TMI Tax Updates - e-Newsletter
July 12, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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Income Tax:
Deduction under Section 80IB - Duty drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80-IA/80-IB of the 1961 Act. - HC
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Income Tax:
Reopening of assessment - issuance of notice at the instance of the audit part - Assessing Officer cannot be allowed a second innings by addressing one element of entire claim of the assessee which was scrutinized during the assessment. - HC
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Income Tax:
Entitlement for exemption under section 54B - purchase of agriculture land in the name of assessee's wife would not allow exemption under section 54B in favour of the assessee. - AT
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Income Tax:
Capital gain arising on the sale of immovable property in Colombo, Sri Lanka - DTAA - Income is taxable in India subject to double taxation relief - AT
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Income Tax:
Business Services Charges for providing Business Service Centre - income from house property or Business Income - AO directed to treat the income earned by the assessee from business service centre as ‘income from business’ in conformity with his stand for the other assessment years. - AT
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Income Tax:
Eligibility for claim of deduction u/s 54F - whether the consideration received by the assessee on sale of her rights to get the conveyance of the flat in her favour is to be treated as capital gain eligible for claim of deduction - Held Yes - AT
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Income Tax:
Non-levy of Penalty u/s 271AAA - revision u/s 263 - AO being quasi judicial authority has not initiated the penalty proceedings in the assessment order is his jurisdictional authority. The ld. CIT cannot just substitute the authority of the AO with his opinion. - AT
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Income Tax:
Set off of loss from settlement of forward contracts for foreign currency against income from ‘other sources’- It was held as capital loss as returned by the assessee. - Assessee's claim rejected - AT
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Income Tax:
When the loans are given out of the funds borrowed from the society, the A.O. was not correct in holding that the assessee has diverted the funds in violation of the provisions of section 13(1)(d) of the Act. - Exemption u/s 11 allowed - AT
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Customs:
Refund of duty drawback claim repaid earlier - recovery of drawback amount had become final as it had been accepted by the applicant who did not challenge it any appellate forum and paid the confirmed dues. Therefore, Government holds that question of any refund of duty paid pursuant to such an order which has attained finality does not arise. - CGOVT
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Service Tax:
Tour operator service - the authority had come to a finding that petitioners are not mere hirers. Petitioners are not persons who merely hire the vehicle, whereas it amounts to operation of the tour itself. - Decided against the petitioner. - HC
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Service Tax:
Jurisdiction - Tax Case - such writ petitions cannot be posted before Single Judges. They have to be posted only before the Division Benches dealing with tax cases. This will avoid the assessees' attempts to have two remedies before this Court as against an order, against which, even an appeal would normally lie before a Division Bench. - HC
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Service Tax:
Levy of penalty u/s 78 - waiver u/s 80 - admitted liability of service tax as paid with interest invoking extended period of limitation at the instance of audit party - penalty was rightly waived - AT
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Central Excise:
Valuation of - deduction of discount offered from the depot / from the stockiests and sub stockiests - (Appeals) has given specific finding to the effect that he has found respondents have actually passed on the benefit of turnover discount to the eligible stockiest and sub-stockiests by raising credit notes - deduction allowed - AT
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Central Excise:
Refund of cenvat credit of accumulated on account of duty of AED (T & TA) paid on inputs - such unutilized accumulated credit of AED (T&TA) can be claimed as refund under rule 5 of the CENVAT Credit Rules, 2004 on export of goods - AT
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Central Excise:
Warehouse has been used by the appellant for storage of raw material and finished goods which is a registered place for removal goods. In the circumstances, storage of goods is an integral part of manufacturing, therefore appellant is entitled to availe cenvat credit on these services. - AT
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VAT:
Recovery of amount from the son (agent of the mother and POA holder) for tax dues pending against the the mother of the petitioner - Amount recovered from the petitioner ordered to be refunded - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (7) TMI 463
Deduction under Section 80IB - income from DEPB and DEPB premium - non entitlement to deduction as per ITAT - Held that:- Principle of netting while excluding certain sum from the claim of assessee for deduction under section 80IB of the Act is neither new nor unfamiliar. Such principle however, cannot be applied in the present case since this very issue of exclusion of the entire amount of DEPB from the profit eligible for deduction under section 80IB of the Act is well entrenched since long by virtue of judgement of the Supreme Court in case of Liberty India (2009 (8) TMI 63 - SUPREME COURT ) wherein held Duty drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80-IA/80-IB of the 1961 Act. Question is answered against the assessee and in favour of the department.
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2016 (7) TMI 462
Reopening of assessment - issuance of notice at the instance of the audit party - claim of interest on borrowed funds - Held that:- Entire claim of interest expenditure was before the Assessing Officer during the original assessment proceedings. The Assessing Officer had raised several queries with respect to the interest paid by the assessee on the borrowed capital. The present issue of interest to the extent of ₹ 2.68 crores forms part of the larger interest claim of ₹ 7.28 crores made by the assessee in the original assessment. The Assessing Officer only after being satisfied, upon examination of various details, materials and documents supplied by the assessee in response to the various queries raised, chose not to make any disallowance. Any attempt on part of the Assessing Officer now to reopen this issue would be based on mere change of opinion. It may be that the present issue of interest expenditure of ₹ 2.68 crores is merely an element of larger claim of assessee of ₹ 7.28 crores. Nevertheless, the Assessing Officer cannot be allowed a second innings by addressing one element of entire claim of the assessee which was scrutinized during the assessment. As noted, the petitioner had putforth a claim of interest expenditure of ₹ 7.28 crores for the entire borrowed sum of ₹ 41.43 crores. Interest expenditure of ₹ 2.68 crores against newly issued OFCD of ₹ 14.89 crores was part of this larger claim. When the entire claim was examined by the Assessing Officer by calling upon the assessee to produce all supporting documents and materials, it would now not be possible for Assessing Officer to disallow this claim and contend that this element of assessee's claim was not examined and would be open for reexamination during the fresh assessment. - Decided in favour of assessee
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2016 (7) TMI 461
Entitlement for exemption under section 54B - agriculture land purchased by assessee in the name of assessee's wife Smt. Manjit Kaur - Held that:- Following the decisions of Hon'ble Punjab & Haryana High Court in the cases of Jai Narain [2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT] and Dinesh Verma (2015 (7) TMI 486 - PUNJAB & HARYANA HIGH COURT) hold that purchase of agriculture land in the name of assessee's wife would not allow exemption under section 54B in favour of the assessee. - Decided against assessee.
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2016 (7) TMI 460
Taxability in India - capital gain arising on the sale of immovable property in Colombo, Sri Lanka - DTAA - Held that:- The income of the assessee earned on capital gains on sale of immovable property situated in Sri Lanka during relevant previous year shall be chargeable to tax only in Sri Lanka by Government of the Democratic Socialist Republic of Sri Lanka, while the same income shall be included in the income of the assessee chargeable to tax in India under the provisions of the Act and the relief shall be granted in the manner laid down in the notification no 91 of 2008 dated 28-08-2008 issued by the Central Government read with DTAA entered into by India and Sri Lanka and provisions of the Act to avoid double taxation and prevention of fiscal evasion of the taxes.
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2016 (7) TMI 459
Business Services Charges for providing Business Service Centre - income from house property or Business Income - Held that:- There is no material to establish that the fact-situation in other assessment years brought out by the assessee is any way different from the instant assessment year. Quite clearly, the Assessing Officer has erroneously treated the income from business service centre as income from house property without bringing on record any fact or law situation, which was inconsistent from the other years. Even before us, no cogent change in facts or law has been brought out by the Revenue, which would justify the departure from the earlier stand of treating the income from providing business service centre facility as income from business income. Therefore, on these aspect we set-aside the order of CIT(A) and direct the Assessing Officer to treat the income earned by the assessee from business service centre as ‘income from business’ in conformity with his stand for the other assessment years. Thus, assessee succeeds on this aspect of the controversy. - Decided in favour of assessee Disallowance u/s 14A - Held that:- The case set-up by the assessee is based on the provisions of section 14A(2) of the Act, which requires the Assessing Officer to record a satisfaction about the correctness of the claim by the assessee before proceeding to disallow any expenditure, which according to him has been incurred in relation to earning exempt income. n the present case, we find from the discussion in the assessment order that there is no satisfaction recorded by the Assessing Officer about the correctness of the claim of the assessee and he has proceeded to re-compute the disallowance under section14A of the Act by applying the provisions of Rule 8D of Income Tax Rules, 1962 in a mechanical manner. Therefore, in our view the action of the Assessing Officer is lacking in jurisdiction and deserves to be set aside. We hold so. As a consequence, we set-aside the order of the CIT(A) and direct the Assessing Officer to retain the disallowance made by the assessee in his return of income and delete the balance. - Decided partly in favour of assessee
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2016 (7) TMI 458
Eligibility for claim of deduction u/s 54F - whether the consideration received by the assessee on sale of her rights to get the conveyance of the flat in her favour is to be treated as capital gain eligible for claim of deduction - Held that:- While making the payment to the builder, the intention of the assessee was not to earn any quick profits but the purpose was of investment. The assessee not only paid the earnest money in the year 2004 but subsequently paid installments to the builder at certain stages of the completion of the construction. However, before the possession of the flat being offered to the assessee, the assessee decided to transfer his rights to a third party at some profit. The said profit was treated by the assessee as capital gains. From the facts narrated above it clearly reveals that the payment made by the assessee was not an advance or security but it was towards the consideration of the flat in question which was under construction and payment of the installments were made at different stages of the completion of the construction. There accrued a right to get the possession/conveyance of the said flat in favour of the assessee from the said builder. A tripartite agreement was executed vide which the assessee, with the consent of the builder, had agreed to sale his rights in favour of the third party. So far as the observation of the AO that the assessee had to exercise his option within 30 months, the Ld. A.R. of the assessee has brought our attention to the relevant part of the assessment order wherein the assessee had explained to the AO that the time period for exercise of option was extended by the builder to 40 months vide its letter dated 01.07.07 Even otherwise, the assessee had booked the flat, paid earnest money, paid installments at certain stages of the completion of the building as per the schedule of the allotment letter, hence under such circumstances a definite right had accrued to the assessee to get the possession and conveyance of the flat in her favour. Hon’ble Bombay High Court in the case of “CIT vs. Vijay Flexible Containers” (1989 (9) TMI 16 - BOMBAY High Court ) wherein the Hon’ble Bombay High Court has held that the right to obtain conveyance of immovable property is a capital asset and giving up of the right to obtain conveyance of immovable property amounts to transfer of a capital asset. - Decided in favour of assessee.
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2016 (7) TMI 457
Non-levy of Penalty u/s 271AAA - revision u/s 263 - Held that:- In support of claim the assessee has produced the ledger copy of the party where we find that all the transactions were routed through banking channel. After considering the submissions of the both parties and facts of the facts we find that assessee has duly substantiate the manner in which the undisclosed income was derived. We also find the AO being quasi judicial authority has not initiated the penalty proceedings in the assessment order is his jurisdictional authority. The ld. CIT cannot just substitute the authority of the AO with his opinion. Thus assessee is very much entitled for impounded from the penalty proceedings as specified u/s. 271AAA of the Act sub clause (2) of the Act. Therefore in our considered view, we find the impugned revision order unsustainable in law, and we, therefore, cancel the same. - Decided in favour of assessee
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2016 (7) TMI 456
Set off of loss from settlement of forward contracts for foreign currency against income from ‘other sources’- Held that:- As relying on assessee's own case for assessment years 1998-99 and 2005-06 find no error in the orders of the authorities below, in the year under consideration, in holding that the loss arising from settlement of forward contract taken by the assessee to safeguard the foreign exchange loan taken for acquisition of shares/debentures is capital loss as returned by the assessee. There is no requirement for us to issue directions to the AO as urged by the assessee, since the AO is bound to follow the directions of the Hon'ble High Court when the appeals before their Lordships is decided. Finding no merit in this ground raised and in the light of the decision of the Coordinate Bench (supra) upholding the assessee’s claim in the matter, we dismiss ground No. 1 raised by the assessee. Application of section 79 - denial of carry forward of long term capital losses incurred in financial year - Held that:- In the year under consideration, neither has there been a change in the shareholding pattern of the assessee nor has there been any claim for set off of carried forward of losses of the year’s prior to A.Y. 2005-06. Hence, in our view, and as contended by the learned A.R. for the assessee the conditions precedent for invoking and bringing into play the provisions of section 79 of the Act are absent and have been wrongly applied by the AO to disallow the aforesaid losses, the set off of which were never claimed in this year. We, therefore, delete the order of the AO on this issue as the same matter is to be examined in the year in which such claim is preferred. - Decided in favour of assessee
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2016 (7) TMI 455
Exemption u/s 11 denied - Eligibility for exemption u/s 10(23C) - whether society is existed for profit motive? - A.O. denied the benefit of exemption for the sole reason that the assessee society has diverted its funds to other societies and violated the provisions of section 13(1)(d) - Held that:- On perusal of the documents available on record, we find that the assessee has advanced loans to other societies under the same management having similar objects and also registered under the provisions of section 12A of the Act and charged interest. The assessee also proved that it has advanced loans out of the funds borrowed from founder members of the society. When the loans are given out of the funds borrowed from the society, the A.O. was not correct in holding that the assessee has diverted the funds in violation of the provisions of section 13(1)(d) of the Act. Therefore, we are of the view that advancing loans to other societies having similar object whether or not registered u/s 12A of the Act, is not a violation of the provision of section 13(1)(d) of the Act. A.O. cannot borrow the findings of the Chief Commissioner of Income Tax in the order cancelling the registration u/s 10(23C) of the Act to deny the benefit of exemption u/s 11 of the Act, unless he had specifically points out the activities carried out by the assessee are not in accordance with the objects of the trust. As far as the observation of A.O. with regard to letting out of properties on commercial lines is concerned, we noticed that the assessee has let out its place to telecom companies for erection of telecom tower and used the proceeds for the objects of the society. Similarly, the assessee society has maintaining a hostel for the benefit of the students. Maintaining hostels for the benefit of the students and letting out properties cannot be considered has ingenuine activity to deny the benefit of exemption u/s 11 of the Act. In the present case on hand, on perusal of the facts, we noticed that the A.O. without pointing out any specific violations referred to in section 13(1)(c) or 13(1)(d) of the Act, simply rejected benefit of exemption. A.O. was erred in denying exemption u/s 11 of the Act. The CIT(A) without appreciating the facts has confirmed the order passed by the A.O - Decided in favour of assessee Disallowance of expenditure under the provisions of section 40(a)(ia) - A.O. was of the opinion that once assessee looses benefit of exemption u/s 11 of the Act, then the income of the assessee should be computed under the normal provisions of business or profession, accordingly, the provisions of section 40(a)(ia) of the Act are applicable - Held that:- Disallowance u/s 40(a)(ia) of the Act is not applicable, when income is computed under the provisions of section 11 of the Act. Therefore, we direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act as assessee has been entiled for exemption u/s 11 - Decided in favour of assessee
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2016 (7) TMI 454
Entitlement to deduction u/s 80HH and 80I - engagement in manufacturing activities - Held that:- As decided in Commissioner of Income Tax v. Hynoup Food & Oil Industries [2011 (7) TMI 1222 - GUJARAT HIGH COURT ] the activity carried on by the assessee was a manufacturing activity and the assessee is entitled to deduction under Sections 32A, 80HH and 80I of the Income Tax Act. Tribunal also further relying on decision of the Supreme Court in case of CIT v. Vegetables Products Ltd. reported in (1973 (1) TMI 1 - SUPREME Court ) held that where there are two possible views, one which favours the assessee while interpreting the taxing provisions needs to be adopted by the Court and accordingly it held activity of assessee as manufacturing activity. - Decided in favour of assessee
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2016 (7) TMI 453
Determination of Profit rate - @ 10% by CIT(A) as against 42.48% determined by AO - books of accounts not produced - Held that:- We find that the accounts of the assessee were duly audited and no adverse inference was drawn by the auditor. The books of accounts could not be produced before the ld. AO as the assessee’s unit had been taken over by the lending institution. The entire unit including its assets and the books of accounts were in the possession of the bank. The ld. AO was duly aware of this fact and accordingly had also issued summons u/s 131 of the Act to the bank but despite that they have not produced the books of accounts. In such a situation, in our opinion, adverse inference cannot be drawn against the assessee on the ground that books of accounts were not produced by the assessee. We find that asking the assessee to produce the books of accounts in these circumstances would only result in impossibility of performance. The legal maxim ‘LEX NON COGUT AD IMPOSSIBLIA’ – a law cannot compel a man to perform an act which he cannot possibly perform would come to the rescue of the assessee. Adoption of preceding year’s gross profit would only result in absurdity as rightly pointed out by the ld. CITA. We find that the assessee had declared profit at 8.42% in its return based on audited data. We find under these circumstances, the revenue had to place the complete reliance on the audited financial statements for the purpose of determination of total income. The ld. CIT-A had estimated the total income at 10% of turnover. However , we, in our considered opinion, in the facts and circumstances of the case, especially considering the state of affairs in which assessee is placed, feel that adoption of profit at the rate of 9% of turnover would meet the ends of justice. The ld. AO is directed to adopt 9% of turnover as income of the assessee as against 42.48%. Accordingly the grounds raised by the revenue are dismissed and cross objections of the assessee are partly allowed.
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2016 (7) TMI 452
Levy of penalty under section 271(1)(c) - bogus claim of exemption of income under section 80P - Held that:- Since the assessee made bogus claim of exemption of income under section 80P of the Act in the return of income, therefore, assessee furnished inaccurate particulars of income so as to levy the penalty under section 271(1)(c) of the Act. - Decided against assessee.
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2016 (7) TMI 451
Share transaction - Capital gain v/s business income - assessee had availed the services of a PMS provider - Held that:- ind the AO had reopened the scrutiny assessment and had held that the income of the assessee arising out of sale of shares had to be taxed under the head business income and not under the heads STCG or LTCG, that the FAA reversed the decision of the AO considering the fact that the assessee had availed the services of a PMS provider. In our opinion, once an assessee approaches a PMS provider, he loses control over the decision-making process for making investment in the shares. It is the PMS provider who decides as to how much money is to be invested and in which scripts- all the decisions related with sale and purchase of shares are taken by the PMS provider. Thus treating the income from sale of shares is income from Short-Term Capital Gains (STCG) of ₹ 2. 99 Crores and Long-Term Capital Gains (LTCG) of ₹ 87, 471/- as against the business income assessed by the AO confirmed - Decided in favour of assessee
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2016 (7) TMI 450
Addition to tax interest income on accrual basis - Held that:- The Assessing Officer in assessment years 2002-3 to 2004-05 has accepted the plea of the assessee that no interest income accrues with respect to the impugned deposits made with MCCL on account of its poor financial health and, therefore, in the absence of change in facts and circumstances in the instant year, the addition in this year does not survive. On this aspect of the matter, Ld. Departmental Representative has not made any argument considering the order of the Assessing Officer for assessment years 2002-03 to 2004-05. Amount written off in the books of account as not recoverable be allowed as deduction as a bad debt - Held that:- Interest income accruing for assessment year 2001- 02 has been offered to tax and the debt is to be understood as comprising of not only interest, but also the principal amount of deposit/advances. In this manner, following the ratio of the judgment of the Hon'ble Bombay High Court in the case of Pudumjee Pulp & Paper Mills Ltd.,(2015 (8) TMI 719 - BOMBAY HIGH COURT ) the test contained in section 36(2)(i) of the Act stands satisfied, inasmuch as, debt or part thereof has been taken into consideration for computing the profit for an earlier year. In this view of the matter, the other aspect as to whether the assessee was engaged in the business of money lending and/banking is not relevant to adjudicate the controversy. - AO directed to grant appropriate relief. - Decided in favor of assessee.
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2016 (7) TMI 449
Application of section 145(3)- Held that:- Consistently the books of accounts have been accepted by the revenue in the earlier years prior to search and in years subsequent to search proceedings. In these circumstances, we find that the Learned CITA had rightly rejected the action of the Learned AO in applying the provisions of section 145(3) of the Act and consequentially resorting to estimation of net profits for all the assessment years and accordingly we find no infirmity in the order of the Learned CITA. TDS u/s 194I - disallowance of rent paid to various co-owners - Held that:- We find that the Learned AR was not able to furnish the original rent agreements or any other documents even before us to prove that the endorsement made in hand in the rent agreements have been duly authenticated by the various lessors by affixing their signatures in the rent agreement. Hence it could safely be concluded that the Learned AR was not able to produce any evidences to prove the existence of multiple co-owners except making an oral statement in this regard. We find that the Learned AR without discharging his onus to prove the veracity of the claim of deduction had only tried to simply shift the burden to the department by making the Learned AO to verify the facts from the landlord. We find that the primary onus lies on the assessee to prove and substantiate its claim which is not discharged in the instant case. Hence we find no infirmity in the order of the Learned CITA in this regard. - Decided against assessee Disallowance of rent paid to Kolkata Port Trust u/s 40 (a)(ia) - Held that:- AR placed before us a copy of the certificate issued by the ACIT, TDS, Kolkata u/s 197(1) of the Act in Proceedings No. ACIT/TDS/Cir-58/Certificate u/s 197(1)/2005-06/7 dated 18.5.2005 directing all the payers to deduct 0% TDS on rental payments made to M/s Kolkata Port Trust and the said certificate shall remain in force up to 31.3.2006 until otherwise cancelled by the issuing authority. The Learned AR fairly submitted that this document was not furnished by the assessee before the lower authorities. Hence in the interest of justice and fair play, we deem it fit and appropriate, to set aside this issue to the file of the Learned AO, to verify the veracity of the certificate u/s 197(1) of the Act produced by the assessee and if the same is found to be correct, then the Learned AO is directed to allow deduction of rent paid to Kolkata Port Trust as there will be no obligation to deduct tax at source on the assessee for the Asst Year 2006-07. - Decided in favour of assessee for statistical purposes Addition made u/s 68 - Held that:- An assessment has to be made on the basis of the material available on record. But, in the present case, presumptions have led the AO to a state of affairs where salient evidences were overlooked and the material on record was ignored. On the other hand, the AO has brought no Positive material on record to substantiate or support his conclusion that there was transfer of cash for obtaining the loans. In view of the above, the addition made by the AO is neither sustainable in law nor on facts - Decided in favour of assessee Addition on unexplained cash deposit - Held that:- We find that the assessee had discharged its primary onus of disowning the document and the presumption as to ownership of the document in the course of search has been duly rebutted by it. Moreover, there was no other corroborative evidences found in the course of search or thereafter to prove the linkage or relation of the assessee with the concerned account holder and the cash deposits found credited in that bank account. We hold that had the Learned AO made corresponding verification with the concerned bank account of Shri Sarat Chandra Patra, that would have eventually led to the concerned party and the said party could have been asked to explain the sources of cash deposits in his bank account. We hold that merely by finding a pay in slip of a third party in the premises of the assessee during the search would not automatically lead to framing of an addition in the hands of the assessee when especially no other corroborative evidences were brought on record to establish the nexus and link of the assessee vis a vis the said seized document. In these circumstances, we hold that the Learned CITA is justified in deleting the addition - Decided in favour of assessee Addition towards cash payments – Seized Document Reference ILRT /1 - Held that:- The assessee claimed that the cash balances are sufficiently available on each date of funding to other godowns though it is recorded int the cash book on a subsequent date. The assessee had also stated before the Learned AO that it is ready to demonstrate the availability of cash balance for making payments to other godowns and what is maintained in the seized document is only memoranda records and hence the delay in recording the entries in the cash book on a subsequent date is quite natural. But this fact is very crucial which has not been the subject matter of examination by the revenue and substantiated properly by the assessee. We find in the facts and circumstances, deem it fit and appropriate, to set aside this issue to the file of the Learned AO, to decide this issue afresh, in accordance with law. - Decided in favour of assessee for statistical purposes. Addition towards payment through credit card - Held that:- We hold that the assessee company being a non-natural person cannot have any personal element thereon and all the expenditure incurred thereon had to be construed only for official purposes - Decided in favour of assessee. Addition towards immovable property in Gurgoan - Held that:- We find that the Learned CITA had given a categorical finding for deleting this addition by stating that the monies paid for purchase of immovable property at Gurgoan had been duly disclosed by the assessee in its balance sheet and hence there is no case for making any addition. The Learned DR could not controvert the factual findings given by the Learned CITA before us. - Decided in favour of assessee. Addition made towards Capital Expenditure - Held that:- We find that the Learned CITA had given a categorical finding that the assessee had constructed a new four-storied commercial building on the rented premises for which building plan was also sanctioned from the local authority. We find that the case laws relied upon by the Learned AR were prior to the amendment brought in section 30 by the Finance Act 2003 with effect from 1.4.2004 and hence therefore not applicable for the Asst Year under appeal. Hence we hold that the expenditure incurred is capital in nature and admittedly the same is used for the purpose of business of the assessee and hence the assessee is entitled for depreciation thereon. The Learned AO is directed to grant depreciation on the same accordingly for this year. - Decided in favour of assessee. Addition towards Unexplained Expenditure – Seized Document Reference ILRT /12 and ILRT/23 - Held that:- We find that the seized documents contain the place where certain works were carried out / purported to be carried out with figures. It does not contain any date, mode of payment, name of the contractor who was engaged for the work etc. We find that the Learned AO had recorded a finding that a sum of ₹ 5,32,500/- indicated in the said seized document was towards the civil works carried out at the residence of Somani family at Alipore, Kolkata. Similarly for ₹ 1,50,000/- , the Learned AO had recorded a finding that the said seized document was towards the civil works carried out for Strand Bank Road office. Similarly he had recorded a finding tha a sum of ₹ 11,24,093/- indicated in the said seized document was towards the civil works carried out at the residence of Somani family at Alipore, Kolkata. The Learned AO had recorded a finding that these three payments were not recorded in the books of accounts of the assessee. These findings recorded by the Learned AO had not been controverted by the assessee before us. We find both the premises recorded in the seized document has got linkage and nexus with the assessee. We find that the primary onus lies on the assessee to disprove that the documents seized during search does not belong to it which has not been discharged by the assessee in the instant case. - Decided against assessee Addition as undisclosed income - Held that:- We hold that the statement u/s 132(4) of the Act made by Shri Laxmi Narain Somani disclosing a sum of ₹ 9 Crores in the hands of the assessee without the consent of the assessee cannot be legally enforceable on the assessee. It is not in dispute that no incriminating documents or assets representing such undisclosed income of ₹ 9 Crores belonging to assessee were found in the search and seizure operations. We also find that the statement u/s 132(4) of the Act given by Shri Laxmi Narain Somani had been later retracted by him clearly adducing the reasons for the retraction. Hence no addition could be made in the hands of the assessee based on the statement of a third party which was later retracted.- Decided in favour of assessee. Addition towards cash and Jewellery - Held that:- We find that no defects were pointed out by the Learned AO in the cash book and the details submitted by the Karta of HUF. We also find that the said HUF in its Balance sheet filed as on 31.3.2010 (Pg 186 of the paper book) had duly disclosed the cash seized of ₹ 3,00,000/- in its Balance Sheet. This itself goes to prove that the cash is owned by the HUF and hence the explanation given by the HUF that cash found belongs to them deserves to be accepted. No contrary evidence were brought on record by the revenue to disbelieve the same. Accordingly, we hold that the Learned CITA had rightly deleted the addition made towards cash found in the sum of ₹ 3,23,283/-. Apropos the addition made towards Jewellery in the sum of ₹ 97,70,729/- , we find from the above discussions that the jewellery found at the time of search was much less than the jewellery declared by the family members of the assessee and their HUFs in their wealth tax returns prior to search and wealth tax assessments on the returns so filed were completed u/s 16(3) of the Act accordingly for which evidences were submitted in the paper book filed by the assessee. The Learned CITA had recorded a categorical finding that there is no material on record that such jewellery declared before the date of search were subsequently sold or transferred by the assessee or their family members. We find that the revenue was not able to bring any contrary evidence to this before us. - Decided in favour of assessee. Non-granting of benefit of set off of Long Term Capital Loss - CIT(A) allowed the claim - Held that:- We find that the Learned CITA had rightly granted the benefit of set off of carry forward long term capital loss of Asst Year 2004- 05 to be set off against the long term capital gain in Asst Year 2010-11 by placing reliance on the CBDT Circular supra and section 10 of General Clauses Act. Hence we find no infirmity in the order passed by the Learned CITA in this regard - Decided in favour of assessee.
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2016 (7) TMI 448
Assessment u/s 153A - unexplained credit u/s 68 addition - Held that:- It is undisputed in the present case that the original assessment proceedings had already been completed u/s 143(3) prior to the date of the search. It is equally undisputed that the impugned additions were made by the Assessing Officer without there being any finding that the additions related to any seized material. The Ld. CIT(A) has given a categorical finding in para 10.1 of his order that in respect of the entities who had subscribed to the shares, the Assessing Officer had asked for various details which were filed by the assessee to prove the identity and creditworthiness of the share subscribers, at the time of the original 143(3) proceedings. The Ld. CIT (A) has also mentioned that the Assessing Officer in 143(3) proceedings, after considering all the evidences/document, accepted the creditworthiness, identity and genuineness of the transactions and that no additions were made on account of unexplained credit u/s 68 of the Act. In the subsequent assessment order u/s 153A/143(3), the additions have been made without any reference to any incriminating material and therefore following the ratio laid down by the Hon'ble Delhi High Court in CIT Central-III vs Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) - Decided in favour of assessee.
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2016 (7) TMI 447
Addition u/s 40(a)(ia) on account of interest paid to NBFCs - retrospectivity - Held that:- What follows is that in the peculiar circumstances of the case and looking to the nature of the provisions with which we are presently concerned, the view expressed by the Hon’ble Delhi High Court in the case of Ansal Landmark (2015 (9) TMI 79 - DELHI HIGH COURT ), which is in favour of assessee, is required to be followed by us. Revenue does not, therefore, derive any advantage from Hon’ble Kerala High Court’s decision in the case of Thomas George Muthoot (2015 (7) TMI 810 - KERALA HIGH COURT). The second proviso to Section 40(a)(ia) was held to be retrospective in in the context of finding solution to the problem to the taxpayer, and the matter was set aside to the file of the Assessing Officer with certain directions about factual verifications on the recipient having included the same in the receipts based on which taxable income is computed, and the income having been offered to tax. It is this action of the coordinate bench that was upheld by the Tribunal and the course of action so adopted by the coordinate bench approved by Their Lordships. It is impermissible to pick up one of the aspects of the decision of the judicial authority and read the same in isolation with other aspects. The decision is not on the retrospectivity of the proviso alone, its also on deletion of disallowance in the event of the recipient having taken into account these receipts in the computation of income. The judge made law is as binding on the authorities below as is the legislated statue. The hyper technical stand of the Departmental Representatives, therefore, does not merit our approval. In view of the above discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the Assessing Officer for limited verification on the aspect as to whether recipient of payment has included the same in his computation of business income offered to tax, and, if found to be so, delete the disallowance in question. With these directions, the matter stands restored to the file of the Assessing Officer.
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2016 (7) TMI 446
Eligibility of deduction u/s.80IB - Held that:- The undertaking qualifying for deduction u/s.80IB of the Act is an undertaking developing and building housing projects and the deduction is in respect of profits and gains derived from such housing project, satisfying the conditions stipulated in the clause therein. Thus, within a composite housing project, where there are eligible and ineligible units, assessee can claim deduction in respect of eligible units in the project and even within the block, assessee is entitled to claim proportionate relief in the units satisfying the extent of built-up area. CIT(A) rightly held that assessee was eligible for deduction u/s.80IB of the Act for Tower T1 amounting to ₹ 1,44,91,313/- being eligible profit u/s.80IB of the Act. For the balance amount of deduction claimed u/s.80IB i.e. ₹ 1,70,09,616/- (Rs.3,15,00,929/- minus ₹ 1,44,91,313/-) assessee has stated that disallowance in respect of Towers T2 and T3 of Kapil Malhar Intelligent Home would be revenue neutral as regular tax liability is less than tax paid on the book profit. Assessee has not filed any specific submission or details for Tower T2 and T3 regarding the claim made for 80IB of the Act. Since the eligible deduction would be tax neutral the adjudication of balance amount becomes mere academic in nature and same was not directed. Above reasoned finding of CIT(A) needs no interference from our side, whereby CIT(A) has allowed the claim of assessee as discussed above. Same is upheld.
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2016 (7) TMI 445
Transfer pricing adjustment - selection of comparable - Held that:- Nine companies are to be excluded from the list of twenty comparables and these nine companies are M/s Aztec Software Ltd., 2) Geometric Software Ltd.(Seg.) 3) M/s iGate Global Solutions Ltd.,(Seg.) 4) M/s Kals Info Systems Ltd., 5) M/s Persistent Systems Ltd., 6) M/s Tata Elxsi Ltd.,(Seg.) 7) M/s Accel Transmatics Ltd (Seg.) 8) M/s Megasoft Ltd and 9) M/s Flextronics Software Systems Ltd.. The average PLI of the remaining 11 comparables have been worked out by the ld. AR of the assessee at 12.02% before working capital adjustment and 10.40% after working out adjustment as against operating profit to cost ratio of the assessee company at 10.36%. We hold that the AO/TPO should check the working of the assessee and if the same is correct that the average PLI of remaining 11 comparables is only 12.02% then the same is within +/ - 5% range and as a consequence, no TP adjustment is called for and for the limited purpose of checking the working of average PLI of the 11 comparables, we restore the mater back to the file of AO. - Decided in favour of assessee for statistical purposes. Deduction u/s 10A computation - Held that:- The total turnover is sum total of export turnover and domestic turnover and therefore, as a consequence, if an amount is excluded from export turnover, the total turnover also goes down by the same amount. See CIT Vs M/s Tata Elxsi Ltd., reported in [2011 (8) TMI 782 - KARNATAKA HIGH COURT ]
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2016 (7) TMI 444
G.P. addition - addition on fall in the gross profit ratio - Held that:- The assessee is maintaining books of accounts which are audited. The assessee has duly met all the adverse reservations of the AO in remand report/appellate proceedings before learned CIT(A) as set out above. No cogent material has been brought on record to prove that the assessee has manipulated its accounts to suppress profits. Therefore, there are no reasons or justification in law to reject the explanation given by the assessee to support its contentions. Mere fall in the gross profit ratio , in the absence of any cogent reasons could not be a ground to hold that the proper income could not be deduced from the audited accounts maintained by the assessee and the book results ought to be rejected, and consequently gross profit margin rate of preceding years be applied to the sales of the instant assessment year under appeal. There is no averments that there is an deliberate attempt to inflate cost of material or other expenses on the part of the assessee or to suppress sale price of products sold by the assessee. The allegations of the AO were duly met by the assessee in remand report/appellate proceedings as set out above. The Revenue is not in appeal before the Tribunal with respect to the relief’s granted by the learned CIT(A). Our view is consistent with the decision of Hon’ble Delhi High Court in the case of CIT v. Smt Poonam Rani (2010 (5) TMI 57 - DELHI HIGH COURT ). In our considered view, the additions made by the learned AO as sustained/confirmed by the learned CIT(A) to the tune of ₹ 1,38,47,120/- is not sustainable in law and we order deletion of the same. - Decided in favour of assessee
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2016 (7) TMI 436
Reopening of assessment - objections of the audit party relied upon - Held that:- Primafacie atleast at one stage, the Assessing Officer was convinced that the audit objection was not valid. However, for want of full clarity on this issue, we are not inclined to conclude the matter only on this aspect. It is by now well settled that if the Assessing Officer has recorded his own reasons uninfluenced by audit objection, such action would not be bad in law merely because certain issues were brought to his notice by the audit party. It is equally well settled that when the Assessing Officer does not accept the audit objections, but has issued the notice for reopening based solely on the audit objections, such action would not be valid. The fact that despite said covenant in the partnership firm, no such interest was paid was very much before him during the original assessment. On the other hand, if the amended partnership deed was produced, he could still have questioned the assessee about nonpayment of interest to a partner who had 99% profit sharing stake in the partnership business. He could have questioned the assessee within the purview of section 80IA(10) read with section 10AA(9) of the Act. This would be relevant since the notice for reopening is issued beyond a period of four years from the end of relevant assessment year. In any case therefore, there was no failure on the part of the assessee to disclose truly and fully all material facts in this regard. Purchase of gold from AEL at a rate lower than the prevailing market rate - Held that:- We have reproduced the portions of the assessee's communications to the Assessing Officer. Particularly, in the letter dated 02.03.2010, the assessee pointed out that the firm had purchased gold bar from AEL. The assessee submitted sample copy of comparable purchases and sale invoices of gold bar of AEL and the purchases the AEL had made from the overseas buyers. On the basis of such material, the assessee had contended that the transactions were at the arm's length price. Thus, according to the assessee, the supply of gold by AEL to the assessee firm was at the prevailing market price. This explanation had to have relation only to the question of proper pricing of gold purchased by the assessee from AEL. This issue thus, was examined by the Assessing Officer during the original assessment. It would thereafter, not be open for the Assessing Officer to reopen the assessment on this ground particularly after four years - Decided in favour of assessee.
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Customs
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2016 (7) TMI 467
Refund of duty drawback claim repaid earlier - Proper format - Earlier, recovery proceedings were initiated for duty drawback sanctioned earlier since respondent / exporter had failed to produce the proof of realization of export proceeds - the respondent repaid the said ineligible drawback along with interest and the penalty amount on 31.01.2013. Meanwhile they received the requisite certificate evidencing realization of export proceeds. Since the certificates demonstrated that the export realization had been received within a period of one year from the relevant date, they filed a refund claim dated 09.02.2013 and the same was rejected by the lower authority as not in proper format. - The main issue for decision is whether refund claim under Rule 16A (4) is admissible or not. Held that:- In the present case, the foreign remittance is claimed to have realized by the respondent first and the amount was repaid by them later. Moreover, no proof of realization of export proceeds was furnished by them within the stipulated period of three months. The enabling statutory provision viz. Rule 16A (4) for refund of drawback recovered will undisputedly be subject to provisions of the said Rule. Therefore, the Commissioner (Appeals) has clearly erred in holding the refund as admissible once the that Bank Realization certificates were produced by the exporter within a period of one year from the date of recovery of drawback. Government finds merit in the observation of the original authority that the Order No. 457/2012 dated 15.05.2012 for recovery of drawback amount had become final as it had been accepted by the applicant who did not challenge it any appellate forum and paid the confirmed dues. Therefore, Government holds that question of any refund of duty paid pursuant to such an order which has attained finality does not arise. Government holds that no refund is admissible under Rule 16A (4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995 and the impugned Order-in Appeal is thus set aside as not being legal and proper. - Decided in favor of revenue.
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2016 (7) TMI 466
Clandestine import of goods in the baggage - import of Sony Camera for someone else - passenger was intercepted at the green channel - absolute confiscation and levy of penalty - Held that:- In the present case as the passenger has brought the goods for someone else and acted as a carrier. Therefore, the impugned goods cannot be allowed to be redeemed on payment of redemption fine. Government places reliance on the following decisions of the higher courts the ratio of which is squarely applicable to the instant case. In view of the facts and circumstance of the case penalty under Section 112(a) of the Act ibid has been rightly imposed on the respondent. The quantum of penalty as imposed by the original authority is reasonable and commensurate with the nature of the offence to the extent that neither the goods were declared and were in excess of the admissible baggage allowance but were also meant for someone else. - Decided in favor of revenue.
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2016 (7) TMI 465
Absolute confiscation of seized 40 M.T. TCO Betel nut locally called as Supari - Fit for human consumption or not - Prohibited goods or not - Section 125 of the Customs Act, 1962 - Held that:- The Original authority at Para 25.1 of Order-in-Original has held the said goods to be prohibited goods by coming to the conclusion that the said goods contravened the provision of section 7(1) (c) of Customs Act, 1962. The said provision is empowering the Board to appoint the Routes by which alone specified goods may passed by land or inland water into or out of India or to or from any land customs station from or to any land frontier. We take the note of facts that he said goods were not intercepted at any point of entry into India. We hold prima facie opinion that the said goods are not prohibited. We, therefore, order that the applicant may be allowed to draw the sample from confiscated goods, get them tested by Food & Drugs Administration of the state and if found fit for human consumption then provisional release of the said goods shall be allowed to the applicant within 15 (Fifteen) days of receipt of report from state authority on Revenue deposit of ₹ 10(Ten) lakhs and on filling of bond of full value of the goods by the applicant. - Decided partly in favor of appellant.
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Corporate Laws
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2016 (7) TMI 438
Winding up proceedings - Jurisdiction of Company Court in the High Court at Madras - sale of property conducted by Recovery Officer - Held that:- For recovery of a debt due to a bank or a financial institution, the concerned bank or financial institution, can legitimately initiate proceedings, by filing a winding up petition before the jurisdictional Company Court, or alternatively, intervene in a pending winding up petition. Since there is no bar restraining a bank or a financial institution from approaching a Company Court, by filing a winding up petition, it is not possible to conclude, that the jurisdictional Company Court, is not possessed with the determinative authority/competence to entertain a claim raised by such bank or financial institution. In view of the above, it is not possible for us to accept, as was suggested on behalf of the appellants, that the order passed by the Company Court in the High Court at Madras dated 10.3.2000, lacked the jurisdictional authority. Since we have concluded that the Company Court which passed the order dated 10.3.2000 did not lack jurisdiction, we hereby hold, that in the facts of this case, the above order dated 10.3.2000 was neither invalid nor void. The submission canvassed at the hands of learned counsel for the appellants, that the impugned sale dated 11.8.2005, and its confirmation on 12.9.2005, should not be interfered with on the ground of equity, as the appellant had made the entire payment in 2005, and the Recovery Officer had ordered confirmation of the sale, as no objection had been raised against the same. We find it difficult to persuade ourselves to accept the above contention. In this behalf, one cannot lose sight of the fact that the Official Liquidator, as well as, the workers union had raised objections before the Recovery Officer at the very initial stage. Even a former Director of Deve Sugars Ltd. N. Ponnusamy raised a challenge to the proceedings before the Recovery Officer by asserting, that the reserve price of ₹ 10 crores fixed for the property being put to auction, was too low. The fact, that in the process of sale of the properties of Deve Sugars Ltd. only two bids were received, has not been disputed. It is also not disputed, that whilst one of the bidders was the appellant Anita International, the other bidder was Synergy Steel Ltd. a sister company of the appellant. In sum and substance therefore, there was only one bidder. For the above reasons, in addition to those recorded by the High Court it is not possible for us to accept the claim of the appellant on the ground of equity. there was sufficient justification for the parties to have approached the Company Court in the High Court at Madras, for the reason that they were seeking the enforcement of the order dated 10.3.2000, passed by the Company Court itself. The sale made by the Recovery Officer on 11.8.2005, and its confirmation on 12.9.2005, were in utter violation of the order dated 10.3.2000, and therefore, the concerned parties were justified in approaching the High Court at Madras and submission on behalf of the appellants, that the sale conducted by the Recovery Officer and the order of confirmation thereof passed by the Recovery Officer ought to have been assailed only in proceedings under Section 30 of the RDB Act rejected. Binding of HC order - Held that:- in the application filed by the State Bank of Mysore, the prayer made was, that the State Bank of Mysore be permitted, leave to proceed with recovery proceedings before the DRT, Bangalore. By the order dated 10.3.2000, the Company Court in the High Court at Madras, while granting leave, imposed two conditions. Firstly, the Official Liquidator would have to be impleaded by the bank in the recovery proceedings before the DRT, Bangalore. And secondly, no coercive steps would be taken against the assets of the company during or after the conclusion of the proceedings before the Tribunal. It is not possible for us to accept, that the aforesaid order passed by the High Court was an order in personam. We are of the view, that the above order had a clear and binding effect on the proceedings permitted to be initiated before the DRT, Bangalore, and further, that it was equally binding on the Recovery Officer. And accordingly, in our view, the same would also be binding on those claiming through sale proceedings conducted by the Recovery Officer. In the above view of the matter, there can be no doubt, that the order dated 10.3.2000 was also binding on the appellant before this Court. For the above reasons, we find no merit even in the last contention advanced by learned counsel for the appellants.
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2016 (7) TMI 437
Scheme of Amalgamation is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned and the same is hereby sanctioned.
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Service Tax
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2016 (7) TMI 473
Tour operator services - giving on hire the vehicle - Adjudicating while confirmed the demand observed that, they are not mere owners of contract carriages let on hire to customers. The staff of the carriage including the driver is operating the trips and tours. The carriages are used for marriage parties, excursions and group trips. It is not a mere instance of hiring of contract carriage. - The main contention urged by the petitioners is based on Ext.P2 judgment of this Court. Ext.P2 judgment will not render any assistance to the petitioners. It was only an observation and cannot bind the department to form an opinion that merely for the reason that the vehicles are given for hire, service tax cannot be imposed. Held that:- When the petitioners were relegated to the appropriate authority and the right to contest the validity of the provisions were left open, it has to be assumed that there is no finality attached to the observation made by the learned Single Judge. Therefore I do not think that the judgment in Ext.P2 had in any way curtailed the right of the assessing authority to consider on facts as to whether the petitioners are tour operators or not. - Further, the authority had come to a finding that petitioners are not mere hirers. Petitioners are not persons who merely hire the vehicle, whereas it amounts to operation of the tour itself. That apart, the following words in the statute “any person engaged in the business of operating tours in a tourist vehicle covered by a permit” is liable to be termed as a tour operator. The finding by the assessing authority is that “the conditions printed on the specimen order form supplied to customers clearly show that the trips are in fact operated by the assessee and is not just a hiring of contract carriage”. It is also found that the staff of the carriage including the driver is operating the trips and tours. - All relevant facts had been considered and the authorities had come to a proper decision which cannot be termed as illegal or perverse - Decided against the petitioner.
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2016 (7) TMI 472
Waiver of pre-deposit - tribunal directed the assessee to pre-deposit 2 crores - maintainability of writ petition - alternative appellate remedy - Held that:- To the extent that the Division Bench of this Court interpreted in Metal Weld Electrodes, the expression 'any order' to mean all orders and held that therefore, appeals are maintainable against these orders, we have no quarrel. But, the opinion expressed by the Division Bench in Metal Weld Electrodes [2013 (11) TMI 240 - MADRAS HIGH COURT] in paragraph 81 of its decision that writ petitions are not maintainable, cannot be accepted by us for two reasons. The first reason is that in the second part of paragraph 38 of Rajkumar Shivhare [2010 (4) TMI 432 - SUPREME COURT], the Supreme Court has carved out certain exceptional circumstances, in which, the writ petitions are maintainable. Therefore, the reading of Rajkumar Shivhare by the Division Bench in Metal Weld Electrodes may not be fully correct. The second reason as to why we cannot agree with the opinion expressed by the Division Bench in Metal Weld Electrodes (paragraph 81) is that the question referred to the Bench has already been answered in paragraph 80. What is stated in paragraph 81, is an opinion, which appears to have been recorded as a corollary to what was recorded in paragraph 80. But, whatever is the answer provided in paragraph 80 to the reference alone can be taken as having arisen directly for consideration before the Division Bench. It is too well settled that a judgment is a precedent for what it lays down and not what follows out of it. Therefore, we are of the considered view that the answer given in paragraph 80 of its decision by the Division Bench in Metal Weld Electrodes, is perfectly correct. But, at the same time, in exceptional circumstances carved out in the second part of paragraph 38 of the decision of the Supreme Court in Rajkumar Shivhare, the writ petitions are also maintainable. However, such writ petitions cannot be posted before Single Judges. They have to be posted only before the Division Benches dealing with tax cases. This will avoid the assessees' attempts to have two remedies before this Court as against an order, against which, even an appeal would normally lie before a Division Bench. The grievance of the writ petitioner is that without considering any of the issues raised, the Tribunal has passed a conditional order for a predeposit. According to the writ petitioner, they are executing a work for Government Departments as well as engaged in constructing houses to tsunami victims and that all of them are completely exempt. - This aspect, though raised by the writ petitioner, has not at all been considered by the Tribunal while deciding the application for waiver. - Matter remanded back to tribunal.
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2016 (7) TMI 471
Levy of penalty u/s 78 - waiver u/s 80 - admitted liability of service tax as paid with interest invoking extended period of limitation - In the instant case, entire services have been provided outside India and not received in India. So the recipient was under the impression that there were no liabilities to pay - Held that:- When the department officials are aware of the activities of the Respondent herein, the allegation of suppression is baseless. - department has failed to make out a case justifying the imposition of penalty under section 78. Apart from the above rulings, factually also there is no suppression of facts on the part of the Respondent herein. - Penalyt was rightly waived by the Commissioner (Appeal) - Decided against the revenue.
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Central Excise
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2016 (7) TMI 470
Valuation of - deduction of discount offered from the depot / from the stockiests and sub stockiests - claim was rejected on the ground that the respondents failed to supplied the true and correct figures of TOD passed on to their buyers in respect of clearances effected from their factory. - Commissioner (Appeals) allowed the claim - Held that:- Since the Commissioner (Appeals) has given specific finding to the effect that he has found respondents have actually passed on the benefit of turnover discount to the eligible stockiest and sub-stockiests by raising credit notes. We find that there is no evidence whatsoever in the grounds of appeals to substantiate the challenge made to specific averments made by the Commissioner (Appeals). - Decided against the revenue.
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2016 (7) TMI 469
Refund of cenvat credit of accumulated on account of duty of AED (T & TA) paid on inputs - since there was no AED (T & TA) on the finished goods the said credit got accumulated - Rule 5 of the Cenvat Credit Rules - Held that:- As per rule 3 of the said rules, CENVAT Credit of AED (T&TA) can be taken even though the manner of utilization of such credit is restricted in terms of sub rule (7). Therefore, such unutilized accumulated credit of AED (T&TA) can be claimed as refund under rule 5 of the CENVAT Credit Rules, 2004 on export of goods. - Refund allowed.
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2016 (7) TMI 468
Entitlement to avail cenvat credit on input services - nexus with manufacturing activity - Held that:- Warehouse has been used by the appellant for storage of raw material and finished goods which is a registered place for removal goods. In the circumstances, storage of goods is an integral part of manufacturing, therefore appellant is entitled to availe cenvat credit on these services. Project for Modification/ Modernisation Services, find that these services are none other than a renovation of the factory premises which is covered by the Rule 2(I) of Cenvat Credit Rules, 2004. Therefore, hold that the appellant is entitled to avail cenvat credit for project for Modification/Modernisation Services. Horticulture services,find that the appellant is compulsory required to maintain a garden in their factory to pollution control norms. Therefore, the horticulture services are directly related to the manufacturing activity by the appellant as without maintaining the garden, the appellant cannot run their factory. Therefore, hold that the appellant is entitled to avail cenvat credit for horticulture services. Courier service has been used by the appellant for various correspondences made with suppliers of the goods, without these correspondences, the appellant cannot do their business. Therefore, the courier service is an integral part of their activity, therefore, the appellant is entitled to avail cenvat credit for Courier service. Transportation service has been used by the appellant for marketing /sales, which is directly related to the manufacturing activity. Therefore, appellant is entitled to avail cenvat credit on Transportation service. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (7) TMI 443
Recovery of amount from the son (agent of the mother and POA holder) for tax dues pending against the the mother of the petitioner - principal agent relationship between the mother and son - The petitioner is holding the general Power of Attorney of his mother and he used to represent M/s.JSS Enterprises in capacity as the power of attorney. - Held that:- We cannot accept the contention for the simple reason that when two separate identity in law are in existence, such identity including the interse liability of each identity cannot be mixed with nor can be extended unless the same is found in an enquiry, that the other identity was a dummy or a dummy projected or fictitious or bogus. Such is not the fact situation in the present case, since no enquiry is held nor it is reported to this Court that any enquiry at any stage was held. - Amount recovered from the petitioner ordered to be refunded. - Decided in favor of petitioner.
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2016 (7) TMI 442
CST liability - failure to submit 'C'-Forms - assessment order was passed without affording an opportunity of personal hearing. - The learned Senior Counsel appearing for the petitioner submitted that the petitioner is in possession C-Forms and prays for one more opportunity and that would be the final opportunity, so as to enable the petitioner to produce the records to enable the assessing authority to consider the same. - Held that:- In the light of the above, the impugned order passed by the first respondent cannot be faulted. However, since the petitioner has pleaded certain operational difficulties in securing 'C' Forms immediately, the petitioner is granted two months time to produce the remaining 'C' Forms and it is open to the petitioner to approach the first respondent along with the 'C' Forms and submit a request to revise the assessment. - Matter remanded back.
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2016 (7) TMI 441
Validity of assessment order - petitioner was not afforded an opportunity of personal hearing - levy penalty under Section 27(3) of the TNVAT Act. - Held that:- it is seen that the petitioner was not afforded an opportunity of personal hearing. On this ground alone, the petitioner is entitled to succeed. - he matter is remitted back to the first respondent for fresh consideration and while doing so, the first respondent shall take into consideration the reply given by the petitioner dated 30.9.2009 to the notice issued by the second respondent dated 9.9.2009 and after affording an opportunity of personal hearing, pass a reasoned order on merits and in accordance with law. - Decided in favor of petitioner.
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2016 (7) TMI 440
Detention of goods and vehicles - vehicle did not pass through the route in which the check post was established. - for the petitioner submitted that the petitioner is a registered dealer and the goods in question were transported with valid documents, such as, Form JJ (delivery note), Etransit pass etc., which would disclose that the goods were transported for delivery at Bangalore. Further, learned counsel for the petitioner submitted that the driver of the vehicle took a different route inadvertently so as to reach Bangalore shortly - Held that:- the writ petition is disposed of, by directing the petitioner to pay a sum of ₹ 25,000/- towards tax to the respondent. On payment of the same by the petitioner, the goods in question shall be released forthwith. With regard to compounding fee, it is always open to the petitioner to challenge the same before the competent authority in the manner known to law.
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2016 (7) TMI 439
Validity of assessment order - period of limitation - Section 41(3) of the Gujarat Sales Tax Act, 1969 - Held that:- it is clear that this court has already answered the said question of law by way of Sales Tax Reference No. 2 of 2004. This Court has held that it cannot be said that merely because a mode was undertaken under Section 41(7) of the Act, the limitation provided under Section 42(1) of the Act for completing the assessment would not be applicable. The reference is therefore required to be answered accordingly in favour of assessee and against the State.
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Wealth tax
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2016 (7) TMI 464
Penalty leviable on the mortgaged assets claimed by the assessee as exempt u/s.2(m) of the W.T. Act - denial of deduction u/s.2(m) of the Act on account of mortgaged assets - Held that:- Tribunal in batch appeal has already deleted such addition/disallowance on the ground that properties mortgaged to the bank cannot be held as assets belonging to the assessee u/s.2(m) of the Wealth Tax Act. Since the quantum addition has already been deleted, therefore, no penalty u/s.18(1)(c) of the Act is leviable on account of such amount.- Decided in favour of assessee. Penalty on account of addition being the difference between value of assets considered for loan purpose by the valuer of the bank and the value considered by the assessee as per Govt sub Registrar’s office for stamp duty purpose - Held that:- We find the assessee has disclosed all the particulars of the properties and has not concealed anything from the Department. We find merit in the submission of assessee that those assets were valued by the bank valuer at higher rate for obtaining loan purpose and that was merely an estimate. Since the assessee has declared the valuation of the assets as per Sub Registrar’s office for stamp duty purpose and since all the particulars are already furnished, therefore, we do not find any infirmity in the order of the CWT(A) deleting the penalty on account of the addition being the difference between the valuation report of the valuer of the bank and the valuation as per Sub-Registrar’s office for stamp duty purpose. In our opinion the reasons given by the CWT(A) while deleting the penalty is a reasoned one. We therefore do not find any infirmity in the same. Accordingly, the order of the CWT(A) is upheld and the grounds raised by the Revenue are dismissed. - Decided in favour of assessee.
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