TMI Tax Updates - e-Newsletter
July 13, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
-
Income Tax:
Change in jurisdiction - Merely because the parties were doing business in the normal course inter se, would not be a ground as such to transfer the assessment in the absence of any major financial nexus - HC
-
Income Tax:
Appeal to high court - The appeals are filed by the revenue mechanically without application of mind in respect of matters which are already concluded by decisions of this Court and accepted or earlier orders of the Tribunal which are accepted by the revenue. - HC
-
Income Tax:
Adjustment of refund due with demands outstanding - The power under Section 245 is discretionary. The orders of stay have to be honoured before adjustment of the demand out of refund is done by the Revenue. - HC
-
Income Tax:
Recovery of tax - Transfer by way of mortgage was without notice of pendency of the assessment proceedings - Void transfer u/s 281 - Undisputedly, the respondent is a secured creditor. Hence it is needles to observe that even the Crown debt could be discharged only after the debt of secured creditors stand discharged. - HC
-
Income Tax:
Reopening of assessment - Escapement of Income - Non speaking order - Non application of mind - if the factual aspects and the details are undisputed then the issuance of the notice itself was not called for and if it was not called for, it cannot be upheld. - HC
-
Income Tax:
TDS u/s 194I or u/s 194C - The assessee had no interest i.e. as a lessee or sub-lessee or tenant in respect of the buses which were being used for transportation of the employees. - The existence of landlord/ tenant relation or licensor/licensee is a must before the payment in question can be termed as a rent - AT
-
Income Tax:
Payment of legal and professional expenses after closer of business - since these expenses were related to the sales tax litigation and for maintaining corporate status it can be said that those were related to the business of the assessee and were rightly allowed. - AT
-
Income Tax:
On-money payment for purchase of immovable property - Though the assessee failed to discharge its onus by producing both the parties before the AO for examination and to establish that on-money was not paid, reliance by the AO as well as the CIT(A) on the statement of Jayaram for making the addition is also not sustainable because he was only an attesting witness to the document. - AT
-
Customs:
Refund of Terminal Excise Duty (TED) - Deemed export - Jurisdiction to claim refund is Central Excise or DGFT - The FTP, as it then existed, did not de-bar the petitioner from seeking a refund from one of the two departments, subject to fulfilment of other conditions - JDGFT to re-consider the refund - HC
-
Customs:
100% EOU - it is now a trite law that the procedural infraction of notifications/circulars etc. are to be condoned if exports have really taken place and the law is settled now that substantive benefit cannot be denied for procedural lapses - HC
-
Corporate Law:
Winding up petition - outstanding dues to the petitioner - If the respondent is unable to persuade its purported mentor, namely, the State Government concerned, it is bound to suffer the peril of the consequence of non-payment of the admitted debt - HC
-
Indian Laws:
Judicial orders of civil court are not amenable to writ jurisdiction under Article 226 of the Constitution; - Jurisdiction under Article 227 is distinct from jurisdiction from jurisdiction under Article 226. - SC
-
Indian Laws:
Demand of luxury tax imposed on a building that consists of 13 residential apartments - Kerala Building Tax Act, 1975 - he will be liable on the basis of aggregate plinth area subject to the cap envisaged under Section 5A of the Act. - SC
-
Service Tax:
Validity of Circular - clarification on levy of service tax on distributors/sub-distributors of films & exhibitors of movie - merely making a reference to some Circular would not mean that the Appellate Tribunal cannot be approached or that the Appellate Tribunal will not view the matter in its entirety and in proper perspective - Assessee to approach the tribunal - HC
-
Service Tax:
Waiver of pre deposit - Mandatory pre deposit of 7.5% - Provision of section 35F, whether prospective or retrospective - date of SCN 05.06.2013 - Date of OIO 27.02.2015 - petitioner allowed to file an Appeal before the CESTAT along with stay application, without making pre-deposit of 7.5% - HC
-
Service Tax:
Levy of penalties u/s 77 and 78 - Bonafide belief - assessee had in fact recovered Service Tax periodically from the service recipient. Not only that such service tax was not deposited with the Government in the returns filed it was declared that Service Tax liability was nil - levy of penalty confirmed - HC
-
Service Tax:
Condonation of delay - Exparte order - delay of 21 days - Tribunal should adopt a lenient approach in dealing with an application for condonation of delay. Length of delay is not material but sufficiency of the cause is - Tribunal invoked the wrong provision - tribunal to re-decide the matter - HC
-
Service Tax:
Difference between the value reflected in ST3 returns and as shown in the Income ledger of the appellant - there is otherwise no evidence on record to reflect any clandestine providing of services or undervaluing the services - stay granted - AT
-
Central Excise:
Remission of duty - reversal of cenvat credit taken on inputs - it is deemed to have been consumed in the process of manufacture and since the goods are lost or destroyed due to unavoidable accident, the claim of reversal of credit cannot be countenanced - HC
-
Central Excise:
Failure to comply with the order of pre-deposit - tribunal dismissed the appeal - no litigant much less placed on par with the appellant before us has the absolute right to insist on the appeal being heard even when he does not comply with the conditions imposed on him while granting him discretionary and equitable relief of interim stay of recovery of taxes. - HC
-
Central Excise:
Classification - tribunal decided that the "SERVO STEEROL C- 6" is a lubricating oil and not a ‘Rolling Mill Oil (Specially Oil) - If the treatise taken into account by the Tribunal is correct then it cannot be said that the view taken by the Tribunal is perverse - HC
-
Central Excise:
Invocation of extended period of limitation - subsequent information by the assessee to the respondent/Department cannot justify a plea of no suppression. The act of suppression had already happened at the time of clearance of the exempted goods in excess of the exemption limit - HC
-
Central Excise:
CENVAT Credit - CVD was paid by utilizing DEPB script - the duty had been paid through DEPB scrips in terms of 2002-2007 Foreign Trade Policy. - credit allowed - AT
-
VAT:
Principle of res judicata in taxation - Rate of VAT on Noodles - 4% or 12.5% - Classification - Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances - HC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
-
Income Tax
-
2015 (7) TMI 372
Change in jurisdiction for the purpose of assessment - Held that:- Merely because the parties were doing business in the normal course inter se, would not be a ground as such to transfer the assessment in the absence of any major financial nexus, as such, a ground would result in transferring other assessments of assessees who were doing business with the Narula Group of Companies (NCG). The reasoning, thus, which has been resorted to by respondent no. 1 cannot be held to be justified in any manner as the serious rights of the petitioner are involved as assessment is to be transferred for all purposes to a far off place to its detriment. In the absence of any independent finding recorded by the authorities below that the parties were as such linked in such a manner where there was major flow of finances from one side to the other, respondent no. 1 was not justified in transferring the proceedings and the said action cannot be held to be justified. In similar circumstances, a Single Bench of this Court in Rajesh Mahajan's case [2002 (7) TMI 94 - PUNJAB AND HARYANA High Court ] has held that even if the transferee is one of the Directors, it was not a valid justification for the transfer of income tax proceedings. - Decided in favour of assessee.
-
2015 (7) TMI 371
Disallowance made under Section 36(1)(iii) - Disallowance of higher depreciation on installation of electrical line for power transmission and metering treated as not part of Wind Mill - Power evacuation infrastructure as part of wind mill - Depreciation on contribution for power evacuation facility - Held that:- Disallowance made under Section 36(1)(iii) - It was not the case of the AO that the assessee had diverted the funds borrowed on interest for the purpose of advancing the sum to his son for business. The Tribunal noted that the AO had in fact accepted that no such borrowed funds had been diverted/advanced by the assessee to his son. There was no nexus between the funds borrowed by the assessee and the funds diverted/advanced to his son. There were free reserves available with the assessee to advance the interest free loan to his son. All other grounds are admittedly covered by a judgement of the Division Bench of this Court dated 18.12.2014 titled as Commissioner of Income Tax-I, Ludhiana Vs M/s Eastman Impex [2015 (1) TMI 436 - PUNJAB & HARYANA HIGH COURT]. The questions are answered against the appellant/department. - Decided against the revenue.
-
2015 (7) TMI 370
Objection in selection of comparable companies - Inclusion of comparable companies chosen by the TPO, which were functionally not comparable - Non-adjudication of certain grounds raised by appellant in the appeal memo - Question of limitation - Held that:- Non-adjudication of certain grounds raised by appellant in the appeal memo - As regards the third question, learned counsel for the appellant contended that the Tribunal had wrongly recorded that the assessee's counsel had confined the grievance on behalf of the assessee to the inclusion of four comparables in software service segment and that it had only been argued that the comparables mentioned therein had been wrongly included by the TPO. Learned counsel for the appellant has invited our attention to the written submissions filed before the Tribunal. This contention must at least, in the first instance, be raised by the appellant before the Tribunal. The appellant is at liberty to do so. In the event of the Tribunal not entertaining the application, the appellant is at liberty to adopt appropriate proceedings including in any appeal that may be filed against the main order. Other issues may be taken after final decision of the tribunal There would be no question of limitation, in such a case. The limitation would begin only after the final decision of the Tribunal.
-
2015 (7) TMI 369
Appeal to high court - Earlier year appeal being dismissed for non-removal of office objections by the counsel - Held that:- We feel that the officers of revenue should keep track of the appeals/petitions to which they are parties before this Court till the proceedings are finally disposed of and also adopt measures to ensure that the law is equally applied across all assessees. While we are at this, we would also like to draw attention to the fact that we have noticed that many appeals are being filed in this Court which stand concluded either by earlier decisions of the Tribunal in case of some other assessee and no appeals there from are filed in this Court. The appeals are filed by the revenue mechanically without application of mind in respect of matters which are already concluded by decisions of this Court and accepted or earlier orders of the Tribunal which are accepted by the revenue. We would like a senior officer of the Revenue to take notice of the above and put on record the steps being taken to ensure that the officers of the revenue concerned with the issue in Court would keep themselves involved in the proceedings till such time this Court finally disposes of the appeal/writ as the case may be. Besides, also point out the steps being taken to ensure that law is equally applied. In case no affidavit is filed before the next date, the Chief Commissioner of Income Tax should personally remain present and explain the steps being taken at their end. - Adjournment granted.
-
2015 (7) TMI 368
Sale of equity shares - Capital gain vs Income from business - Disallowing the expenditure relating to Travel by the executive for the purpose of business - Disallowance of technical support charges - Disallowance of technical support charges - Disallowance of professional charges - Held that:- The CIT(A) has noticed that the balance sheet along with its enclosures of the earlier 2-3 years, assessee has been showing the value of the shares of Diebold HMA Private Limited at ₹ 50,00,000/- and has never claimed diminution. It is also noticed by the CIT (A) that claim for diminution/increase in valuation in respect of other shares had not been allowed by the assessing Officer and the assessee had accepted the same. In that view of the matter, we are not inclined to accept the contention of the revenue and we are of the considered view that the finding recorded by the CIT (A) which has since been affirmed is a question of fact. - Decided against the revenue. Dis-allowance of travel expenditure - The assessee had not discharged the burden cast on it by furnishing the details like the business visa, at whose invitation the business trip was held, proof of any meetings abroad and the details alike. In that view of the matter, the order of assessing Officer as affirmed by the lower appellate authorities cannot be found fault with. - Decided against the assessee. Disallowance of technical support charges - Undisputedly, assessee did not place any material to show as to the actual implementation of the contract and the report which the consultant HMAS had to furnish to the assessee and as such, in the absence of any commercial expediency of incurring such expenditure, the disallowance was sustained by both the appellate authorities. It cannot be gainsaid by the assessee that even in the absence of any evidence, the claim ought to have been allowed. The mere existence of a technical agreement with HMAS was not sufficient and there being no business activity in the year under consideration, the burden was on the assessee to prove the business expediency to claim expenditure. - Decided against the assessee. Disallowance of professional charges - The Tribunal has rightly noticed that the exercise undertaken by the assessee in the book is to transfer the same from pre-paid professional charges to professional charges account and held that in the year under consideration, expenditure took place and accounted for in the books. Hence, the Tribunal found that the allowance made by the CIT(A) was in connection with the transfer of shares and hence, it is to be computed in the income from the long term capital gains and cannot be allowed while computing the business income. The said finding of fact by the authorities does not give rise to the substantial question of law for being answered in favour of the assessee.
-
2015 (7) TMI 367
Deduction under section 80-IA of the Income Tax Act - Held that:- The facts in the present case are also identical to the above-said decision of this Court that all the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. In the decision reported in [2010 (3) TMI 860 - Madras High Court ](Velayudhaswamy Spinning Mills V. Asst. CIT), there appears to be no distinction on facts. Again in Commissioner of Income Tax Versus M/s. Eastman Exports Global Clothing P. Ltd. [2015 (1) TMI 830 - MADRAS HIGH COURT], by order dated 12.1.2015, this Court, following the decision reported in [2010 (3) TMI 860 - Madras High Court ] (Velayudhaswamy Spinning Mills V. Asst. CIT) held in favour of the assessee and against the Revenue. - Decided against the revenue.
-
2015 (7) TMI 366
Adjustment of refund due with demands outstanding - Unconditional stay granted under Section 220(6) of the Act - Discretionary power of adjustment - Adjustment depend upon the facts and circumstances of each case - Sanctity of order passed by an superior officer - Held that:- It is an admitted position that there is no demand outstanding/payable for Assessment year 2004-05. Thus no occasion to adjust any part of the refund due to the petitioner for Assessment year 2005-06 to meet a non existing demand for A.Y. 2004-05 can arise. Consequent demanding of interest under Section 220(2) of the Act as demanded by order dated 22 August 2013 for A.Y.2004-05 would not arise. Therefore in view of above agreed position the Revenue is directed to hand over the sum of ₹ 3.76 lakhs retained/adjusted out of the refund due for the alleged dues of A.Y.2004-05 to the petitioner along with interest in accordance with the Act. So also we set aside the impugned order dated 22 August 2013 being Exhibit P to the the petition demanding interest of ₹ 1.05 lakhs. For Assessment Year 2007-08 is concerned, the demand of ₹ 18 crores had been stayed by the order of Commissioner dated 22 March 2011 under Section 220(6) till the disposal of the petitioner's appeal before the CIT (Appeals). The appeals are still pending. Further, stay was granted in respect of the demands attributable to transfer pricing adjustment which was an issue of dispute even for the Assessment Year 2006-07 and was finally resolved in favour of the petitioner. It must be pointed out that the petitioner had made an application for stay to the Assessing Officer. In response to the petitioner's application for stay under Section 220(6) of the Act, to the Assessing officer, his superior viz. the Commissioner of Income Tax granted partial stay to the extent of the demand relating to transfer pricing adjustment. We are unable to understand how an order passed by an officer superior to the Assessing Officer granting stay would not be binding upon the Assessing Officer. In fact the Commissioner of Income Tax is the administrative head and does exercise jurisdiction over the entire Commissionerate. Thus, even today, the order Commissioner of Income Tax staying the demand of ₹ 17.98 crores is in force. For Assessment Year 2008-09 is concerned, the Assessing Officer by an order dated 9 March 2012 stayed the demand of ₹ 25 crores attributable to transfer pricing adjustment done in the assessment order till the disposal of the petitioner's appeal by the CIT(Appeals). These transfer pricing dispute are identical to the issue in A.Y. 2006-07 and the same are now resolved in favour of the petitioner by the order of the Tribunal. The appeals are still pending before the CIT (Appeals) and consequently the stay for the Assessment Year 2008-09 is in force even today. The power under Section 245 is discretionary. The orders of stay have to be honoured before adjustment of the demand out of refund is done by the Revenue. If the Assessing Officer did not accept the assessee's contention at the time of making the adjustment, the petitioner should have been informed as to why the objections of the assessee to the adjustment is not sustainable. Unless the Assessing Officer exercising power under Section 245 of the Act subjects himself to this discipline, he would be exercising his powers in an arbitrary manner. In these circumstances, the refund of ₹ 129 crores due to the petitioners is payable in its entirety and no adjustment of any demand for the Assessment Year 2007-08, 2008-09 and 2004-05 was permissible. This for the reason, that factually there was no due outstanding for the Assessment Year 2004-05 and the demand for the Assessment Years 2007-08 and 2008-09 had been stayed pending disposal of the petitioner's appeal before the CIT (Appeals). Consequently, Revenue is directed to hand over the balance amount of ₹ 52 crores out of ₹ 129 crores of refund due for A.Y.2006-07 to the petitioners. The petitioner is not an assessee in default under Section 220 of the Act, till such time as its appeals are decided. Consequently no occasion to charge interest at this stage under Section 220(2) of the Act can arise. Consequently, the orders dated 22 August 2013 for the Assessment Year 2004-05, 2007-08 and 2008-09 being Exhibit N, O and P are quashed and set aside. - Decided in favour of assessee.
-
2015 (7) TMI 365
Recovery of tax - Charge or transfer of property during the pendency of the Income Tax proceedings - Transfer by way of mortgage was without notice of pendency of the assessment proceedings - Held that:- In the matter on hand, there cannot be any dispute that the transfer was for adequate consideration. The records reveal that the term loan obtained by Veekay Developers and subsequently transferred to V.K. Clubs is to the tune of ₹ 211.00 lakhs. Whereas the notice under Section 143(2) of the Act by the Income Tax Department is for recovery of ₹ 80,03,376/-. Hence it is clear that the transfer was for adequate consideration. It is also clear from the records that, while the transfer by way of mortgage is effected, there was no notice of pendency issued to transferee, of the proceedings initiated by the department. As aforementioned, the notice was issued to the assessee by the Assessing Officer one day prior to sanctioning of the loan. The notice was issued on 12.9.1995, whereas the loan was sanctioned by the respondent – Corporation to V.K. Developers on 13.9.1995. Therefore it is clear that the transfer by way of mortgage was also without notice of pendency of the assessment proceedings. In view of the same, the transfer cannot be held to be void. Same views were rendered in the judgment of Gujarath High Court in the case of TAX RECOVERY OFFICER .vs. INDUSTRIAL FINANCE CORPORATION OF INDIA AND ANOTHER [2012 (8) TMI 541 - Gujarat High Court ]. Undisputedly, the respondent is a secured creditor. Hence it is needles to observe that even the Crown debt could be discharged only after the debt of secured creditors stand discharged. In that regard, consciously the concerned Tax Recovery Officer by his letter dated 27.1.2006 has clearly stated that the respondent – Corporation can proceed for sale of the properties involved as the respondent - Corporation has first charge over the properties and to treat the Income Tax Department as second mortgagor. It is also clearly stated in the said letter that after appropriation of sale proceeds towards dues of the respondent – Corporation, surplus, if any has to be handed over to Tax Recovery Officer, Range-2, Mangalore for appropriation of Income Tax dues. In view of the same, no interference is called for. - Decided against the revenue.
-
2015 (7) TMI 364
Undisclosed investment - Error apparent on the face of record - Review of order [2014 (4) TMI 77 - KERALA HIGH COURT] - information obtained during search and seizure operation at the residence of Mr. P.A. Noushad. - Held that:- This is a case where P.A.Noushad had virtually admitted the fact that he had sold the property for 7,82,00,000/-, which is borne out from other documents and evidence on record. Even if the statement, which is purported to be given under Section 132(4) of the Income Tax Act is ignored, we do not find any reason to review the judgment. - Decided against the appellant.
-
2015 (7) TMI 363
Reopening of assessment - Escapement of Income - Non speaking order - Non application of mind by Assistant Commissioner - Held that:- The Court is required to make detailed reference to all this simply because in a proceeding which is as serious as this, the stand of the revenue appears to be mechanical. The attitude is light hearted and casual. During the course of arguments as well the Advocate refers to the instructions issued to the counsel for the revenue as reflected in the reply affidavit. The officers ought to know that when they file an affidavit in the Court and make a statement on oath, such statements are subject to scrutiny and verification. Their veracity can be tested, including by asking the deponent to step into the witness box and affording to the adversary a chance to cross examine him or her and in the proceeding before the court. Now at least, we expect the officers like the present deponent to be careful and vigilant. If her deposition before the Court is based on records then the least that is expected is such records are perused by the officers before deposing on oath. We do not find any application of mind by the Assistant Commissioner of Income Tax to these aspects at all. She rejected the objections on 26th February, 2015. We are surprised that neither she makes any reference to the Assessment and Appellate proceedings, the specific disallowance but files an affidavit in reply in the Court and merely copies the reasons which have been recorded by her predecessor. It was her bounden duty to have referred to all factual averments in the writ petition, the documents in support thereof and their contents and thereafter dealt with the same. There is a sanctity which is attached to the principles evolved by this Court and equally the Hon'ble Supreme Court. We do not find that the impugned notice can be sustained. Once we have arrived at this conclusion and on all counts, the assessee's objections refer to the materials which were before the assessing officer for the earlier assessment year, some of which were also the subject matter of revisional/Appellate proceedings, then, we would be failing in our duty if we do not interfere with the Notice in our writ jurisdiction. Once we come to this conclusion, then, we do not find any substance in the contention of Mr. Pinto that this Court cannot invoke its writ jurisdiction. As part of our further duty and to reinforce our conclusion that if the factual aspects and the details are undisputed then the issuance of the notice itself was not called for and if it was not called for, it cannot be upheld. Thus, by invoking the writ jurisdiction we interfere with and quash the same. - Decided in favour of assessee.
-
2015 (7) TMI 362
Disallowance invoking the provisions of 69C - FAA deleted the addition - Held that:- AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end.But,he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account.We find that no such exercise was done. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue.The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock.A There is nothing, in the order of the AO,about the cash trail. Secondly, proof of movement of goods is not in doubt. Thererfore, considering the peculiar facts and circumstances of the case under appeal,we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO.So,confirming the order of the FAA - Decided against revenue.
-
2015 (7) TMI 361
Addition made invoking the provisions of S. 36(1)(iii) r.w.s. 40A(2)(b) - Held that:- In the instant case, there is no question of disallowance of interest on account of interest free advances given to related parties. It is a reverse case wherein the assessee has obtained the loan from related parties by paying exorbitant rate of interest for which the Assessing Officer disallowed the excess interest paid to the related parties by invoking the provisions of section 40A(2)(b) of the I.T. Act. Since the assessee itself has agreed for the addition of ₹ 33,37,059/- to tax being excess interest paid to the related parties covered u/s.40A(2)(b), therefore, the CIT(A) in our opinion was fully justified in upholding the addition made by the Assessing Officer. - Decided against assessee. Disallowance u/s 14A r.w.r 8D - Held that:- Since the assessee itself had admitted that it has incurred certain expenses although the same is negligible which cannot be correctly ascertained and since certain additions were made during A.Y. 2006-07 and 2008-09 by the Assessing Officer u/s.14A and nothing has been brought on record as to the outcome of the same including the quantum, therefore, we do not find any infirmity in the order of the CIT(A) upholding the disallowance made u/s.14A r.w. Rule 8D for the impugned assessment year. - Decided against assessee. Disallowance of 10% of the expenses on estimate basis being personal in nature - Held that:- There is no dispute to the fact that certain bills and vouchers were supported by only self-made vouchers and were not amenable for verification for which the Assessing Officer made adhoc disallowances. We find similar disallowances were made in the preceding year and the assessee has not objected to the same. However, none of the parties has brought to our notice regarding the amount of disallowance. Considering the totality of the facts of the case, we are of the considered opinion that the disallowance at 10% on adhoc basis appears to be on the higher side. We therefore direct to restrict such disallowance to 5% of the expenses - Decided partly in favour of assessee.
-
2015 (7) TMI 360
Short deduction on account of interest - @194I or section 194C - CIT(A) deleted disallowance - Held that:- Having regard to the agreement entered into by the assessee, the contents of which have been summarized by ld. CIT(A) in his order, it is evident that assessee had not acquired any right of possession of the buses i.e. vehicles, which is an essential ingredient of hiring. The assessee had no interest i.e. as a lessee or sub-lessee or tenant in respect of the buses which were being used for transportation of the employees. The existence of landlord/ tenant relation or licensor/licensee is a must before the payment in question can be termed as a rent. Accordingly, we see no reason to interfere in the order of ld. CIT(A) in deleting the addition on account short deduction as also the interest charged u/s 201(1)/201(1A). - Decided against revenue.
-
2015 (7) TMI 359
Double disallowance on account of Provident Fund contribution - appellant claimed that it had already disallowed ₹ 34,43,868/- in original return filed but Assessing Officer again made disallowance resulting in double disallowance - Held that:- In the instant case, the CIT(A) vide its order had deleted the disallowance of ₹ 18,88,427/- out of total disallowance of ₹ 36,10,361/-. The AO gave effect of the aforesaid order of the CIT(A) vide order dated 20.10.2010. A perusal of the said order shows that though the AO deleted disallowance of ₹ 18,88,427/- but his order is silent in respect of direction of the CIT(A) to verify the fact whether there was double addition to the extent of ₹ 34,43,868/-, and if found to be correct, then the delete the disallowance of ₹ 34,43,868/-. Thus, such a non-speaking order passed by the AO while giving effect to the order of the CIT(A) is bad in law, and unsustainable. We, therefore, set aside the orders of the orders of the lower authorities on this issue and remit back the matter to the file of the AO with the same directions as given by the CIT(A) vide its order dated 31.8.2010 quoted above in the order. The AO is directed to pass a speaking order on this issue - Decided in favour of assessee for statistical purposes. Charging interest under section 234A - Held that:- In order under section 143(3) r.w.s. section 147 the AO inter alia ordered for charging interest under section 234A of the Act. Thus, the assessee was not correct in submitting that no interest under section 234A was originally levied by the AO, and the same was only levied for the first time in the order which was passed to grant effect to the order of the CIT(A). We, therefore, do not find any force in the ground of appeal, and accordingly, the same is dismissed.- Decided against assessee. Charging interest under section 234B - Held that:- Case of Freightship Consultants P. Ltd. Vs. ITO, (2007 (5) TMI 259 - ITAT DELHI-A) wherein it was held that it is mandatory for the AO to charge interest under section 234B of the Act and after the decision of the Tribunal, he was duty bound to increase or reduce the same as per the order of the Tribunal, the interest which he had charged while passing the assessment order and upto the date of the assessment order and not upto the date of the order passed by him in consequence of the order passed by the Tribunal. The order passed by the AO under section 254/154 of the Act charging interest under section 234B of the Act upto the date of the orders passed by him in consequence of the order of the Tribunal was against the provisions of the law. We, therefore, set aside the order of the lower authorities and direct the AO to charge interest under section 234B of the Act after giving effect to the order of the Tribunal till the date of the order of the original assessment. - Decided partly in favour of assessee.
-
2015 (7) TMI 358
Penalty u/s 271(1)(c) - Short term Capital Gain was assessed as business income - Held that:- Following the earlier order of this Tribunal as well as the Judgment in the case of CIT Vs. Amit Jain (2013 (1) TMI 340 - DELHI HIGH COURT), we are of the view that the Short term Capital Gain offered by the assessee from sale and purchase of shares treated by the Assessing Officer as business income would not amount to furnishing inaccurate particulars of income or concealment of particulars of income. Accordingly, we delete the penalty levied u/s 271(1)(c). - Decided in favour of assessee.
-
2015 (7) TMI 357
Disallowance u/s 40(a)(ia) - Disallowance for salary paid - Held that:- The issue duly covered in favour of assessee because it is an undisputed fact that payments were made during the year itself and therefore, were not outstanding as payable. The Special Bench in the case of Merylin Shipping &Transport Co. in [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has clearly held that disallowance u/s 40(a)(ia), can be made of the amounts which are payable and cannot be made of the amounts which have already been paid. Similar findings has also been made in case of Vector Shipping Service Pvt. Ltd. reported at [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] against which SLP filed by the department has also been dismissed. Though in the case of CIT Vs Cresent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] and CIT vs Sikander Khan [2013 (5) TMI 457 - GUJARAT HIGH COURT] are not in favour of assessee but keeping in view of case of CIT VS Vegetable products [1973 (1) TMI 1 - SUPREME Court ], the assessee is entitled to application of judgement benefiting to it - Decided in favour of assessee. Addition u/s 41(1) being salary payable - Held that:- Various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is undisputed fact that provisions were not written back and were outstanding in the balance sheet and reflection of such liabilities in the balance sheet itself proves that liabilities had not ceased and therefore, provisions of Section 41(1) were not applicable. - Decided in favour of assessee. Amount received from the Director as a violation of Section 269SS - Held that:- There was no violation of provisions of Section 269SS as these provisions are not applicable in a case where the assessee had received loans or deposits by way of passing of a journal entry and therefore, Ld. CIT(A)'s action in confirming the action of A.O. in initiating penalty u/s 271D is not justified - Decided in favour of assessee.
-
2015 (7) TMI 356
Disallowance of the interest expenditure from being set off against the interest income offered under the head “Income from other sources” - whether the interest paid on the borrowings which were source of funds parked in term deposits has to allow as expenditure or not? - Held that:- The interest earned by the assessee is assessable u/s 56 and only such expenditure can be allowed which has been set out in clauses (i) to (iii) in section 57. In that case it was not the case of the assessee that the interest payable by it on the term loans should be allowed as deduction u/s 57. Here also if the interest payable on the borrowed funds are directly relatable to setting up of the project, then perhaps the decision of the Ld. CIT(A) would be assailable, but here in this case, the assessee’s claim is that interest expenditure was directly related to earning the interest income taxable under the head “Income from other sources.” Hence the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. (1997 (7) TMI 4 - SUPREME Court) and other decisions as relied upon by the Ld. CIT(A) will not be applicable. In order to establish that such an interest expenditure was directly related to the interest income, the matter is being restored back to the file of the AO to verify the assessee’s contention and to see, whether there is a direct nexus of the interest expenditure incurred to the interest income earned. If that is so, then AO will allow the interest expenditure or set off against such interest income, while doing so AO will give due and effective opportunity to the assessee to demonstrate its case before him. - Decided partly in favour of assessee for statistical purpose.
-
2015 (7) TMI 355
Validity of CIT's order passed u/s.251(1)(c) - appeal preferred before the CIT(A) is against the order of assessment i.e., re-assessment u/s.147 - whether CIT(A) in his wisdom specifically mentioned clause 251(1)(c), which does not apply to the proceedings pending before him? - Held that:- CIT(A) has not adjudicated the issue at all in its correct perspective. While adjudicating the issue, it is his duty to examine the facts, verify the applicable law and give a decision based on facts and provisions of law. He cannot shirk his responsibility and direct the Assessing Officer to examine the issues and decide appeal accordingly. As rightly contended by the Revenue, the Assessing Officer does not have the power to re-visit the assessment again and cannot gain the power from the order of CIT(A), which is not according to the provisions of Income Tax Act, 1961. In view of this, we have no hesitation in setting aside the order of CIT(A) and restore the appeal to the file of CIT(A) to consider it afresh and pass appropriate order on merits after examining assessee's contentions. He should also give a finding whether the assessment was re-opened within four years or after four years and if so, should analyze the applicable case law and the provisions of the Act to give a finding whether assessment order can be upheld or not? If required, he should also give a finding in the merits on the additions made by Assessing Officer. With these observations, appeal before the CIT(A) is restored by setting aside the impugned order of the CIT(A). - Decided in favour of assessee and revenue for statistical purposes.
-
2015 (7) TMI 354
Disallowance of expenses claimed u/s 43B, deposit of sales tax and legal expenses - CIT(A) allowed the claim - the business of the assessee was closed down on 28.02.1998, a finding of fact recorded by the ITAT in its own case for A.Y. 2003-04 - Held that:- It is an admitted fact that the assessee made the payment of the sales tax during the year under consideration and also pointed out to the AO that the assessee company was contesting sales tax cases before the Sales Tax Authorities. In the present case nothing was brought on record to substantiate that the assessee did not make the payment of the sales tax liabilities which were outstanding and were disallowed in the earlier years u/s 43B of the Act and since the assessee furnished the evidences for making the payments during the year under consideration which were duly verified by the ld. CIT(A) and no adverse comments were given by the AO in the remand proceedings, therefore, the disallowances were rightly deleted by the ld. CIT(A). As regards to the disallowance out of legal and professional expenses, it is noticed that the AO disallowed the total claim of the assessee on the grounds that the assessee did not file any evidence and that the business operation were discontinued by the assessee. In the present case, the assessee furnished the evidences for making the payments to the various legal firms, the bills relating to those expenses were verified by the ld. CIT(A) and no adverse comment was given by the AO in his remand report except that the business of the assessee discontinued. In our opinion the ld. CIT(A) rightly directed the AO to allow the claim to the extent of ₹ 1,12,500/- for which the assessee produced the evidences and since these expenses were related to the sales tax litigation and for maintaining corporate status it can be said that those were related to the business of the assessee and were rightly allowed. We, therefore, do not see any valid ground to interfere with the findings of the ld. CIT(A) on this issue. - Decided against revenue.
-
2015 (7) TMI 353
On-money payment for purchase of immovable property - CIT(A) deleted surcharge levied u/s 113 on assessee - Held that:- During the course of search, a document was found and seized in which are recorded the transactions of the assessee with Smt.Venkatamma and Smt.Venkatnarasamma for purchase of immovable properties. In this document, the dates of agreement of sale, sale consideration as per the agreement, date of execution of sale deed, amounts paid and the amounts due to be paid are all recorded. The assessee neither appeared before the AO during the remand proceedings nor did he file any evidence in support of his contention that on-money, as recorded in the seized document, was never paid. Even before the CIT(A), the assessee had undertaken to produce one of the sellers as the other seller was already dead but failed to produce said person or her affidavit. The only affidavit filed before the CIT(A) is that of one Jayaram, whose statement was recorded by the AO u/s 131 during the assessment proceedings. During the recording of statement u/s 131, Jayaram had stated that there was on-money involved in the transaction. However, in the affidavit filed before the CIT(A), Jayaram has controverted the statement. However, we find that the CIT(A) has not admitted the additional evidence filed by the assessee on the ground that the signature of the deponent did not match. Thus observing, the CIT(A) has rejected the additional evidence. Though as rightly pointed out by the learned Departmental Representative, the assessee failed to discharge its onus by producing both the parties before the AO for examination and to establish that on-money was not paid, reliance by the AO as well as the CIT(A) on the statement of Jayaram for making the addition is also not sustainable because he was only an attesting witness to the document. The attesting witness to a document is a witness only to the execution of the document, but not to the contents of the document. Therefore, his statement or the subsequent affidavit have no relevance as regards the consideration by the assessee to his vendors. But the assessee has not produced his vendors, nor has he filed confirmations from them to rebut the findings of the AO that on-money has been paid by the assessee, even in the remand proceedings. Therefore, we see no reason to interfere with the order of the CIT(A).- Decided against assessee.
-
Customs
-
2015 (7) TMI 393
Refund of TED - Deemed export - Jurisdiction to claim refund is Central Excise or DGFT - Terminal Excise Duty (in short the TED) has been paid by the petitioner - petitioner’s request for refund of the TED has been, evidently, rejected by the JDGFT- Held that:- insofar as the prayer (a) is concerned, the same cannot be granted; not for the reason that the petitioner does not have a case, but for the reason that, it seeks setting aside of a file noting. It is not disputed by the petitioner before me that the impugned file noting has not been formally communicated to the petitioner. A decision, not communicated, cannot be assailed by instituting an action in court. The common case of parties before me, is that, exemption was not availed of by the petitioner, instead the petitioner ended paying TED. Therefore, the petitioner had two options: First, to seek refund of the Excise Duty from the Excise Department. Second to seek refund from the respondent herein. The petitioner has chosen the latter. The FTP, as it then existed, did not de-bar the petitioner from seeking a refund from one of the two departments, subject to fulfilment of other conditions. Joint Director General of Foreign Trade, will examine the case of the petitioner and pass a suitable order thereafter.
-
2015 (7) TMI 379
100% EOU - allegation of diversion of the imported duty free raw material through its related firm - Further, during search, As such the officers had drawn a reasonable belief that the goods of foreign origin were not acquired validly and seized the same under Section 110 of the Customs Act, 1962. - Held that:- It is not denied that there might be some lapses in the observance of said notification, however, from the record there is no glaring averment which could establish that there was some deliberate deviation/disposal of material or any other loss to Revenue, but imported/duty free procured material were utilized in accordance with the notifications, for the manufacture of export products which were exported under physical supervision of Central Excise officers. The Hon’ble Apex Court in the case of Mangalore Chemicals & Fertilizers v. Deputy Commissioner [1991 (8) TMI 83 - SUPREME COURT OF INDIA] held that non-compliance with substantive and mandatory requirement fatal but non-compliance with formal and procedural requirement not fatal to the application for grant of permission. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. - There are condition and conditions, some may be substantive mandatory based on considerations of policy, and some others may merely belong to the area of procedure. - In fact, it is now a trite law that the procedural infraction of notifications/circulars etc. are to be condoned if exports have really taken place and the law is settled now that substantive benefit cannot be denied for procedural lapses. Procedure has been prescribed to facilitate verification of substantive requirements. The core aspect or fundamental requirement for debate is its manufacture and subsequent export. As long as this requirement is met, other procedural deviations can be condoned. All documents relating to removal were under scrutiny by these officers and relevant documents relating to removals were subjected to proper scrutiny. It is relevant from the record that the department did not point out any contraventions. In this background, the issuance of demand in the year 2005 for non-compliance with procedural rules for the year 2001-02 to 2003-04 are unsustainable and liable to be rejected. - Decided against the revenue.
-
Corporate Laws
-
2015 (7) TMI 378
Winding up petition - outstanding dues to the petitioner - only reason for the petitioner stopping and withdrawing the men and machinery from the work site was non-payment of bills by the respondent. - Held that:- the debt claimed by the petitioner is an undisputed debt and the denial of debt by the respondent can be characterised as a moonshine or a cloak, spurious, speculative, illusory or misconceived. This point is accordingly answered against the respondent. The petitioner is not a privy, to the alleged understanding between the respondent and the State Government. There is no whisper in the contract that the respondent is a mere name lender or a facilitator for the Government to get the work executed. The respondent alone being the party to the contract between itself and the petitioner, it cannot escape from the consequences of default in payments. If the respondent is unable to persuade its purported mentor, namely, the State Government concerned, it is bound to suffer the peril of the consequence of non-payment of the admitted debt. This point is accordingly answered against the respondent.
-
2015 (7) TMI 377
Penalty u/s 15HA of SEBI Act, 1992 read with Section 23A and 23E of SCR Act, 1956 - Incorrect reporting of promoter's shareholding to stock exchanges - Wrongly and illegally projected their shareholdings far in excess of their real shareholding by taking into consideration shareholdings of third parties - Violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(f) of PFUTP Regulations, 2003, read with Sections 12A(a), (b) and (c) of SEBI Act, 1992 - Violation of Regulations 13(3) and 13(5) of the SEBI PIT Regulations, 1992 - Validity of legal opinions - Non reporting of purchase or sale of shares to the stock exchanges. Held that:- Incorrect reporting of promoter's shareholding to stock exchanges - In the case in hand, the appellants claim that they had included shares of third parties in their shareholdings on the basis of certain arrangements between the third parties and the appellants and some of the said parties (only 2 or 3 in number) had denied such arrangements. It has been categorically held that the appellants could not have included the shares of third parties into their shareholdings as per the law and hence have been rightly held guilty of violating the provisions of law by SEBI in the impugned order. This finding of SEBI is being upheld by this Tribunal in light of the discussion made hereinabove. Therefore, even if an opportunity to cross examine those 2 or 3 third parties was granted to the appellants, it would not have served any purpose and would also not have made any difference in the findings reached by SEBI. Hence such an opportunity would have been superfluous and a mere formality. Moreover, no prejudice shown to have been caused to the appellants by not granting the cross-examination of those 2-3 witnesses. There is sufficient material on record to prove the violations in question by the appellants which indeed formed the basis of the impugned order. Validity of legal opinions - It is settled law that legal opinions are only advisory in nature and not binding on anyone. Therefore, no legal infirmity can be attributed to the impugned order which holds all the appellants guilty of violating the PFUTP Regulations, 2003 and imposes monetary penalties on them. Non reporting of purchase or sale of shares to the stock exchanges - Four ingredients must be satisfied before attracting the provisions of Regulation 7(1A). A person may be acquirer under SAST Regulations but may not acquire shares as a “person acting in concert” with other and as such he shall not be obliged to make disclosures under Regulation 7(1A) of the SAST Regulations unless he individually crosses the threshold of 2%. In the case in hand the learned adjudicating officer has not recorded any specific finding that there was an understanding or agreement, direct or indirect, among the 10 appellants. In the absence of any such finding or evidence on record, none of the 10 appellants can be held guilty of violating Regulation 7(1A) of the SAST Regulations, 1997. Violation of Regulations 13(3) and 13(5) of the SEBI PIT Regulations, 1992 - If we simply read Regulations 13(3) and 13(5) of the PIT Regulations, we note that a person or promoter is required to make a disclosure to the stock exchange if his shareholding undergoes 2% alongwith his aggregate shareholding. Thus, this provision is almost pari-materia with the provisions of Regulation 7(1A) of the SAST Regulations, 1997. Violation of Regulation 7(1A) of SAST Regulations, 1997, if any, would automatically trigger violation of Regulations 13(3) and 13(5) of the PIT Regulations, 1992. Since we have already held that the charge of violation of Regulation 7(1A) of SAST Regulations, 1997 has not been proved against the ten promoters, including Carissa which is one of the ten promoters, the charge of violation of Regulations 13(3) and 13(5) of PIT Regulations, 1992 qua Carissa must also fail. - In totality appeal nos. 6, 7 and 8 of 2014 are dismissed and appeal nos. 9 to 18 of 2014 are partly allowed in terms of abovesaid.
-
Service Tax
-
2015 (7) TMI 392
Validity of Circular - whether the circular would govern the controversy or whether the controversy must be dealt with strictly in terms of the statutory provisions and the circular cannot override the same - clarification on levy of service tax on distributors/sub-distributors of films & exhibitors of movie - Circular No.148/17/2011 Service Tax, dated 13th December, 2011 - Held that:- merely making a reference to some Circular would not mean that the Appellate Tribunal cannot be approached or that the Appellate Tribunal will not view the matter in its entirety and in proper perspective. In the circumstances, we are not in agreement with Mr.Dada that the Petitioner cannot approach the appellate authority. In the event the Petitioner approaches the Appellate Authority by filing an Appeal and within a period of four weeks from today, the Appellate Authority, namely, the Tribunal shall entertain the Appeal and not dismiss it on the ground that it is barred by limitation. The Tribunal shall permit the Petitioner to raise all contentions including that the issue must be examined in the light of the arrangements, prevalent practices and customs peculiar to the film industry. Such arrangements and which are in vogue for decades together do not create any relationship and which is assumed to be created by the Revenue. The Circular therefore will have no application and would not apply. Equally, an opportunity should be given to the Petitioner to rely upon such Judgments and decisions in order to support its submissions and distinguish those referred to in the Circular as well. - The Tribunal shall consider them and pass appropriate orders in accordance with law, after hearing the parties. Equally, it would be open for the Petitioner to seek such reliefs as are permissible in law and to apply for dispensation of the condition of pre-deposit of the tax amount. - Petition disposed of.
-
2015 (7) TMI 391
Waiver of pre deposit - Mandatory pre deposit of 7.5% - Provision of section 35F, whether prospective or retrospective - date of SCN 05.06.2013 - Date of OIO 27.02.2015 - amendment has come into effect from 06.08.2014 - Held that:- the assessee's right to file an appeal and a further appeal under the earlier Act is a vested right and such a right becomes vested in the assessee, the moment he filed his return which commenced the assessment proceedings. - Decision in the case of The Deputy Commercial Tax Officer Versus Cameo Exports [2005 (12) TMI 528 - MADRAS HIGH COURT] followed. As the amended provisions of the Act are not given retrospective effect as of from an anterior date, it has been construed that the amended provisions are prospective. - petitioner to file an Appeal before the CESTAT along with stay application, without making pre-deposit of 7.5% of the tax amount confirmed against the petitioner, within a period of two weeks - Decide din favour of assessee.
-
2015 (7) TMI 390
Levy of penalties under Sections 77 and 78 - Bonafide belief - Held that:- Even if the provisions of Sections 76, 77 and 78 of the Act are otherwise applicable, no penalty would be imposed on an assessee for the failure referred to in such provision, if he proves that there was reasonable cause for such failure. Thus the primary duty is on the assessee to establish reasonable cause for failure. What would constitute reasonable failure in a given case would essentially be a question of fact. The Revenue authorities as well as the Tribunal concurrently came to the conclusion that the assessee failed to offer any such reasonable cause. In particular, as noted earlier, the Tribunal recorded that the assessee had in fact recovered Service Tax periodically from the service recipient. Not only that such service tax was not deposited with the Government in the returns filed it was declared that Service Tax liability was nil. - No question of law arises. - Decided against assessee.
-
2015 (7) TMI 389
Condonation of delay - Exparte order - delay of 21 days - Determination of quantum of the Service Tax - Held that:- Tribunal should adopt a lenient approach in dealing with an application for condonation of delay. Length of delay is not material but sufficiency of the cause is. Delay of longer period may be condoned if sufficient cause is made out but the delay of shorter period may not be condoned in absence thereof. The approach of the Tribunal should not be such to find a fault in the application seeking delay but should encourage the litigation to be decided on merit. Furthermore, when an order is passed ex parte and the defaulting litigant approaches the Tribunal showing cause of non-appearance, the Tribunal should not act harshly by simply recording that petition does not show that the petitioner was prevented by sufficient cause. Furthermore, the Tribunal has misconstrued the application to be an application for review when proviso to Rule 20 of the Customs, Excise and Services Tax Appellate Tribunal (Procedure) Rules, 1982 provides for setting aside ex parte order of dismissal provided a sufficient cause is made out. - Tribunal invoked the wrong provision and therefore, the order impugned is unsustainable in law. This Court on perusing the averments made in the miscellaneous application finds that the petitioner has made out a case, which constitutes the sufficient cause. This Court finds that the petitioner was prevented by sufficient cause in not appearing on the day when his application for condonation of delay was decided ex parte. - Tribunal directed the decide the matter afresh.
-
2015 (7) TMI 388
Waiver of pre deposit - difference between the value reflected in ST3 returns and as shown in the Income ledger of the appellant - Service of formation, clearance, excavation and earth moving - Held that:- An amount of ₹ 14 lakhs stands confirmed on the ground of difference between the value reflected in ST3 returns and as shown in the Income ledger of the appellant. Appellants have clarified that the figures reflected in the ledger are inclusive of service tax amounts whereas the figures reflected in the ST3 returns are exclusive of the service tax element. Otherwise also, we find that apart from the said difference, there is otherwise no evidence on record to reflect any clandestine providing of services or undervaluing the services. As such, we are of the view that the appellant has a good prima facie case on the said issue and according demand confirmed is dispensed with. - Stay granted.
-
Central Excise
-
2015 (7) TMI 386
Reversal of CENVAT Credit - Remission of duty - whether on remission of duty, the assessee is liable to reverse the cenvat credit taken on inputs - held that:- once the goods are destroyed or lost due to natural cause, remission of duty is granted on such goods. Since the inputs are considered to be put to intended use in the manufacture of finished products, it is deemed to have been consumed in the process of manufacture and since the goods are lost or destroyed due to unavoidable accident, the claim of reversal of credit cannot be countenanced, more so, when the said provision does not provide for reversal of credit, as has been observed by the Tribunal, which we approve. - Decided against Revenue.
-
2015 (7) TMI 385
Failure to comply with the order of pre-deposit - tribunal dismissed the appeal - Whether the Tribunal was justified in law in passing its order dated 14.10.2013 decline the appeals on merits for the reason the action stated in para 3 of its's order - Held that:- The tribunal has to be specifically vested with the power to dismiss the appeal for want of prosecution. We are inclined to apply the law laid down by the Hon'ble Supreme Court of India [2014 (11) TMI 531 - SUPREME COURT] to the present case as well. However, we find that no litigant much less placed on par with the appellant before us has the absolute right to insist on the appeal being heard even when he does not comply with the conditions imposed on him while granting him discretionary and equitable relief of interim stay of recovery of taxes. The conditions that have been imposed by the tribunal while granting such a discretionary and equitable relief have never been questioned by the appellant and rather he has accepted the same. He therefore, cannot be permitted to wriggle out of the same and by relying on the present state of law as emerging from the judgment of the Hon'ble Supreme Court of India. The consequences of a breach of such a conditional order was also not an issue before the Hon'ble Supreme Court in the above judgment. The law laid down in the above decision cannot be stretched and applied to a situation where the conditional order is not complied with and still the appeal must be decided on merits. That was a case where the appellant and for no fault of his, was visited with a dismissal of his appeal for want of prosecution. He lost a valuable right of appeal and adjudication of the same on merits. Such is not the case before us. The appellant approached the tribunal on two occasions. Prior thereto, he approached the Commissioner (Appeals) and applied for discretionary and equitable reliefs. There was a conditional stay. He did not comply with that condition as well. Rather he did not comply with the conditions imposed by the tribunal as well. - Decided against assessee.
-
2015 (7) TMI 384
Classification - Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in deciding that the "SERVO STEEROL C- 6" is a lubricating oil and not a ‘Rolling Mill Oil (Specially Oil)’ without considering all the documents and literature produced before the Learned Tribunal and thus the finding of the Learned Tribunal is perverse - Held that:- Exemption is available for lubricating preparations. Mr.Bharadwaj, learned Advocate, appearing for the appellant/revenue submitted that the learned Tribunal did not consider the literature of the manufacturer itself which defines the properties of the product - The correctness of the treatise taken into account by the learned Tribunal was not assailed by Mr.Bharadwaj. If the treatise taken into account by the Tribunal is correct then it cannot be said that the view taken by the Tribunal is perverse. In that case one has to say that the view is a plausible view - Decided against Revenue.
-
2015 (7) TMI 383
Invocation of extended period of limitation - Suppression of facts - Held that:- There has been failure on the part of the appellant to discharge the duty liability on clearance in excess of the exempted production. The adjudicating authority, the Commissioner (Appeals) as well as the Tribunal concurrently have come to the clear conclusion that it is a case of suppression and, therefore, this Court finds no reason to differ with the well considered finding of fact recorded by the authorities below, in the absence of any material to the contrary. The fact of suppression has been reiterated by all the authorities in their order and the Tribunal has also taken note of the same in coming to its well considered finding. - subsequent information by the assessee to the respondent/Department cannot justify a plea of no suppression. The act of suppression had already happened at the time of clearance of the exempted goods in excess of the exemption limit and, therefore, it is not open to the assessee to plead a case of no suppression. - Decided against assessee.
-
2015 (7) TMI 382
Denial of CENVAT Credit - assessee had wrongfully availed of credit on inputs in the final products under Chapters 9306 and 3506 - Held that:- There was no reference therein to the declaration under Rule 57G or the deletion of the final product from the purview of the same. In such circumstances, the Tribunal rightly interfered with the concurrent orders and allowed the assessee’s appeal. In any event, a declaration requiring the assessee to mention the final product and which declaration is to be filled in, in compliance with the procedural provision, would not govern the issue of admissibility of the credit. That is how the Tribunal proceeds as well. On both counts, we do not find that its order is perverse or vitiated by error of law apparent on the face of the record. The substantial question of law would therefore, have to be answered against the Revenue and in favour of the assessee - Decided against Revenue.
-
2015 (7) TMI 381
Waiver of pre deposit - manufacture and excisability of Gas Conversion Kits and other parts manufactured by appellant - Held that:- appellants are manufacturing excisable goods and failed to discharge central excise duty on clearance and not obtained central excise registration. On a perusal of letter dt. 20.5.2015, the department is yet to receive copy of the Hon'ble High Court's order in the aforesaid writ petition. It is stated that previous W.P. are shown as "disposed" as per High Court's website. However, there is no copy of the order on record. Neither the appellant produced any copy of High Court's order nor they failed to appear and explain their case. They have not made out a prima facie case for total waiver. - Partial stay granted.
-
2015 (7) TMI 380
CENVAT Credit - CVD was paid by utilizing DEPB script - the duty had been paid through DEPB scrips in terms of 2002-2007 Foreign Trade Policy. - Exemption under notification no.96/2004-Cus dated 17.09.2004 - Held that:- So far as the cenvat credit of Additional Customs duty paid through DEPB scrips issued under 2002-2007 Foreign Trade Policy in respect of the imports made under notification no.96/2004-Cus is concerned, the only objection of the Department is that while in terms of notification no.96/2004-CE, the benefit of the cenvat credit of additional customs duty paid through DEPB scrips would be admissible only if DEPB scrips had been issued in terms of 2004-2009 Foreign Trade Policy, while in this case, the duty had been paid through DEPB scrips in terms of 2002-2007 Foreign Trade Policy. However, we find that this very issue stands decided in the appellant's favour by the judgement of Hon'ble Punjab & Haryana High Court in the case of Neel Kanth Rubber Mills (2010 (4) TMI 281 - PUNJAB & HARYANA HIGH COURT). As regards the cenvat credit of Additional Customs Duty paid through DEPB scrips in respect of the imports made under notification no.34/97-Cus, this issue also stands decided in favour of the appellant's own case for the previous period by the Final Order passed by the Tribunal [2015 (7) TMI 315 - CESTAT NEW DELHI] - Impugned orders are not sustainable. The same are set aside - Decided in favour of assessee.
-
CST, VAT & Sales Tax
-
2015 (7) TMI 387
Principle of res judicata in taxation - Rate of VAT on Noodles - 4% or 12.5% - Classification - Covered by Entry 9(3) of Schedule I or Entry No.87 of Schedule II to the Gujarat Valued Added Tax Act - whether sale of Maggi, Noodles equating it to “Farsan” sold as branded product - Validity of order passed beyond the scope of show cause notice (SCN) - Held that:- there cannot be any dispute that generally, the principle of res judicata would not be applicable to Tax Laws as every year is a separate unit. However, it is required to be noted that the same would not be applicable in a case where the issue with respect to classification and/or Entry is interpreted by higher forum and the same had attained finality, inasmuch as the same is not challenged and the decision of the higher forum has been followed consistently for number of years, unless there are change circumstances in the subsequent assessment years. Even in case, where the officer and/or authority is of the opinion that the earlier decision though not challenged and/or even implemented for years is not a good decision and/or not in the interest of the revenue, the revenue is not remediless. However, as observed hereinabove, the Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances and the decision of the higher forum (in the present case, learned Tribunal), has been acted upon and implemented for the years. The impugned order passed by the Assessing Officer cannot be sustained, as the same is beyond the scope and ambit of the show cause notice dated 30.8.2012. It is required to be noted that by show cause notice dated 30.8.2012, the petitioner was called upon to show cause why “Maggi Noodles” shall not be treated as “Farsan and Eatables” (except sold in sealed container under a brand) falling under Entry 22 and liable to be taxed at 4%. However, by impugned order, the adjudicating authority has passed the impugned order holding that product “Maggi Noodles” would fall within Entry 87 (Residuary Entry) and liable to be taxed at 12.5% plus additional duty. Under the circumstances also, the impugned order cannot be sustained. Decided in favor of assessee on technical grounds.
-
Indian Laws
-
2015 (7) TMI 376
Whether an order of civil court was amenable to writ jurisdiction under Article 226 of the Constitution - correctness of the law laid down by this Court in Surya Dev Rai vs. Ram Chander Rai and others [2003 (8) TMI 527 - SUPREME COURT] - Held that:- (i) Judicial orders of civil court are not amenable to writ jurisdiction under Article 226 of the Constitution; (ii) Jurisdiction under Article 227 is distinct from jurisdiction from jurisdiction under Article 226. - Contrary view in Surya Dev Rai is overruled
-
2015 (7) TMI 375
Scope of RTI - seeking Income Tax Returns and balance sheets of others of elected representatives - right to privacy - RTI application requesting certain information and more particularly the Income Tax Returns and balance sheets of the Respondent No.3 herein for the preceding three years - The CPIO of the Income Tax Department thereafter by her order dated 212013 denied the said information sought by the Petitioner. It was observed in the said order that the information sought for has no relationship to any public activity or interest and therefore does not qualify in view of the provisions of Section 8(1)(j) of the said Act. Held that:- Since the right to privacy has been recognized as a fundamental right to which a citizen is entitled to, therefore, unless the condition mentioned in Section 8(1)(j) is satisfied, the information cannot be provided. Hence the burden on the Applicant is much more onerous than may be a routine case. - In the instant case, the said burden cannot said to have been discharged by the Petitioner. There is a basic fallacy in the contention raised on behalf of the Petitioner. The Petitioner wants to proceed on the hypothesis that the information sought by him cannot be denied to the Parliament. In so far as the Parliament is concerned, the Parliament has its own rules of business and it therefore cannot be presumed that the information in respect of the Income Tax Returns of a Member of Legislature would be sought. The same would undoubtedly be in the discretion of the Honourable Speaker. In the said context, it is also relevant to refer to Section 75A of the Representation of the People Act under which every elected candidate for a House of Parliament has to furnish information relating to the movable and immovable property, his liabilities to any public financial institution, his liabilities to the Central Government or the State Government to the Chairman of the Council of States or the Speaker of the House of the People i.e. Loksabha or the Chairman of the Council of the State i.e. Rajyasabha. Hence there are adequate provisions in the Representation of the People Act under which the information sought is to be provided to the Parliament to the extent mentioned in the said provisions and therefore reliance cannot be placed on the proviso to Section 8(1)(j) to contend that the exemption provided in the said Section would not operate. RTI application was rightly rejected
-
2015 (7) TMI 374
Demand of luxury tax imposed on a building that consists of 13 residential apartments - clubbing of plinth area of more than one residential unit of single owner - Kerala Building Tax Act, 1975 - Held that:- The learned Single Judge, as we have reproduced a paragraph hereinbefore, has opined that when the plinth area of any residential apartment is above 278.7 sq. mts., then the authority can demand luxury tax for such apartment or flat. Be it noted, the learned Single Judge has held that even if the person is the owner of the entire building the computation would be apartment-wise. The said analysis is also incorrect. We have given purposive interpretation to Explanation II as it has to be read with Section 5A of the Act. When the owner parts with the building each apartment will be segregable for the purpose of luxury tax. If he remains the owner for the whole or part then he will be liable to pay for the plinth area in respect of the flats or apartments that is retained by him subject to the cap as envisaged under Section 5A of the Act. If he sells away the entire building then it has to be flat/apartment-wise calculation/computation, for every apartment owner is different than the others. Thus, the plinth area would be different. To clarify further, if a singular person purchases three flats, he will be liable on the basis of aggregate plinth area subject to the cap envisaged under Section 5A of the Act.
-
2015 (7) TMI 373
Arbitration Agreement - Whether ONGC is part of arbitration agreement or not - Arbitral Tribunal made an Award, but all the three Members of the Tribunal could not come to the same conclusion. The majority i.e. two Members of the Tribunal came to the conclusion that there was no privity of contract between the appellant and the ONGC; and the ONGC was not a party to the contract between the appellant and the respondent. In the aforestated circumstances, the ONGC, according to the majority view, could not be held liable for making payment to the appellant and the liability to make payment to the appellant was that of the respondent. - High court reversed the decision of Arbitral Tribunal Held that:- it is very clear that the respondent had given a sub-contract to the appellant and in the said agreement of sub-contract, the ONGC was not a party and there was no liability on the part of the ONGC to make any payment to the appellant. Moreover, we could not find any correspondence establishing contractual relationship between the ONGC and the appellant. In the circumstances, the ONGC cannot be made legally liable to make any payment to the appellant. As stated hereinabove, only for the sake of convenience and to get the work of the ONGC done without any hassle, the ONGC had made payment to the appellant on behalf of the respondent without incurring any liability to make complete payment on behalf of the respondent. The ONGC shall not be liable to make payment, as rightly decided by the Arbitral Tribunal, to the appellant but the payment shall have to be made by the respondent, who had given a sub-contract to the appellant. Majority view of the Arbitral Tribunal on the above issue is confirmed and the view of the High Court is not accepted. - Decided in favor of appellant.
|
