TMI Tax Updates - e-Newsletter
July 15, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
CBDT issues another Clarifications on the Income Declaration Scheme, 2016 (IDS)
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Income Tax:
TDS u/s 195 - whether the payments made by the assessee to its foreign subsidiaries would fall under the ambit of ‘fees for technical services’ as per the DTAA - Held No - AT
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Income Tax:
Levy of penalty - The CBDT has clarified that in cases prior to 1-4-2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s. 271(1) ( c) of the Act, will depend on the nature of adjustment. The CBDT has also directed the revenue authorities that no appeal may henceforth be filed on this ground and appeals already filed, if any, on this issue before various courts/tribunals may be withdrawn or not pressed upon. - No penalty - AT
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Income Tax:
It is well settled law that no assessment order can be passed on a defunct company. Therefore, the assessment order passed by AO was non est in the eyes of law. - AT
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Income Tax:
Levy of penalty u/s 271(1) (c) - provision for bad debts and loss on sale of fixed assets - the fact that the assessee immediately offered to rectify the mistake on detection is also undisputed. It is only that the claim of the bona fide of the assessee was not accepted by the department - No penalty - AT
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Income Tax:
MAT calculation u/s 115JB - it is also not the case of the assessee that the revaluation reserve which has been created is not a mere book adjustment entry but on the contrary has resulted into actual cash inflow and that it represents realized gains - assessee in the garb of issue of bonus shares has distributed the unrealized gains - additions confirmed - AT
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Customs:
In the absence of any specific provision under the Customs Act for recovery of the dues of the company from the Directors in their personal capacity, the notice of attachment should be held to be bad in law. - HC
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Indian Laws:
A disciplinary inquiry, it is well settled, is not governed by the strict rules of evidence which govern a criminal trial. A charge of misconduct in a disciplinary proceeding has to be established on a preponderance of probabilities. - If there is some legal evidence to hold that a charge of misconduct is proved, the sufficiency of the evidence would not fall for re-appreciation or re-evaluation - SC
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Service Tax:
Recovery proceedings - Failure to deposit the amount of service tax delcared in the VCES 2013 - it shall always be open for the respondent authorities to take necessary steps to collect the interest as well as penalty in accordance with law. - HC
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Service Tax:
Rejection of rectification application u/s 74 - rectification in the quantification of the Service Tax demanded - bare perusal of the petition for rectification would reveal that the petitioner seeks for re-arguing the matter before the authority or question the interpretation given by the authority for not granting the relief sought for. - petition dismissed - HC
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Service Tax:
Refund of cenvat credit - eligible input services - For exported of services, they consumed various services in India - It was explained by the counsel that each of the above services are very much essential for providing the output services - refund allowed - AT
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Central Excise:
Extended period invoked - duty demand - It is a well settled law that when during the relevant period, there were decisions in favour of the assessee, he cannot be attributed with any mala fide so as to invoke the longer period of limitation. - demand set aside - AT
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Central Excise:
Cenvat Credit - When the buyer always opt to take delivery of the goods only upon pre-dispatch testing. The place where such testing was carried out was subjected to security provision for protection of the goods. - the service tax paid availing the security service entitles the appellant to the CENVAT credit. - AT
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Central Excise:
Cenvat Credit on capital goods - simultaneous availing depreciation - As per Rule 4(4), it clearly provides that only part of the value of capital goods which represents the amount of duty on such capital goods, which the assessee claimed as depreciation shall not be allowed as cenvat credit. - In the present case, the part of the value, which claimed as depreciation, is ₹ 16569/- only. Therefore, to this extent the appellant is not entitle for the cenvat credit - AT
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Central Excise:
Eligibility of Cenvat credit on air travel agent and rail travel agents services - when air travel was performed for the purpose of company business the Service Tax paid on the said air travel agent service is admissible as credit, the same principle is applicable for rail travel agents service also- AT
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VAT:
Classification - Admittedly, there is no separate entry for motor vehicles. Therefore, when a question arises where certain equipment is a machinery which is used in the execution of the works contract, the fact that it also happens to be a motor vehicle, would be wholly insignificant - HC
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VAT:
Principle of promissory estoppel - Levy of penalty - Amendment in the exemption scheme - Tribunal was wholly justified in invoking the doctrine of principle of promissory estoppel and holding that the appellant was bound by the assurances given to the respondent and cannot change the conditions to the detriment of the respondent. - HC
Notifications
Companies Law-
S.O. 2321(E) - dated
6-7-2016
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Co. Law
Central Government appoints Justice (Retd.), Shri M. M. Kumar, Chairman, Company Law Board as President, National Company Law Tribunal with effect from 1st June, 2016
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S.O. 2320(E) - dated
6-7-2016
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Co. Law
Central Government appoints Justice S. J. Mukhopadhaya, Judge (Retd.), Supreme Court of India as Chairperson, National Company Law Appellate Tribunal
Customs-
100/2016 - dated
14-7-2016
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Cus (NT)
Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Second (Amendment) Rules, 2016
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98/2016 - dated
8-7-2016
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Cus (NT)
Rescinding notification No.18/2003-Customs dated 1st March 2003
Income Tax-
36/2016 - dated
27-5-2016
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IT
U/s 35(1) (ii) - Approved organization - G.B. Pant Institute of Himalayan Environment and Development, New Delhi
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (7) TMI 580
TDS u/s 195 - whether the payments made by the assessee to its foreign subsidiaries would fall under the ambit of ‘fees for technical services’ as per the DTAA - PE in India - Held that:- We find that as per Article 7 of UK and Singapore Treaty, in the absence of PE in India, the business income also would not get taxed in India. Hence we hold that the payment made by the assessee to its subsidiaries is not chargeable to tax in India in the hands of the subsidiaries in India. The provisions of section 195(1) of the Act mandates a requirement that the income should be chargeable to tax in India to assume jurisdiction in India. In the instant case, it is proved beyond doubt that the subsidiaries do not have any income chargeable to tax in India and hence the decision rendered by the Hon’ble Apex Court in the case of GE India Technology Centre P Ltd vs CIT reported in (2010 (9) TMI 7 - SUPREME COURT OF INDIA ) supports the case of the assessee. Thus we have no hesitation in directing the Learned AO to delete the disallowance made u/s 40(a)(i) of the Act in respect of payments made to foreign subsidiaries. - Decided in favour of assessee Disallowance made u/s 14A - Held that:- We hold that the investments made in subsidiary companies are to be treated as strategic investments and hence the disallowance u/s 14A of the Act would not operate at all as the investment made thereon is not with an intention to earn any exempt income in the form of dividend but only for obtaining controlling interest in the said companies and to further the business interests of the assessee in the said company. Thus we hereby direct the Learned AO to recomputed the disallowance u/s 14A of the Act after eliminating the strategic investments made in subsidiaries and investments yielding taxable income. - Decided in favour of assessee for statistical purposes. Disallowance of club expenses - Held that:- We find that the Learned CITA had observed in his order that the assessee had not provided even the basic details as to in whose name the membership is taken and who were the other persons visiting in the name of the Director and whether it was in the name of individual or corporate membership. We find that these facts are crucial for the purpose of deciding the issue. Hence we 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, with a direction to the assessee to produce the necessary evidences in support of its claim. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 579
Penalty u/s. 271(1)(c) - provisions for leave encashment and provisions for gratuity added back to book profit u/s 115JB - Held that:- We find that the CBDT has issued circular no. 25/2015 dated 31-12-2015 explaining that the pursuant to the judgment of Hon’ble Delhi High Court in the case of Nalwa Sons Investment Ltd (2010 (8) TMI 40 - DELHI HIGH COURT ) and the substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now settled position that prior to 1-4-2016, where the income-tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profit under MAT provisions of the Act, then penalty u/s. 271(1) ( c) of the Act is not attracted with reference to additions/disallowances made under the normal provisions of the Act. The CBDT has clarified that in cases prior to 1-4-2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s. 271(1) ( c) of the Act, will depend on the nature of adjustment. The CBDT has also directed the revenue authorities that no appeal may henceforth be filed on this ground and appeals already filed, if any, on this issue before various courts/tribunals may be withdrawn or not pressed upon. Thus penalties deleted - Decided in favour of assessee
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2016 (7) TMI 578
Validity of reopening of assessment against defunct company - Held that:- Admittedly assessee had not given information to AO in terms of section 176 of the I.T. Act when it had applied to ROC on 29.12.2003. However, when the notice u/s 148 was issued on 24.3.2006, then vide its reply dated 5.4.2006 this fact was specifically brought to the notice of AO, as is evident from the contents of the letter, reproduced earlier. It is well settled law that no assessment order can be passed on a defunct company. Therefore, the assessment order passed by AO was non est in the eyes of law. Under such circumstances, restore this matter to the file of ld. CIT(A) for providing an opportunity to assessee to produce authentic evidence to show the date of dissolution of the assessee company. In case ld. CIT(A), after perusing the documents filed by assessee, gets satisfied about the authenticity of the documents, then the assessment order passed will stand quashed. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 577
Levy of penalty u/s 271(1) (c) - provision for bad debts and loss on sale of fixed assets - Held that:- Merely submitting an incorrect claim in law for the expenditure would not amount to furnishing inaccurate particulars of income. It is undisputed that the impugned amounts were part of the schedules of the audited accounts and the AO noticed the omission from these accounts only. It is again undisputed that these accounts form a part and parcel of the return of income. The fact that the assessee immediately offered to rectify the mistake on detection is also undisputed. It is only that the claim of the bona fide of the assessee was not accepted by the department. It is also important to note that Explanation 1 to section 271(1)(c) cannot be applied where charge against the assessee is furnishing of inaccurate particulars of income since it provides a deeming fiction qua concealment of particulars of income only and consequently cannot be extended to a case where charge against the assessee is furnishing of inaccurate particulars of income. Hence in light of the judicial precedents as aforesaid discussed we are unable to agree with the findings of the authorities below on the imposition of penalty on the issue of provision for bad debts and loss sale of fixed assets not added back to the computation of income by the assessee. For allowability of the Write off of Bad Debts the assessee’s case gets a stronger footing from the decision of the Hon’ble Delhi High Court in its own case for AY 2002-03 wherein the Hon’ble Delhi High Court has upheld the assessee company’s policy of write offs thus supporting the assessee’s plea that the write off of bad debts has been in dispute in different assessment years and therefore, to term it as furnishing of inaccurate particulars of income for the purpose of levy of penalty will be inappropriate. Hence, we are unable to agree with the findings of the lower authorities on this issue also. Penalty deleted - Decided in favour of assessee.
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2016 (7) TMI 576
MAT calculation u/s 115JB - revaluation reserve - whether any taxable income arising on account of revaluation, no adjustment could be made to the profit and loss account for the purpose of “book profits” u/s 115JB - Held that:- At the initial stage, the arguments of the Ld AR that the only real gains and only realized gains can be considered for the purpose of taxation seems to be attractive, but the same cannot be accepted in the light of the totality of the facts listed hereinabove and in the light of the detailed order of Ld CIT(A) and more so when the assessee in the garb of issue of bonus shares has distributed the unrelaised gains. Further, before us Assessee has also not placed any material on record to demonstrate that the finding of the Ld CIT(A) are factually incorrect with respect to Assessee’s going ahead with the passing of resolution for issue of bonus shares even before the receipt of the report of Chartered Accountant, which the basis of the revaluation, issuance of bonus shares to its shareholders even though it was not permissible as per the Guidance note issued by the Institute of Chartered Accountants of India and the Circular issued by Department of Company affairs, Ministry of Law, Justice and Company affairs. Further, it is also not the case of the assessee that the revaluation reserve which has been created is not a mere book adjustment entry but on the contrary has resulted into actual cash inflow and that it represents realized gains. Before us, in support of its claim, Ld AR had relied on various decisions but however we find that the ratio of decisions relied upon by the assessee in its support are not applicable to the present facts of the case because in none of the cases relied upon by the Ld AR, the revaluation reserve was used for the purpose of issuing bonus shares. In view of the aforesaid facts, we find no reason to interfere with the order of Ld CIT(A) and we therefore dismiss the ground of Assessee.
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2016 (7) TMI 575
Applacability of provisions of section 28(iv) - non-compete fees receipt - Held that:- The issue is covered by the decision of the Apex Court in the case of Guffic Chem (P.) Ltd. v. Commissioner of Income-tax [2011 (3) TMI 6 - Supreme Court ] wherein held that it is well settled that a liability cannot be created retrospectively. In the present case, compensation received under Non-Competition Agreement became taxable as a capital receipt and not as a revenue receipt by specific legislative mandate vide Section 28(va) and that too with effect from 1.4.2003. Hence, the said section 28(va) is amendatory and not clarificatory - Appellate Tribunal right in holding that provisions of section 28(iv) are not applicable in the case of assessee - Decided in favour of assessee
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2016 (7) TMI 574
Penalty u/s. 271AAA - assessment u/s 1543A pursuant to search - ITAT restricted part penalty - Held that:- We find that both the CIT(A) as well as the Tribunal have rendered a finding of fact that an amount of ₹ 13 lakhs (Rupees thirteen lakhs) and ₹ 23,276/( Rupees Twenty three thousand two hundred seventy six only) alone have not been explained so as to satisfy Section 271AAA(2) of the Act save the above both have held that the other portions of statement made under Section 132(4) stated satisfied. In fact, the Assessing Officer while imposing the penalty has not given any reasons in support of his conclusion that the respondent-assessee does not satisfy Section 271AAA(2) of the Act so as to be excluded from the provisions of Section 271AAA(1) of the Act. Nothing has been shown to us as to why the impugned order of the Tribunal is perverse. The view taken by the Tribunal is a possible view on the facts as found. - No substantial questions of law - Decided against revenue
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2016 (7) TMI 573
Rejection of review petition - disallow of expenditure - revision petition filed and prayed for a direction to set aside the order passed by the second respondent under Section 143(3) and to redo the assessment after verifying the details of the cheques, through which, payments have been made, bank statements and ledger copies, which came into possession of the petitioner after the assessment was completed - Held that:- On a perusal of the impugned order, it is seen that the first respondent called for a report from the Assessing Officer and there is a reference to such a report of the officer dated 4.8.2015 in paragraph 4 of the impugned order. However, the first respondent has not stated anything as to what was the report submitted by the Assessing Officer and as to how it is relevant or not relevant to the grounds raised by the petitioner in the review petition. However, the first respondent proceeded solely on the basis as if the petitioner is estopped from raising such a contention. Thus in view, the reason assigned by the first respondent for rejecting the review petition is not tenable for the simple reason that the petitioner had initially accepted for disallowance, which cannot be a ground to put against the petitioner, since, subsequently i.e. 17.3.2014, the petitioner made a request to the Assessing Officer to consider other documents and allow deduction claimed as expenditure. Writ petition is allowed, the impugned order is quashed and the first respondent is directed to furnish a copy of the report of the second respondent dated 4.8.2015 to the petitioner so as enable the petitioner to put forth their objections and after affording an opportunity of personal hearing, the first respondent shall pass orders afresh on merits and in accordance with law.
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2016 (7) TMI 572
Deduction under section 80JJA - profits and gains from business of collecting and processing of bio-degradable waste - Held that:- Reasons for disallowing the claim of the assessee is identical, as was considered in the Asstt.Year 2006-07. The ld.AO re-appreciated the certificate issued by SGS India Pvt.Ltd. and its correspondence. In the light of fresh assessment order, if we examine the assessment orders passed in these two years, then, it would reveal that there is a perceptional difference in appreciating the same certificate. Considering the stand of the AO in the year 2015, when he passed assessment order in 2006-07 afresh, we are of the view that orders of the ld.CIT(A) in both the years are not required to be interfered with. In view of the above discussion, we do not find any merit in these appeals - Decided in favour of assessee.
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2016 (7) TMI 571
Deduction under section 80IA(4)(iii) - denial of claim on the ground that the assessee has offered the income from leasing/licensing of the “Industrial Project” in Hyderabad as ‘Income from House Property’ and not as ‘Income or Profits & Gains from Business or Profession’ - Held that:- The assessee has been allowed deduction in the first year and it is the bounden duty of the A.O. to examine the eligibility of the assessee to claim the deduction under section 80IA(4) of the Act at the time of allowing such deduction. Since the claim has been allowed, it is to be presumed that the A.O. is satisfied about the allowability of the claim. This being the second year, unless there are distinguishing facts and circumstances for taking a different view and deny the claim of deduction, the A.O. cannot take a contrary stand. The CIT(A) has in fact, directed the A.O. to examine the assessment order for A.Y. 2009-2010 and to see whether the A.O. has examined the eligibility of the assessee and to take suitable action. This direction, in our opinion, is not sustainable. The CIT(A) can only deal with the appeal before him and cannot give a direction with regard to another assessment year not before him. Therefore, such direction is not sustainable and is hereby quashed. Revision u/s 263 - A.O. has accepted the lease rentals from I.T. Park as “Income from house property” though denied the claim of the assessee under section 80IA of the Act on the ground that deduction cannot be given under the head “Income from House Property” - Held that:- Stand of the A.O. has been that since the income is not offered as business income, the deduction under section 80IA cannot be allowed. If the stand of the CIT is accepted, and the income is brought to tax under the head “business income”, then the deduction under section 80IA(4) would be allowable whereby the income of the assessee would not be exigible to tax. Therefore, it is clear that there is no prejudice caused to the revenue by the view adopted by the A.O. For a revision order to be sustained, the assessment order should be both erroneous as well as prejudicial to the interests of the Revenue. In the case before us, as we have already held that there is no prejudice caused to the Revenue and further since we have also held in assessee’s appeal against the assessment order denying the claim of deduction under section 80IA(4), that the assessee is eligible for deduction under section 80IA even if the income is returned under the head “Income from house property”, the revision order is not sustainable. Appeal decided in favour of assessee.
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2016 (7) TMI 570
Disallowance under section 14A - Held that:- Respectfully following the ratio of the decisions in the cases of Joint Investments Pvt. Ltd. (2015 (3) TMI 155 - DELHI HIGH COURT ), we set aside the orders of the authorities below in respect of the disallowance made and sustained by them under section 14A r.w. Rule 8D(2)(iii). We, consequently, restore the matter to the file of the AO for fresh consideration in accordance with the pre-conditions set out in the provisions of section 14A(1) of the Act and Rule 8D(1) of the Rules; in respect of examination of the sufficiency or correctness of the assessee’s claim of suo moto disallowance of ₹ 12,50,000/- having regard to the assessee’s accounts and explanations in this regard and to proceed further to consider Rule 8D(2)(iii) of the Rules only if speaking reasons for non satisfaction are recorded. - Decided in favour of assessee for statistical purposes Disallowance under section 43B - employees contribution to ESIC not deposited before the due date - Held that:- Respectfully following the decision of the Hon'ble Bombay High Court in the case of Ghatge Patil Transports Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT), we hold and direct that the disallowance of ₹ 46,519/- under section 43B of the Act is to be deleted since the assessee in the case on hand has admittedly paid the employees contribution to ESIC before the due date for furnishing its return under section 139(1) of the Act for A.Y. 2008-09 which fact has not been disputed or controverted by Revenue. - Decided in favour of assessee
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2016 (7) TMI 569
Addition u/s 69 - cash payment towards purchase of shop, over and above the price settled - whether the addition made on the basis of paper seized in the case of search on the Siddhi Group and not on the assessee and also on the basis of statement made by Shri Kantilal M Patel, the key person of Siddhi Group, is justifiable and in accordance with law - Held that:- In the absence of any incriminating documentary material/ evidence found against the assessee to prove that the alleged investment of ₹ 37 lakhs had been made by the assessee as on money, over and above, credited amount for purchase of the shop in question, find that the addition made by the AO and confirmed by the ld. CIT(A) is unsupported and unsustainable in law. The same is accordingly deleted - Decided in favour of assessee.
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2016 (7) TMI 568
Addition u/s.69B - disclosed investment - expenditure non substantiated - Held that:- As regards the addition of ₹ 54,850/- u/s.69B is concerned the Ld.CIT(A) upheld the addition made by the AO on the ground that assessee has purchased the flat during the year for which ₹ 54,880/- was spent on stamp duty, registration charges and copying charges etc. Since the same was neither shown by the assessee nor by his spouse in their respective return of income and no evidence was produced to substantiate this expenditure he sustained the addition made by the AO. As regards the addition of ₹ 2,70,000/- on account of difference in opening and closing balances is concerned he upheld the addition made by the AO on the ground that the closing balance of capital as on 31-03-2008 was shown at ₹ 2,91,320/- whereas the opening balance as on 01-04-2008 was shown at ₹ 5,61,320/-. The assessee could not explain the difference of ₹ 2,70,000/- for which he sustained the addition. So far as the addition of ₹ 47,400/- u/s.69B is concerned he upheld the addition on the ground that the value of flat as per registered sale deed dated 22-01-2009 was ₹ 12 lakhs whereas the assessee has shown such investment by himself and in the name of his spouse at ₹ 11,52,600/-. Since the difference could not be explained the addition was sustained by the CIT(A). - Decided against assessee.
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2016 (7) TMI 567
TDS u/s 195 - professional fees paid outside India without deduction of tax at source - disallowance u/s 40(a)(i) - PE existence - Held that:- From the details on record there is no material to establish that any technical knowledge, skill, etc. have been made available to the assessee in order to establish that it falls within the purview of Article 12 of the Indo-USA DTAA. It is also an undisputed fact that such non-residents recipients do not have any permanent establishment (PE) in India. We find that the similar issue was considered and adjudicated by the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2009 and the Coordinate Bench held in favour of the assessee that such income/amounts cannot be held to be chargeable to tax in India so as to require deduction of tax at source thereon and therefore invoking of section 40(a)(i) of the Act to disallow such expenditure is not sustainable In respect of the payment made by the assessee to KPMG, Ireland for audit services, it is not in dispute that the said services have been rendered outside India and the same cannot be construed as managerial or technical services so as to be governed by Article 13 of India-Ireland DTAA as contended by Revenue. In our view, they are clearly in the nature of independent personal services coming within the purview of Article-14 of the India-Ireland DTAA and therefore in the absence of any fixed place of business of the recipient, the said payments/income is not exigible to tax in India. In this view of the matter, we are of the considered view that the assessee is not liable to deduct tax on the aforesaid payment made to the non-resident entity in Ireland for the provisions of section 40(a)(i) of the Act to be invoked With respect to the payment made by the assessee to Siddharta Siddharta and Widjaja, Indonesia for rendering of audit services the assessee is not liable to deduct tax at source on the aforesaid non-resident entity in Indonesia for the provisions of section 40(a)(i) of the Act to be evoked. We, therefore, uphold the finding of the learned CIT(A) on this issue which has not been controverted before us by the Revenue. - Decided against revenue
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2016 (7) TMI 566
Penalty under section 271(1)(c) - disallowances under section 40(a)(ia) and Addition of Rent receipts - Held that:- Both on facts and in law, the assessee, by its explanation and conduct, has not been able to discharge the burden that lay upon it under Explanation 1 to section 271(1)(c) of the Act. In this factual and legal view of the matter, we are of the considered opinion that the penalty levied under section 271(1)(c) of the Act in the impugned order by the learned CIT(A) is to be upheld - Decided against assessee.
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2016 (7) TMI 565
Treatment of assessee’s interest income from its surplus funds parked in the State Bank of India, IDBI and Sardar Sarobar Narmada Nigam - Held that:- Entitlment for Section 80P deduction qua interest income allowed Addition made in respect of profits earned out of trading activity - Held that:- Departmental Representative fails to rebut this factual position that the lower appellate order does not deal with the assessee’s second substantive grievance. We accordingly remit this issue back to ld. CIT(A) for adjudication as per law.
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2016 (7) TMI 564
Revision u/s 263 - mistake in finding of act of the AO regarding 'on money' transactions - Held that:- CIT did not bring on record any material or evidence to point out any mistake in finding of act of the AO regarding 'on money' transactions. No reason has been given by the Ld. CIT for the deduction allowed against the income which has not been correctly computed as per provisions of the Act. For the following reasons also the order passed by the learned CIT u/s. 263 totally fails to meet the jurisdictional requirements of section 263 of the I.T. Act, 1961. (i) The issue communicated to the assessee in the show cause notice was thoroughly examined at the time of original assessment and, therefore, there was complete application of mind on the part of the Assessing Officer on this issue. (ii) Further, the Assessing Officer at the time of original assessment has adopted a view which is consistent with the view adopted by the Department itself in the preceding assessment year and, therefore, the view taken by the Assessing Officer gets supported from the principles of consistency of approach when the facts and circumstances are similar. (iii) Thus, when the Assessing Officer has taken a plausible view after thorough application of mind and after making detailed enquiry, the learned CIT cannot substitute his view by assuming jurisdiction u/s.263 of the I.T. Act. - Revision order u/s 263 quashed - Decided in favour of assessee
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2016 (7) TMI 563
Denial of benefit of Section 44BB - assessee has not entered into an agreement directly with Central Government but is only a second leg contractor - Held that:- We find this issue to be covered in favour of the assessee by the decision of ITAT in the case of SBS Marine Ltd. Vs. Additional DIT [2015 (3) TMI 147 - ITAT DELHI ] where held section 44BB does not mandate that the assessee should directly enter into contract with the person engaged in the business of prospecting for or extraction or production of, mineral oils or the services or facilities or plant and machinery on hire should be directly provided to the said person alone. Thus there is no merit in the contentions of the revenue that the assessee is not an eligible assessee under section 44BB - Decided in favour of assessee Service tax collected by the assessee will not form part of receipt for the purpose of computing income u/s 44BB. See DIT Vs. Schlumberger Asia Services Ltd [2009 (7) TMI 51 - UTTARAKHAND HIGH COURT ] Amount received on account of reimbursement of freight and transportation charges - amount actually incurred in respect of equipment was not includible while computing its income under section 44BB - Held that:- It was not in dispute that the amount had been received by the assessee. Therefore, the Assessing Officer correctly added the said amount which was received by the non-resident company rendering services under the provisions of section 44BB to the ONGC and imposed the income-tax thereon. He was justified in doing so
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2016 (7) TMI 562
TDS u/s 195 - non deduction of tax at source on payment to Centre for Investment and Business Advisory, Indonesia as fees for technical services (FTS) under section 9(1)(vii) - Disallowance of expenses under section 40(a)(ia) - India-Indonesia DTAA - Held that:- As contended by the learned A.R. for the assessee, a perusal of the impugned order shows that the learned CIT(A), in coming to the finding he did, has not examined the India-Indonesia DTAA and adjudicated thereon while passing the impugned order which the assessee claims is favourable to it and ought to have been applied. In these circumstances, in the interest of equity and justice, we restore this issue to the file of the learned CIT(A) to examine the assessee’s claim in this regard with respect to the India-Indonesia DTAA and to allow the assessee the benefit of that which is favourable to it, i.e. the DTAA or the Act, in accordance with law and after affording the assessee adequate opportunity of being heard and to submit details/submissions in this regard. It is accordingly ordered. - Decided in favour of assessee for statistical purposes. Disallowance of Expenses incurred for GDRs - revenue or Capital Expenditure - Held that:- Hon'ble Apex Court in the case of Brook Bond India Ltd. (1997 (2) TMI 11 - SUPREME Court ) has held that even though the increase in capital results in expansion of the capital base of the company and incidentally that would help the business of the company and may also help in profit making, the expenses incurred in that connection still retains the character of capital expenditure since the expenditure is directly related to the expensing of the capital base of the company. In that view of the matter, the aforesaid expenditure incurred by the assessee in the case on hand for listing of GDRs is capital expenditure and the assessee’s claim that the said expenditure be allowed under section 37(1) of the Act is not legally tenable as the share capital of the assessee has increased consequent to the issue of GDRs and the said expenditure incurred is clearly capital in nature. We, therefore, finding no infirmity in the impugned order of the learned CIT(A) uphold the finding therein that the said expenditure of ₹ 49,01,024/- paid to Linklaters, U.K. in respect of listing of GDRs is capital expenditure and the same is not allowable under section 37(1) of the Act. - Decided against assessee Disallowance under section 14A r.w. Rule 8D - Held that:- It is seen that the case on hand is not one where no exempt income was earned by the assessee. In such circumstances, various Coordinate Benches of this Tribunal have observed that in such cases certain percentage of exempt income can constitute the basis for a reasonable estimate for making the disallowance under section 14A of the Act for assessment years prior to A.Y. 2008-09. Such a view; that a disallowance of 5% of exempt income under section 14A of the Act was reasonable has been taken in the case of VFC Securities Pvt. Ltd. vs. ITO [2010 (8) TMI 998 - ITAT MUMBAI ] and in DCIT vs. Alka Securities Ltd. [2012 (7) TMI 982 - ITAT MUMBAI] for A.Y. 2007-08 by Coordinate Benches of this Tribunal. Following the ratio of the aforesaid decisions of this Tribunal (supra), we direct the AO to instruct the disallowance under section 14A of the Act for this year to 5% of the exempt income earned by the assessee - Decided partly in favour of assessee Disallowance of Expenditure on FCCB issue - Held that:- Following the ratio of the decision of the Coordinate Bench of this Tribunal in the case of Prime Focus Ltd. (2016 (5) TMI 360 - ITAT MUMBAI ), we hold that, in the facts and circumstances of the case on hand, the expenditure incurred by the assessee in connection with the issue of FCCBs was correctly held to be revenue in nature by the learned CIT(A), being expenses incurred in connection with the raising of debts and allowable expenditure under section 37(1) of the Act. - Decided in favour of assessee TDS u/s 195 - non deduction of tds on payment of legal and professional fees, L/C Commission, arranger fees, etc.- Held that:- The issue under consideration is covered by the decision of the Coordinate Bench of this Tribunal in the case of Raymond Ltd. vs. DCIT (2002 (4) TMI 891 - ITAT MUMBAI ) wherein it was held that neither management commission nor underwriting commission nor selling commission would amount to FTS within the meaning of the DTAA with U.K. and consequently there was no obligation on the part of the assessee-company to deduct tax under section 195 of the Act. Following the decision of the Coordinate Bench, we hold that there is no liability case on the assessee in the case on hand to withhold tax under section 195 of the Act on the said payments which, inter alia, constitute payment of legal and professional fees, L/C Commission, arranger fees, etc., incurred in connection with the issue of FCCBs and therefore no disallowance under section 40(a)(i) of the Act is called for. - Decided in favour of assessee Disallowance of STCL on Loan Assignment - Held that:- Following the decision of the Coordinate Bench of this Tribunal in the case of Siemens Nixdorf Informations systeme GmbH (2016 (4) TMI 384 - ITAT MUMBAI) we uphold the order of the learned CIT(A) in allowing the assessee’s claim for STCL on assignment of loan to M/s. Western Power Alliance Ltd. - Decided in favour of assessee
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2016 (7) TMI 561
Disallowance of speculation loss u/s.43(5) - hedging transactions or speculative transactions - Held that:- We find that the ld.CIT(A) while deciding the issue has noted that the assessee had done transactions through HDFC Bank and Karvy Stock Broking Ltd., the transactions done through HDFC Bank were very few, whereas the transactions done through Karvy Stock Broking Ltd. were frequent and the number of transactions done with Karvy Stock Broking Ltd. indicated that they were not in the nature of hedging transactions but were in the nature of speculative transactions. Therefore concluded that the transactions done through HDFC Bank were linked with the business of the assessee and therefore could be considered as hedging transactions, whereas the transactions through Karvy Stock Broking Ltd. were in the nature of speculative transactions. He accordingly directed the loss incurred on the transactions through HDFC Bank be allowed and the loss incurred on the transactions with Karvy Stock Broking Ltd. be considered in speculative in nature. Before us, Assessee and Revenue have not placed any material on record to controvert the findings of ld.CIT(A) Addition made u/s.36(1)(vii) - Held that:- We find that the ld.CIT(A) while deciding the issue in favour of assessee has noted that the transactions with the Directors were of current account type and there was opening credit balance in the account for which the Directors did not charge any interest from the assessee and assessee has also not charged the interest. He has further given finding that the interest-free funds in the form of Share Capital were far in excess of the amount advanced to the Director and in view the decision of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT), no disallowance u/s.36(1)(iii) of the Act was called for. Before us, Revenue has not placed any material on record to controvert the findings of ld.CIT(A) - Decided in favour of assessee
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Customs
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2016 (7) TMI 589
Attachment of property to recover dues - Personal property belongs to the Director and wife of the directors of the company - company failed to fulfill the conditions of export obligation under the EPCG licence - The contention raised by the petitioner is that the bond was executed by the company, however, due to torrential rains in 2003, water entered the petitioners' factory premises, all the records documents were completely destroyed and the petitioners have no documents relating to the subject transaction. On account of financial crisis faced by the company, they had to sell the factory on outright sale during March 2006 to clear the loans payable to various institutions. It is submitted that the impugned proceedings is in violation of principles of natural justice, as no notice of proceedings was issued to the petitioner prior to serving impugned notice of attachment. Held that:- in the absence of any specific provision under the Customs Act for recovery of the dues of the company from the Directors in their personal capacity, the impugned notice of attachment should be held to be bad in law. Therefore, the respondents having admitted that the dues are payable by the company, then it goes without saying that the recovery could be made only against the company and not against the Directors in their personal capacity. - Decided in favor of petitioners.
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Service Tax
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2016 (7) TMI 602
Recovery proceedings - Failure to deposit the amount of service tax delcared in the VCES 2013 - Petitioner requested for extending the period of the Scheme. - Held that:- petitioner is not entitled for any relief. - The Scheme is statutory in nature and unless the provisions in the statute are complied within the time specified, it shall always be open for the respondent authorities to take necessary steps to collect the interest as well as penalty in accordance with law. As far as the prohibitory order is concerned, even if quantification of the interest and penalty, if any, is pending, nothing prevents the department from initiating appropriate action by way of garnishee proceedings and the same also cannot be challenged. - Decided against the petitioner.
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2016 (7) TMI 601
Refund of cenvat credit / input tax on export of goods - Refund claim on THC charges, bills of lading charges, origin haulage charges, repo charges rejected on the grounds that same are not covered under Port Services as the service providers are registered under different category and proof of deposition of tax under port services not produced. - GTA services. - CHA Services - Cleaning activit - courier service - Held that:- Regarding rejection of refund of service tax paid on courier services and cleaning activity, the Ld. Consultant is not pressing this point. We find that consultant is right in claiming that the issues mentioned at Sr. No. (i) (ii), (iii) & (iv) are indeed covered in assessees favour by the aforementioned CESTAT judgments. Following the precedents, we partly allow the appeal to the extent that the refund rejected on grounds mentioned at serial no. (i), (ii), (iii) and (iv) above is allowed but refund relating to courier service and cleaning service is disallowed. Decided partly in favor of assessee.
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2016 (7) TMI 600
Waiver of pre-deposit - seeking modification in the earlier order - construction of residential units. - The period involved is 2007-08 to 2011-12. The moot contention of the appellant is that they have been regularly filing return and paying tax under CRCS. Only because the department has classified it as works contract service, the present demand for differential duty has been made. It is also to be noted that they are not given the benefit of abatement even after remand of the case by the Tribunal. We are convinced that there is an error apparent on the face of record as the Tribunal in the said order has not taken into consideration the claim of abatement made by appellant and also the fact that they have been paying tax without fail under the category CRCS. - stay order modified - the amount of ₹ 1 crore paid by the appellant would suffice pre-deposit for the purpose of Section 35 F and we hereby grant waiver of the balance. - Decided partly in favor of applicant.
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2016 (7) TMI 599
Erection Commissioning or Installation Services (ECIS) - Activity of supply of material, erection and installation of sub-stations, related lines, installation of transformers and other electrical equipments etc. - Held that:- the demand raised under ECIS is unsustainable and requires to be set aside which we hereby do.
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2016 (7) TMI 598
Refund of cenvat credit - eligible input services - For exported of services, they consumed various services in India - It was explained by the counsel that each of the above services are very much essential for providing the output services - Held that:- appellant is eligible for refund of input service credit of all the services listed in the table above. The rejection of refund is unjustified. - Decided in favor of assessee.
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2016 (7) TMI 597
Rejection of rectification application u/s 74 - rectification in the quantification of the Service Tax demanded - it was contended that alternatively they have given their option under Rule 3(3) of Works Contract (Composition scheme for payment of service tax) Rules, 2007 and the said option was rejected without relying on the statutory provisions. - Held that:- A bare perusal of the petition for rectification would reveal that the petitioner seeks for re-arguing the matter before the authority or question the interpretation given by the authority for not granting the relief sought for. This would not fall within the scope of the power to be exercised under Section 74 of the Finance Act. Therefore, the authority was justified in refusing to exercise such power. - Writ petition dismissed - Decided against the petitioner.
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Central Excise
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2016 (7) TMI 596
Extended period invoked - duty demand - Held that:- It is a well settled law that when during the relevant period, there were decisions in favour of the assessee, he cannot be attributed with any mala fide so as to invoke the longer period of limitation. In fact, we find that in an identical case involving the same issue of insulation bricks and by taking note of the Larger Bench decision of the Tribunal in the case of Prakash Industries [2000 (5) TMI 59 - CEGAT, COURT NO. III, NEW DELHI], which subsequently stand overruled by Supreme Court in the case of Kohinoor Elastics Pvt. Ltd. [2005 (8) TMI 115 - SUPREME COURT OF INDIA], the Hon’ble Delhi High Court in the case of Commissioner of Central Excise-Delhi Vs. Sun Shine Industries (2015 (10) TMI 678 - DELHI HIGH COURT) has held that extended period would not be invokable due to uncertain legal podsition. As such we are of the view that issue of limitation is squarely covered by the above referred decision of the Hon’ble Delhi High Court. Accordingly, we set aside the impugned order and allow the appeal in favour of assessee.
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2016 (7) TMI 595
Cenvat credit denied - description of the goods disclosed in the invoice as M/S. Scrap which is not the raw material for the appellant - Held that:- Appellant has been able to obtain the certificate from the Range Superintendent of supplier of goods who certified that the goods supply to the appellant are MS. Ingots and not M.S. Scrap. As the description of goods has been certified by the Range Superintendent of the supplier in the same was not examined by both the authorities below. If the same was considered, the cenvat credit could have been allowed but the authorities below have not done so but confirmed the demand against the appellant. As description of goods have been explained satisfactorily with documentary evidence, in that circumstances, thus hold that the appellant has correctly taken cenvat credit on the goods in question - Decided in favour of assessee.
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2016 (7) TMI 594
Cenvat credit of service tax availed on freight on outward transportation of goods denied - Held that:- Ownership in goods rests with appellant till delivery to customer. The appellants have also furnished a certificate issued by Chartered Accountant wherein it is certified that freight is included in price of goods and form integral part of assessable value. That appellant has paid appropriate duty of excise payable when calculated by including freight in the assessable value, in case of sales made on FOR basis. These documents sufficiently establish that sale was on FOR basis, and freight was borne by appellant. The Board Circular No. 97/8/2007-ST dated 23.08.2007 lays down three conditions to be satisfied to avail credit of outward transportation on FOR basis. As find that all three conditions are satisfied. The Hon’ble High Court in the case of CCE & Cus Vs Parth Poly Wooven (P) Ltd., [2011 (4) TMI 975 - GUJARAT HIGH COURT ] referring to this Circular held that outward transportation is an input service and is eligible for credit. Following the judgment in the above case and applying the same to the facts presented before me, I hold that denial of credit is not legal or proper. - Decided in favour of assessee.
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2016 (7) TMI 593
CENVAT credit on service tax paid availing the security service - Held that:- When the buyer always opt to take delivery of the goods only upon pre-dispatch testing. The place where such testing was carried out was subjected to security provision for protection of the goods. Therefore the service tax suffered in respect of security service availed cannot be said to be out of the zone of consideration of the input service. Accordingly, the service tax paid availing the security service entitles the appellant to the CENVAT credit. See Ramala Sahkari Chini Mills Ltd. Versus Commissioner Central Excise, Meerut-I [2016 (2) TMI 902 - SUPREME COURT] - Decided in favour of assessee
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2016 (7) TMI 592
Cenvat Credit on capital goods - claiming depreciation under the Income Tax Law - Appellant relied upon the Chartered Accountants Certificate to argue that calculation made in the show cause notice and confirmed has been wrongly arrived at - Held that:- As this issue of miscalculation/wrong calculation was not raised before the lower authorities, therefore, the case is required to be remanded to the adjudicating authority for verifying the claim of the Appellant. Appellant should also produce all the relied upon documents, including chartered accounts certificate produced before this bench. Needless to say that a personal hearing should be extended to the Appellant for explaining their case regarding correct calculation of Cenvat Credit required to be reversed. Imposition of penalty - Appellant enjoyed double benefits of taking Cenvat Credit and availing depreciation by suppressing the facts - Held that:- When the provisions of Cenvat Credit Rules were abundantly clear then Appellant cannot claim ignorance of law for not imposing penalty. Accordingly penalty has been correctly imposed upon the Appellant. However, looking to the fact that the quantification of correct demand is required to be worked out by the Adjudicating Authority under this order, the amount of penalty on such re worked amount will be required to be calculated and Appellant will be entitled to option to pay 25% of such reduced penalty on the redetermined amount, along with interest, and 25% reduced penalty under Section 11 AC, if these amounts are paid within one month from the date of receipt of final order passed by the Adjudicating Authority in the remand proceeding.
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2016 (7) TMI 591
Cenvat Credit on capital goods - simultaneous availing depreciation - The appellant in the year 2004-05 availed cenvat credit to the tune of 50%, i.e. amounting to ₹ 104828/- and remaining 50% capitalized and claim the depreciation on the total assessable value and 50% of excise duty, i.e. ₹ 104828/-. In the year 2005-06, the appellant reduced an amount of ₹ 104828/- from the capital account and availed cenvat credit of the said amount as remaining 50%. The show cause notice was issued proposing denial of cenvat credit. - Held that:- As per Rule 4(4), it clearly provides that only part of the value of capital goods which represents the amount of duty on such capital goods, which the assessee claimed as depreciation shall not be allowed as cenvat credit. In the present case, the part of the value, which claimed as depreciation, is ₹ 16569/- only. Therefore, to this extent the appellant is not entitle for the cenvat credit, however the remaining amount, i.e. ₹ 88263/- (Rs. 104832-16569/-) is eligible as cenvat credit to the appellant for the reason that in respect of this amount of ₹ 88263/-, depreciation was not claimed. - Decided partly in favor of assessee.
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2016 (7) TMI 590
Eligibility of Cenvat credit on air travel agent and rail travel agents services - Held that:- It is clear from the definition that sales promotion is included in the inclusive part of the definition and there is nothing contrary to prove that the services were availed for any personal activity and the appellants had availed the services in the course of their sales promotion which is directly related to the manufacture of the final product. Also guided by the decision of the Hon’ble High Court of Bombay in the case of Coca Cola India Ltd, [2009 (8) TMI 50 - BOMBAY HIGH COURT ] and Good Luck Steel Tubes ltd vs. C C EX, Noida, (2014 (1) TMI 37 - CESTAT NEW DELHI ) wherein it was held that when air travel was performed for the purpose of company business the Service Tax paid on the said air travel agent service is admissible as credit, the same principle is applicable for rail travel agents service also. Therefore, the credit availed on the air travel and rail travel agent service is admissible. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (7) TMI 588
Classification - Levy of vat on goods used in execution of works contract - manufacturer of construction equipment - The assessee also re-sells machines used in execution of works contract after purchasing the same in case of inter-state sale. - GVAT - Central question is whether such goods would fall under entry 35 pertaining to “machinery including parts and accessories thereof used in the execution of works contract” and invited tax at the rate of 4% and additional rate of 1% or the goods would fall under residuary entry inviting tax at higher rate. Held that:- Entry 35, we may recall, pertains to machinery including parts and accessories thereof used in the execution of the works contract. Admittedly, there is no separate entry for motor vehicles. Therefore, when a question arises where certain equipment is a machinery which is used in the execution of the works contract, the fact that it also happens to be a motor vehicle, would be wholly insignificant. In other words, if an equipment satisfies description of being a machinery used in execution of works contract, the fact that it also happens to be a motor vehicle, would not change this fundamental feature which would be sufficient to bring the equipment within the purview of entry 35. In absence of any specific entry pertaining to motor vehicle, merely because a certain equipment satisfies description of being a motor vehicle, in addition to being a machinery used in execution of works contract, cannot carry it to the residuary clause. Prior to 15.2.2010, any construction equipment which was a machinery used for execution of works contract even if it happened to be a vehicle would fall within entry 35. - Decided in favor of assessee.
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2016 (7) TMI 587
Nature of transaction - in the court of Import of goods or inter-state sale - The Goods,a consignment of beetle nuts, were brought against Form 31 - Held that:- What is of significance is that the M/S. Rumpa Impex did not claim any exemption under Section 6(2). The purchase which was effected by the revisionist was tax paid. These facts were duly disclosed by it in its initial reply dated 29 November 2003 itself. If, M/S. Rumpa Impex had not claimed any exemption from tax by virtue of the provisions of Section 6(2) of the 1956 Act and the revisionist had in fact purchased the goods after paying the tax, no additional liability could have been foisted upon the revisionist. In view of the above, this Court is of the opinion that the Tribunal as well as the assessing authority have clearly erred in proceeding on the basis that the sale was one which would stand covered within the ambit of Section 6(2) of the 1956 Act. - Decided in favor of assessee
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2016 (7) TMI 586
Suo motu revision proceedings - Period of limitation - - Held that:- Tribunal has erred in sustaining the order of Assistant Commissioner of Sales Tax so far as it relates to applicability of limitation in the revisional proceedings. The Tribunal is not justified in holding that amendment in section 67(1)(a) of the Act is not applicable to such pending proceedings wherein notice for revision in form no. 49 has been issued prior to 07.04.1992 and proceedings are still pending on that date. It is well settled law that in the absence of challenge to the validity and amendment of the Rules, the plea that time limit cannot be applied to credit accrued prior to the amendment and introduction of amendment to rule is arbitrary cannot be availed.
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2016 (7) TMI 585
Enhancement of assessment - AO enhanced the sales and purchases of the respondent three times the figures of the alleged suppression besides considering the purchases from Sureshkumar Tulsidas as purchases from unregistered dealer. - Tribunal deleted the enhancement made. - Held that:- Even in the present case, the respondent had not been given the opportunity of cross examining the said dealers or rebutting the averments made by them in their affidavits. It is required to be noted that at the relevant times, both the dealers viz. Sureshkumar Tulsidas and Hemantkumar Bhavdas held Registration Certificates under the Sales Tax Act. The respondent ought not to have been punished for believing the certificate issued by the Government. - Decided against the revenue.
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2016 (7) TMI 584
Principle of promissory estoppel - Levy of penalty - Scheme for Special Incentives to Prestigious Units 1990-95 - The respondent, in accordance with the eligibility certificate and exemption granted as aforesaid, availed of exemption from payment of purchase tax and sales tax. - Condition No.6 came to be amended with effect from 14th November, 2000 whereby it was provided that the goods were to be actually used by the eligible units as raw materials, processing materials, consumable stores in its industrial unit for which it had eligibility certificate. - Violation of condition of exemption. Held that:- Tribunal was wholly justified in invoking the doctrine of principle of promissory estoppel and holding that the appellant was bound by the assurances given to the respondent and cannot change the conditions to the detriment of the respondent. Insofar as the decision of the Supreme Court in the case of M/s Kothari Industrial Corporation Ltd. v. Tamil Nadu Electricity Board (supra) on which reliance has been placed by the learned counsel for the appellant is concerned, the said decision was rendered in respect of a case where the benefit of exemption was withdrawn and would have no applicability to the facts of the present case which relates to change in the conditions for availment of the benefit of exemption. Moreover, the contention regarding lack of jurisdiction on the part of the Tribunal to invoke the principle of promissory estoppel was never raised before the Tribunal, and hence such question does not arise out of the impugned order. Having regard to the fact that there is no breach of any condition of Entry 255, the question of imposition of any penalty does not arise.
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Indian Laws
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2016 (7) TMI 583
Punishment of dismissal imposed upon a disciplinary inquiry - the Appellant delivered a judgment on 22 January 1997 convicting the accused, but awarded a sentence of imprisonment less than the minimum prescribed by Section 135 - Proceedings before the Disciplinary Committee - Offences punishable under Section 135 of the Customs Act 1962 and the Imports & Exports (Control) Act 1947 - Held that:- A disciplinary inquiry, it is well settled, is not governed by the strict rules of evidence which govern a criminal trial. A charge of misconduct in a disciplinary proceeding has to be established on a preponderance of probabilities. The High Court while exercising its power of judicial review under Article 226 has to determine as to whether the charge of misconduct stands established with reference to some legally acceptable evidence. The High Court would not interfere unless the findings are found to be perverse. Unless it is a case of no evidence, the High Court would not exercise its jurisdiction under Article 226. If there is some legal evidence to hold that a charge of misconduct is proved, the sufficiency of the evidence would not fall for re-appreciation or re-evaluation before the High Court. Applying these tests, it is not possible to fault the decision of the Division Bench of the Gujarat High Court on the charge of misconduct. The charge of misconduct was established in disciplinary Inquiry 15 of 2000. The punishment must be proportionate to the misconduct established. Having due regard to the nature of the misconduct which has been found to be established and the totality of circumstances we are of the view that the punishment of dismissal should stand substituted by an order of compulsory retirement. The Appellant has attained the age of superannuation and would be entitled to his retirement benefits on that basis. We accordingly allow the Appeals in part. We confirm the judgment of the High Court in so far as it rejects the challenge by the Appellant to the finding of misconduct. However, for the reasons which we have indicated above we direct that the order of dismissal from service shall stand substituted with an order of compulsory retirement which shall take effect from 14 July 2009, the date on which the final order of penalty was imposed upon the Appellant.
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2016 (7) TMI 582
Arbitration - whether the appellant is entitled to seek a declaration that the appellant awards are illegal and liable to be set aside by way of a suit or whether the same is barred by any law? - The High Court has rejected the plaint on the ground that permission from COD was not obtained.Held that:- The question that whether the requirement of the clearance of COD could be insisted upon even at this stage is in the negative. We say so because COD stands abrogated/dissolved and the orders directing constitution of such a Committee reversed. Since there is no COD at present there is no question of either obtaining or insisting upon any clearance from the same. The upshot of the above discussion is that the orders passed by the High Court rejecting the plaint on the ground that the same was not preceded or accompanied by permission from COD is unsustainable, are hence, liable to be set aside. Whether the matter remanded back to the Civil Court for adjudication - Remedies which are available to the Government on the administrative side cannot substitute remedies that are available to a losing party according to the law of the land. The appellant has lost before the arbitrators in terms of the Permanent Machinery of Arbitration and is stoutly disputing its liability on several grounds. The dispute regarding liability of the appellant under the contract, therefore, continues to loom large so long as it is not resolved finally and effectually in accordance with law. No such effective adjudication recognized by law has so far taken place. That being so, the right of the appellant to demand such an adjudication cannot be denied simply because it happens to be a Government owned company for even when the appellant is a government company, it has its legal character as an entity separate from the Government. Just because it had resorted to the permanent procedure or taken part in the proceedings there can be no estoppel against its seeking redress in accordance with law. That is precisely what it did when it filed a suit for declaration that the award was bad for a variety of reasons and also that the contract stood annulled on account of the breach committed by the respondents. Having said that, Mr. Patwalia made a candid statement after instructions that the appellant would have no difficulty in having all the claims and counter-claims of the appellants and the respondent-corporation referred to adjudication in accordance with law to a sole arbitrator to be nominated by this Court. To facilitate such a reference Mr. Patwalia has on instructions sought deletion of respondent No.2 from the array of respondents which prayer we see no reason to decline especially because the dispute is between the two corporations which alone ought to be referred to adjudication in accordance with law. Respondent No.2 shall accordingly stand deleted from the array of parties. No prevention from making a suitable order of reference to a sole arbitrator for adjudication of all outstanding disputes between the two corporations especially because the alternative to such arbitration is a long drawn expensive and cumbersome trial of the suit filed by the appellant before a civil court and the difficulties that beset the execution of an award made under a non-statutory administrative mechanism. Both these courses are unattractive with no prospects of an early fruition even after the parties have fought each other for nearly twenty years. In the result we allow this appeal and set aside the judgment and order passed by the High Court. We further direct that all disputes relating to and arising out of the contracts executed between the appellant company and the respondent corporation shall stand referred for adjudication to Hon’ble Mr. Justice K.G. Balakrishnan, Former Chief Justice of this Court, who is hereby appointed as Sole Arbitrator to adjudicate upon all claims and counter claims which the parties may choose to file before him.
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2016 (7) TMI 581
Validity of Conviction and sentence to suffer rigorous imprisonment for ten years - offence punishable under section 20(B) of the Narcotics Drugs and Psychotropic Substances Act, 1985 (NDPS) - Held that:- It is to be noted that in the present case, the appellants were found in possession of 3 kg and 400 gm of contraband article ‘ganja’. Maximum punishment prescribed for small quantity of 1000 grams of ganja is six months while for possession of commercial quantity of 20 kg or more, punishment prescribed is minimum of 10 years of rigorous imprisonment and fine. Thus, for possession of small and commercial quantity, punishment prescribed is a sentence extending to ten years and fine. However, in case of ganja, the sentence would alter in proportion to the quantity of ganja seized. Thus, there is huge difference between possession of 3 kg and 400 gm of ganja and 20 kg and therefore, in tune with the legislative intent, principle of proportionality between the small and commercial quantity should have been considered by the trial court while imposing sentence. As per the jail record, behaviour of the accused is good. They are also having responsibilities to maintain their family. As they are in jail, entire family is in a helpless condition and passing through a difficult period to survive a living. In view of the above, this Court is of the opinion that interest of justice will be met if the sentence imposed on the applicant is reduced to the period already undergone by the appellants. The appeal is accordingly partly allowed.
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