same satisfaction note has held the proceeding initiated in those case u/s 153C as invalid - In those cases also Annexures A-1 to A-10 were the subject matter, on consideration of which the Tribunal came to the conclusion that invocation of section 153C was not valid as no incriminating documents belonging to the assesee were found. The documents were not found from the possession of the present assesee nor these are in the handwriting of the assessee or its employee(s) - These were found from the possession of Shri R.K. Miglani and UPDA, there is no evidence of any receipt or payment of cash in respect of which addition was made - The word belonging may be understood in the sense of ownership or something little lesser than ownership but of course more than mere reference of assesee on a documents found and seized from the possession of others without any corroboration - The documents noted in satisfaction to proceed u/s 153C do not make reference to any receipt or payment of cash and are not of any incriminating nature. There is no reference to any amount paid or received and as such the document is not relevant even in the context of satisfaction note recorded by the AO the documents do not belong to various parties referred to in the document the documents were not found from the possession of the assesee nor these documents are in the handwriting of the assessee or its employees the documents marked as Annexure A-1, A-2, B-2 and B-3, the subject matter of the satisfaction recorded by the AO to initiate proceedings u/s 153C against the present assessee do not belong to the assessee to justify initiation of proceedings u/s 153C of the Act against the assessee Decided in favour of Assessee.
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2014 (5) TMI 108
Disallowance of business promotion schemes Held that:- payments are made in respect of transactions entered into by assessee in normal course of business - Payments have been made only on account of commercial expediency and matter should be examined from businessman point of view as held by Supreme Court in cases of CIT vs. Malayalam Plantations Ltd. [1964 (4) TMI 9 - SUPREME Court] - Set aside order of CIT(A) and allow expenditure of Rs.22,24,416/- claimed by assessee under head Business Promotion Schemes - Decided in favour of Assessee. Addition towards unexplained credits u/s. 68 Held that:- CIT(A) erred in confirming addition of Rs. 2 lakhs under section 68 when creditor had confirmed advance and amount was transferred from creditors bank account to that of Appellant - He ought to have deleted this addition also just like he deleted other two additions made u/s. 68 for a sum of Rs. 6.5 lakh each for valid reasons - Discussed issue in revenues appeal as already decided and confirmed Order of CIT(A), this ground of assessee in C.O. is dismissed Decided partly in favour of Assessee.
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2014 (5) TMI 107
Rejection of contemporaneous data and undertaking fresh comparable Held that:-The relevant data was not available at the time of preparing TP documentation, the Tribunal uniformly is holding that comparable data available at the time of analysis by the TPO should also be used provided information available with either in the public domain or specifically obtained by the TPO was made available to Assessee for its objections, if any the TPO has given enough opportunity to Assessee, there was no merit in the contentions raised - There is no necessity for re-preparing the TP documentation, which has already been furnished to the TPO at the time of filing return as exercise of verifying arm's length price is with the TPO and in the proceedings before the TPO enough opportunity was given to Assessee Decided against Assessee. Segment wise data Held that:- The Assessee has a valid ground - assessee's computation of profits on different units, two units being eligible units i.e. GIS and Engineering Division and one non-eligible unit of IT Division are available separately and the AO has neither raised any objection on the profit computation nor made any adjustments to the working given by Assessee each activity has different factors in respect of source, identification of vendors, merchandise, designs quality control, handling, etc.- The FAR analysis in each of the activity will have distinct and separate considerations - the TPO as well as DRP have ignored the fundamental fact and have erred in not considering this aspect of the economic substance of the transactions Decided in favour of Assessee. Determination of ALP at entity level Restriction to transaction with AEs Held that:- Assessee has suffered losses in software services where the AE transactions are less - Assessee also had very meagre AE transactions in Engineering Services and there are separate profits which were already arrived at and accepted by AO in the order itself - When profit margins of different units are available separately, it could not be understood as to why TPO and DRP should adopt total profit at 10.74%, which included non-AE transactions on which according to Assessee, profit margin was less - Relying upon Dy. CIT v Starlite [2010 (4) TMI 704 - ITAT, MUMBAI] - since segmented profits are available and profits are separately computed under the provisions of section 10A, it is not difficult to arrive at the correct profit margin on cost, on the basis of information available on record and making the addition accordingly thus, the AO is directed to re-work out the addition Decided in favour of Assessee. Selection of Comparables of various companies Held that:- The foundation for comparability analysis is the need for a comparison between conditions made or imposed between AE and those which will be made between independent enterprises - As per the provisions, FAR analysis is must - As per Rule 10B if there are any differences between comparables, relevant transactions should be taken and differences to be adjusted to arrive at the ALP for the reason that after taking number of companies as comparables, the TPO should allow adjustments towards differences in depreciation, differences in risk perceptibility, of working capital adjustments, etc depending on the facts of the case - But selecting a company, which is not comparable at all or which affects comparison due to unusual features cannot be taken as a comparable company thus, the AO is directed to exclude the companies as comparables as taken by the AO Decided in favour of Assessee. Improper calculation of working capital adjustment by the TPO Held that:- Assessee contended that trade practice of advances and subsequent adjustment of these advances against invoices raised, being captive service provider has a bearing on profit margin, therefore, working capital requirement should be taken care of by way of adjustments - Whether similar conditions exist for other comparables require examination and adjustment towards working capital assessee furnished detailed annexure making working capital adjustment to justify 3.30% sought by Assessee as against 1.38% given the TPO - Relying upon M/s Bearing Point Business Consulting Pvt. Ltd. vs. DCIT [2014 (4) TMI 997 - ITAT BANGALORE] - working capital adjustment require verification by the TPO, thus, the matter is remitted back to the TPO for examination Decided in favour of Assessee. Setting off of brought forward losses and unabsorbed depreciation before giving effect to deduction u/s 10A Held that:- The decision in CIT v. Yokogawa India Ltd. 2011 (8) TMI 845 - Karnataka High Court] followed - deduction u/s 10A of the Act has to be computed prior to setting of losses of other industrial units - The AO is directed to rework out the computation of income Decided in favour of Assessee.
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Customs
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2014 (5) TMI 125
Classification of Goods imported Parts or unassembled/disassembled in CKD condition - Whether Goods imported by Assessees are parts and not motherboards, Modems, Fast Ethernet Adapters, Ethernet Cards etc. in CKD Condition HSN Explanatory Notes, Rule 2 (a) - Bar of Limitation Held that:- It is found that HSN Explanatory Notes, Rule 2 (a) covers the complete or finished articles presented in unassembled or disassembled condition and the same is to be classified in the same heading as the assembled article - It is usually for reasons such as requirements or convenience for handling, transportation and packing - The rule further provides that articles presented in unassembled or disassembled condition means articles, the components of which are to be assembled either by means of simple fixing devices or by riveting or welding for only simple assembly operations are involved - The Notes further provides that components shall not be subject to any further working to form complete into finished article - The processes undertaken by assessee are not in dispute. It is found that manufacturing processing undertaken by assessee such as screen printing of solder paste, mounting of individual components on the PCB etc cannot be held to be that the parts imported by Assessee are not further worked upon Therefore, no merits are found in the contention of the Revenue - In respect of time bar also it is found the appellant had declared the description of the imported goods in the Bills of Entry and there is no evidence on record to show that the appellant had mis-declared the description of the imported goods So, the allegation of suppression with intent to evade duty is not sustainable - No infirmity in the impugned order found Decided in favour of assessee.
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2014 (5) TMI 124
Duty demand - Confiscation of goods - Redemption fine - Violations of various conditions of the EPCG licences - Held that:- Advocate for the Appellants have produced the various evidences showing that the EPCG licences have been amended with the retrospective effect and the name of M/s.Caparo Engineering India Ltd. has been included in the EPCG licences as supporting manufacturer with the retrospective effect. The Appellants have further produced the Chartered Engineers Certificate to the effect that the imported dies and fixtures have been installed in the premises of a supporting manufacturer and that the export obligations stipulated in the EPCG licences have already been fulfilled by the Appellant. It is evident from the various submissions of the Ld.Advocate that the evidences produced before this Tribunal were not available during the adjudication proceedings. - Matter remitted back with order of pre deposit - Decided in favour of assessee.
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2014 (5) TMI 123
Refund of SAD sale as such - Notification No.102/2007-Cus, dt.14.09.2007 Import of coils - sale as Proflex Roof material - Revenue argued that no sales tax is paid at the time of clearance of the goods and sales tax is paid only as deemed sales at the time of raising final bill when the work of installation of roof is complete. Held That:- quantity of imported goods used or sold is not known till the completion of the contracted work (Roof). In the final invoices also, it is not separately shown as to how much quantity of imported goods have been sold to the clients. Unused quantity of material/wastage also remains the property of the appellant. The rate of laying of Proflex Roof is also charged on per square meter including the value of the materials. Final retail invoice is issued after completion of work when the imported goods are not at all existing in the form they were imported - When the deemed sale of the material takes place, the imported goods do not exist as such but what exists is the Proflex Roof - It is also not made clear whether CST paid in the final invoices is only with respect to imported goods only or also represent other materials/consumables as per purchase orders - The facts of the present case are different from the facts of the case before Hon'ble Gujarat High Court in the case of CC Vs Posco India Delhi Steel Processing Centre P. Ltd. [2013 (6) TMI 347 - GUJARAT HIGH COURT] and accordingly, the relied upon case law is not applicable to the present appeals - Appeals filed by the appellant are rejected Decided against assesse.
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2014 (5) TMI 122
Reasoned Order - Exemption of Duty Notification of Scheme Misuse of the benefit Diversion of duty free goods to open Market - Setting aside of Penalty Whether Tribunal erred in setting aside penalty of Rs. 25 lacs u/s 112(b) of the Customs Act, 1962 Held That:- Tribunals reasoning for the conclusion it arrived at, is not satisfactory both in its extent and content - Whatever conclusion the Tribunal may reach, it has to spell out in support of its order proper and adequate reasons - Reasons are a soul of any judicial order and good and proper reasoning makes its body strong - Court remands the matter back to Tribunal directing it to decide the matter afresh after giving notice to the parties and hearing them - Tribunal committed an error in passing the impugned order - The question formulated above is accordingly answered in affirmative Decided in Favour of assessee.
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2014 (5) TMI 121
Release of goods viz. Mulberry Silk Yarn Evasion of Duty - Held that:- In view of the submissions made by the learned counsel for assesse the first respondent is directed to consider the request of assessee for the release of the goods in question and pass appropriate orders thereon, on merits after giving an opportunity of hearing to assessee, the second respondent and the other parties concerned taking into consideration the order passed in Commissioner of Customs (Imports), Chennai Versus Ravi Enterprises, Shreepal Silk & Sarees & Others [2011 (6) TMI 285 - CESTAT, CHENNAI] Decided in Favour of assesse.
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Service Tax
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2014 (5) TMI 141
CENVAT Credit - maintenance and repair services - Held that:- As regards the denial of credit in respect of maintenance and repair services for the DG sets, air conditioner and UPS located in offices and show rooms, I find that the issue is covered by the Tribunals decision in the case of CCE Vs. Cadila Healthcare - [2013 (1) TMI 304 - GUJARAT HIGH COURT]. The maintenance and cleaning services of the office premises as also the residential colony has been held to be Cenvatable input services in the case of CCE Hyderabad Vs. ITC Ltd. 2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT and stands followed by the Tribunal in the number of decisions - Decided in favour of assessee.
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2014 (5) TMI 140
Waiver of pre-deposit - non-payment of service tax - Freight expenses - reverse charge mechanism - Held that:- applicant has produced a chartered accountant certificate dated - 12th November, 2013 before this Tribunal explaining the entire facts. However, the said certificate was not before the Ld. Commr. (Appeal). In view of this, I am of the opinion that the matter may be remitted back to the Ld. Commr. (Appeal) for fresh decision without insisting for any pre-deposit and therefore, the case is remitted back to the Ld. Commr. (Appeals) for fresh decision into the matter after hearing both the sides. The Ld. Commr. (Appeal) after considering the evidences produced by both the parties should decide the issue afresh. - Decided in favour of assessee.
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2014 (5) TMI 139
Waiver of pre deposit - Port services - Held that:- appellant had entered into contract with GMB for Built, Operate, Transfer and Maintain project in respect of Hazira port. The appellant herein had constructed one of the contracted projects, of the said port, but for the construction of bulk/general cargo terminals, they gave such rights to another party on upfront payment of an amount, which has been considered by the revenue as one time payment received by the appellant as rent for land lease. In our view, the definition of the Port Services which was amended in 2010 under the category of Port services needs to be appreciated in detail vis-a-vis the clauses of contract - Matter is arguable one - Conditional stay granted.
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2014 (5) TMI 138
Demand of service tax - Goods transport agency - expenditure on transportation of sugarcane from the cane collection centers to their sugarcane mills - Held that:- admittedly no consignment notes have been issued. The fortnightly bills cannot be treated as consignment notes, as a consignment note issued by Goods Transport Agency represent its liability to transport the consignment handed over to it to the destination and deliver the same to the consignee and merely a bill issued for transportation of goods cannot be treated as Consignment Note. The fact of non issue of consignment to M/s. Nandganj is admitted in the Show Cause Notice itself - The transportation of goods by individual truck owners without issue of consignment note, GR s & billties etc. as prescribed in Rule 4B of the Service Tax Rules, would be simple transportation and not the service of Goods Transport Agency which involves not only undertaking the transportation of the goods handed over to it but also undertaking delivery of the goods to the consignee and also temporary storage of the goods till delivery. When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called Goods Transport Agency and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp). In view of this we hold that there will be no service tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency. In view of this the impugned orders are not sustainable and the same are set aside - Decided in favour of assessee.
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2014 (5) TMI 137
Waiver of pre deposit - Section 35F - appellant contended that the appellant is the Statutory Board fully controlled and financed by the State Government and discharging public functions of supplying portable water and other sewage works. - Held that:- Under Section 35F of the Act, the appellant has to deposit the entire amount to maintain the appeal. However, where in any particular case, the Appellate Tribunal is of the opinion that depositing of the said amount would cause undue hardship to such person, the Tribunal may dispense with such deposit subject to such condition as it may deem fit to impose so as to safeguard the interest of the Revenue - pre-deposit of the amount demanded is one of the conditions precedent to maintain the appeal. The pre-deposit of the amount due is applicable to the statutory authority set up by the State Government. When the Legislature has not made any distinction, we cannot make any distinction by judicial order. Therefore, we do not find any justification to interfere with the order passed by the Appellate Tribunal - Decided against assessee.
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2014 (5) TMI 136
Rate of service tax - Works contract - The works contract for civil works like construction of buildings, bridges or roads and repairs of such works carry tax liability at 2%. As against this, the works contract other than those mentioned above and for repairs of such works carry tax liability at 12%. - Held that:- From the materials on record, the Tribunal noted that (i) such barriers are installed for protection of the vehicles and pedestrians. The speeding vehicles on highway may skid accidentally. (ii) to avoid such accidents, the barriers work as road restraint systems. It provides for a crash cushion. The Tribunal, therefore, concluded and rightly so, in our opinion, that the road-side metal crash barriers are integral part of the road. The Tribunal also held that installation of such barriers was in the nature of a civil work. The iron and metal barriers would have to be installed with cement-concrete work. The installation of any such barrier would require laying of cement-concrete foundation. It was, therefore, held that installation of such barriers is basically in the nature of civil work of buildings which, in turn, is a part of construction of a road. Since the rate of duty of 2% is extendable to the constructions like buildings, bridges or roads, we see no reason to interfere - Decided against Revenue.
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2014 (5) TMI 135
Waiver of pre deposit - service tax demand - works contract service - tribunal directed the petitioner to deposit a sum of ₹ 25 lacs only as pre deposit - Held that:- On merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequence flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given. Two significant expressions used in the provisions are "undue hardship to such person" and safeguard the interest of revenue" Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view - For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it - The word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant - Decided against assessee.
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Central Excise
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2014 (5) TMI 130
Denial of rebate claim - Unjust enrichment - whether doctrine of unjust enrichment will be applicable to the rebate claims under the Sugar Incentive Scheme - Held that:- Tribunal in the case of CCE Meerut Vs Kisan Sahkari Chini Mills Ltd vide [2013 (3) TMI 210 - CESTAT NEW DELHI] relying upon the decision of Honble Supreme Court in Sahakari Khand Udyog (2005 (3) TMI 116 - SUPREME COURT OF INDIA) has held that doctrine of unjust enrichment would be applicable to rebate under the excess production scheme in respect of sugar. We after following the decision dated 26.9.2012 of the Tribunal in the case of Kisan Sahkari Chini Mills holding the applicability of unjust enrichment in rebate claims - Decided against assessee.
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2014 (5) TMI 129
CENVAT Credit - GTA services - Held that:- credit on Outward Transportation is admissible provided the delivery of finished goods by the appellant is contracted under FOR destination to be made at the door steps of the buyers. It is also observed from the grounds of appeal that similar credit admissibility has been clarified by CBCE vide circular dated 23.8.2007 that, to be admissible subject to fulfilment of certain conditions. However, appellants has to establish their case before the Adjudicating Authority with documentary evidence that the finished goods are contracted to be supplied on FOR destination basis at the door steps of buyers. As such verifications can only be done by the Adjudicating Authority therefore, OIA dated 25.9.2013 passed by the first appellate authority is required to be set aside and the matter remanded back to the adjudicating authority for denovo consideration. - Decided in favour of assessee.
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2014 (5) TMI 128
Denial of refund claim - CENVAT Credit - Denial on the ground that claimant has not physically exported the goods but merely supplied the goods to 100% EOU , the provision of Rule 5 of the Rules are not applicable and therefore, there are not entitled for refund of CENVAT credit under Rule 5 - Held that:- on inputs used in manufacture of goods cleared by TDA units to 100% EOU refund of CENVAT credit would be available to the assessee and it would not be denied on the ground that it was the case of deemed export and refund could be granted only in case of physical export - Following decision of CCE&C v. NBM Industries [2011 (9) TMI 360 - GUJARAT HIGH COURT]. Contempt of Court - Importance not given to precedents cases - Assistant Commissioner, Central Excise and Customs Division, Vapi by impugned orders has rejected the refund claims of the claimant on the ground inter alia that the decision of this Court in NBM Industries (Supra) is in the case of another assessee and not in the case of claimant and each one must fight its own battle and must succeed or fail in such proceedings - Held that:- It is required to be noted that the decision of Division Bench of this Court in the case of NBM Industries (Supra) is binding upon the respondent No.4 . Merely because the said decision is in the case of another assessee , the respondent No.4 could not have ignored the same and/or not followed the same by holding that it is not binding ruling as the same is in case of another assessee . It appears that the respondent No.4 has not properly understood the decision of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. (1996 (12) TMI 50 - SUPREME COURT OF INDIA). In the case of Mafatlal Industries Ltd. (Supra), the Hon'ble Supreme Court has never held that a decision of the higher appellate authorities/courts which may be in the case of another assessee are not binding to the lower authorities, on the ground that the same is in the case of another assessee . It is also not held by the Hon'ble Supreme Court that it is not open for a person to make refund claim on the basis of a decision of a court or tribunal rendered in the case of another person. On the contrary, there are direct decisions of the Hon'ble Supreme Court as well as various High Courts. We are constrained to strongly disapprove such arbitrary act on the part of the lower adjudicating authority and/or lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Time and again the Hon'ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities - It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts. Being a part of the justice delivery system, all efforts should be made by the authorities/quasi judicial authorities and judicial authorities to see that there is no multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure - Decided in favour of assessee.
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2014 (5) TMI 127
Duty demand - Assessee mis led Tribunal to obtain stay application - Held that:- A perusal of the principle of law would clearly bring out that the party misrepresenting facts before the Court with the object of securing interim relief would be rendered disentitled to opportunity of hearing the matter on merit. Once the Tribunal has found that the interim order was secured by the appellant by practicing misrepresentation then no option is left with the Tribunal to nonsuit the appellant on principle and precedent. It is established beyond doubt that such fraudulent misrepresentation has no place in the judicial administration. There is no substantial question of law within the meaning of Section 35 G of the Act, which may warrant admission of the appeal - Following decision of KD. SHARMA Versus STEEL AUTHORITY OF INDIA LTD. & ORS. [2008 (7) TMI 851 - SUPREME COURT OF INDIA] - Decided against assessee.
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2014 (5) TMI 126
Benefit of concessional rate of duty - Content of 15% betel nut in "Chutki" - Held that:- order inoriginal is appealable under section 35 B of the Central Excise Act, 1944. The petitioner has also indicated that it would be filing an appeal before the CESTAT within three weeks. Consequently, we dispose of this writ petition by directing that in case the petitioner files the appeal within three weeks before the CESTAT along with an application for waiver of predeposit under section 35 F of the Central Excise Act, 1944, the demands and penalties raised in the order in original shall remain stayed till the disposal of the said application under section 35 F by the Tribunal - Conditional stay granted.
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CST, VAT & Sales Tax
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2014 (5) TMI 134
Re-fixation of taxable turnover Non existant concern - Suppression of amount Held That:- The Tribunal was of the view that it was not correct on the part of the assessee to contend that it had handed over the goods worth Rs.10 lakhs in the year 1996 for safe custody - Assessee filed return showing the taxable turnover as NIL - The assessee had not offered any explanation on this turnover as to whether the same had gone into export stream or otherwise - The only contention taken by the assessee was that they were entrusted the goods with Balaji Garments, which was later on returned to the assessee on 26.4.97 after the date of inspection and they were in poor condition - The assessee could not show the receipt of the goods and the manner in which it had dealt with the goods - There is every justification for including this turnover for the purpose of assessment. Levy of penalty Held that:- the Assessing Officer gives no reason for imposition of penalty indicating any intention on the part of the assessee to suppress the fact - the explanation offered by the assessee was disbelieved and rejected, per se would not lead to imposition of penalty - the fact that there are also defects in the enquiry done by the Revenue, thus, it is not a fit case where penalty should be imposed relying upon APPOLLO SALINE PHARMACEUTICALS PRIVATE LIMITED v. COMMERCIAL TAX OFFICER (SAC) AND OTHERS [2001 (10) TMI 1100 - MADRAS HIGH COURT] - No levy of penalty is warranted on the assessment made solely relying on the turnover available in the books of accounts penalty could not be levied Decided against Revenue.
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2014 (5) TMI 133
Nature of activity - Whether the assessee was doing 'works contract' or sold plastic bags to his customers - Held That:- The contention of the assessee cannot be accepted that the transaction in question has to be viewed as a works contract Relying upon Tvl.Bharat Offset and others Vs. The Tamil Nadu Taxation Special Tribunal, Rep. By its Registrar, Chennai and another [2010 (4) TMI 969 - MADRAS HIGH COURT] - where an assessee sells bags with the customer's name imprinted therein, the subject of the transaction being the sale of bag or diary as the case may be, the printing of the name is just incidental. The mere fact that the labels or logos have been printed would not make the transaction into a works contract - It is purely and simply a sale of goods - Therefore, printing of the logo or name is incidental to the sale and the transaction between the customer and the supplier is not work charged - Except for contending that the transaction is one of works contract, the assessee had not placed any material before any of the authorities - When the primary object of the transaction is sale of bags and the printing of the name or logo is only incidental to the sale, there was no justifiable ground to accept the case of the assessee and hold that the transaction is sale alone decided against assessee.
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2014 (5) TMI 132
Quashment of Notice - Recovery certificate Alternate Remedy of Appeal Section 55 of the U.P. VAT Act, 2008 - Unchallenged assessment order Held that:- It transpires from the records of the writ petition that earlier a recovery certificate dated 9 November 2011 was issued by AO w.r.t. 2007-08 relating to the period from 1 January 2008 to 31 March 2008 - Assessee instead of filing an appeal u/s 55 of the U.P. VAT Act, 2008 filed a writ petition - This petition was disposed of by the judgment and order dated 17 February 2012 - It was left open to assessee to file objections in response to the notice (actually a recovery certificate) dated 9 November 2011 - Assessee filed objections before the Commissioner which have been decided against assessee by the order dated 21 January 2014. It is clear that the petitioner had not challenged assessment order pursuant to which the recovery certificate had been issued before Appellate Authority - In writ petition all that was prayed was that an appropriate direction should be issued for not recovering the tax for the Assessment Year 2007-08 claim under the recovery certificate dated 9 November 2011 -The Court, had only left it open to the petitioner to file his objections and if there was a statutory remedy of an appeal, assessee should have availed of that remedy - Even the subsequent notice dated 15 March 2010 which has been issued u/s 28 for 2009-10, assessee has been called upon to file his reply - Assessee can file a reply to aforesaid notice and if an assessment order is passed, which does not satisfy assessee, he would have an adequate remedy of filing an appeal Decided in favour of Assessee.
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2014 (5) TMI 131
Constitutional validity of Section 6-A Central Sales Tax, 1956 Alternate remedy of appeal Held that:- This Court is not inclined to entertain the petition, which is essentially against the order which has been passed by AO - Undoubtedly, constitutional validity of Section 6-A cannot be considered or decided in a departmental appeal - A challenge to constitutional validity can be resolved in writ proceedings, but it is equally well settled that a challenge to constitutional validity should not be considered in a vacuum, particularly in a matter where the fiscal legislation provides a hierarchy of departmental remedies. The ordinary rule of prudence would warrant relegating the assessee to a departmental remedy first - The Court should address an issue of constitutional validity only when it is necessary to do so - The Appellate Authority would be within its jurisdiction in considering the judgment of a Division Bench of this Court in M/s. A.C.P.L. Jewels v. UOI [2009 (12) TMI 849 - ALLAHABAD HIGH COURT] and determining whether the dictum which has been laid down there would apply to the facts of the case - Consequently, at this stage in the considered exercise of our discretionary jurisdiction, it would not be appropriate or proper for this Court to entertain the petition Matter remitted back to Appellate Authority Decided in favour of assesse.
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Indian Laws
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2014 (5) TMI 120
Wrong withholding of property - father of petitioner had joined service of M/s Birla Cotton Spinning and Weaving Mills Ltd and on 28.12.1978 had been allotted quarter - There was an application to handover the vacant and peaceful possession of the quarter but he failed to do so - After death of her father, the petitioner did not vacate the quarter; she wrongfully withheld the same - Respondent filed complaint under Section 630 - Appellant contends that Respondent did not have the locus standi to file the complaint - Held that:- Section 630 of the said Act had been engrafted in the Legislature to provide speedy relief to a company where its property is wrongfully obtained or wrongfully withheld by an 'employee' or an 'officer' or a 'past employee or an officer' or 'legal heirs and representatives' deriving their colour and content from such an 'employee or officer' in so far as the occupation and possession of the property belonging to the company is concerned. The failure to deliver property back to the employer on the termination, resignation, superannuation or death of any employee, would amount to wrongful withholding that property giving rise to an actionable claim under Section 630 of the said Act. A broader, liberal as also a purposeful interpretation has to be given to Section 630 in furtherance of the object and purpose for which this legislation has been engrafted. The scheme clearly shows that respondent has become the owner of the quarter in question as also the employer of the father of the petitioner; all rights and liabilities of the transferor-company stood vested with the transferee-company, i.e., respondent - This Court has already returned a finding on the first issue i.e. M/s Texmaco Limited being the transferee company and having taken over all assets and liabilities of the said Mill which has been approved not only by the Delhi High Court but also by the Kolkata High Court, it was well within its right to file this complaint. - time period could be extended for vacation of the quarter but he declined the offer and sought an order on merits stating that this revision petition be decided on its merits - Decided against Petitioner.
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