TMI Tax Updates - e-Newsletter
July 29, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Highlights / Catch Notes
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Income Tax:
Extension of due date of filing Return of wealth for A.Y, 2015-16-clarification - Order-Instruction
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Income Tax:
Liability to deduct TDS for the payments made to subcontractors u/s 194C - The Tribunal found that there is no subcontract or relationship of a subcontractor emerging from this undisputed factual position - section 194C(2) has no application to the facts of the case - HC
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Income Tax:
Denial of exemption u/s 11 - it is not possible to accept that grant of exemption to the Assessee for the past several decades was palpably erroneous and successive AOs were wrong in accepting that the activities of the Assessee were in furtherance of its charitable objects, entitling the Assessee to escape the levy of income tax - HC
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Income Tax:
In view of Article 26 of DTAA between USA and India, since no TDS is required to be made in case of sale of immovable properties within India, therefore, an assessee could not be burdened while making the payment to a non-resident for deducting tax at source u/s 195 - AT
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Income Tax:
Disallowance of provision made for a loss on account of a firm purchase contract - the principle of prudence as not being applicable to losses which arise or have their genesis in events subsequent to the end of the relevant year - AT
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Income Tax:
Default u/s 206C(6A) - short collection of tax at source (TCS) - goods for use in manufacturing, processing or producing articles or things. - The point of reference is furnishing of declaration by the buyer and not the month or date on which sale is affected by the assessee - AT
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Income Tax:
Eligibility for deduction u/s. 80 IC - whether milk is an item of production eligible for deduction? - CIT(A) allowed claim - profit derived from production of milk is eligible for deduction u/s. 80IC of the Act - AT
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Customs:
Penalty under Section 112(a) of the Customs Act, 1962 - The importer never filed any Bill of Entry declaring the value and other particulars of the goods. Hence it is absurd for the DRI to have ventured to such an exercise. Surprisingly, this absurdity was sustained by learned Commissioner in the impugned order - AT
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Customs:
Revocation of CHA License - forfeiture of the security deposit - A case of sub-letting of licence by CHA, obtaining Customs pass for non-employees, removal of goods without obtaining authorisation from importers - revocation sustained - AT
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Service Tax:
CENVAT Credit - input services - inclusion part - Credit availed on Civil Construction service - If, the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment - credit allowed - HC
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Service Tax:
Appellants have also approached the Authority for Advance Ruling (AAR) who has held against the appellant - The Tribunal's decisions shall be applicable to the disputed issue which is for the period not covered by the A.A.R. judgment. - stay granted - AT
Articles
Notifications
Income Tax-
140/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sri Keshava Trust, Bangalore
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139/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Pranab Kanya Sangha, Kolkata
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138/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sankar Foundation, Visakhapatnam
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137/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Andh Kalyan Kendra, Ahmedabad
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136/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – National Association for the Blind, New Delhi
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135/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Anoopam Mission, Gujarat
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134/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Shree Panchmahal Anusuchit Jati Education Trust, Gujarat
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133/2015 - dated
4-6-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Parivar Education Society, Kolkata
News
Case Laws:
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Income Tax
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2015 (7) TMI 931
Liability to deduct TDS for the payments made to subcontractors u/s 194C - Tribunal merely relied upon the absence of a written contract to hold that there is no relationship of a subcontractor between the assessee and M/s. SMC Infrastructure Pvt. Ltd. and M/s. Ambika Enterprises and allowed assessee's appeal - Held that:- The tribunal found that the assessee is an Association of Persons(AOP). The association comprises of M/s. SMC Infrastructure Pvt. Ltd. which is a company incorporated under the Indian Companies Act, 1956 and M/s. Ambika Enterprises which is a proprietary firm. The association was for the purposes of bidding for contract of the Thane Municipal Corporation. It is the association which placed its bid and was eventually awarded the contract by the Thane Municipal Corporation on 16th November, 2004. The Tribunal noted this admitted fact in para9 of the order under challenge and found that the contract received from Thane Municipal Corporation was made over to the two entities noted above. The work was carried out by these two entities. The amount was received after the work was carried out and the same was handed over to the members to enable them to execute the contract. The association has neither kept any commission of its own nor any profit. The association comprising of these two members/partners joined together for the purposes of executing the project. It is in such circumstances, that no inference of any sub contractorship can be drawn. It is not correct to say that the Tribunal insisted on any written contract evidencing such relationship. The Tribunal noted the admitted facts and found that there is no subcontract or relationship of a subcontractor emerging from this undisputed factual position. It is in these circumstances, that it is correctly held that section 194 C(2) of the Income Tax Act has no application to the facts of the assessee's case. - Decided in favour of assessee.
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2015 (7) TMI 922
Denial of exemption under Section 11 - Assessee contended that the Assessee was a charitable institution engaged in running a hospital (both Allopathic and Ayurvedic) and the same constituted a charitable purpose within the meaning of Section 2(15) of the Act - Held that plain reading of the objects indicates that it includes “devising means for imparting education and improving Ayurvedic system of medicine and preaching the same”. It is also expressly clarified that the Assessee is not prohibited to take help from the English, Unani or any other system of medicine for its object. Further, it is also expressly provided that according to the need, one or more Ayurvedic hospitals may be opened. It is at once clear that the object does not prohibit running of an Allopathic hospital or drawing from any the other system of medicine for improving the Ayurvedic system of medicine. The Assessee’s endeavour of running a hospital providing modern techniques and treatment which would also be a source for improving Ayurvedic system of medicine would, plainly, be an activity towards the objects as specified. Merely because, running of an Allopathic hospital is not specifically mentioned, it does not necessarily mean that the same would be ultra vires the objects, as establishment of an Allopathic hospital does assist the Assessee in its object of improving the Ayurvedic system and taking assistance from the Allopathic system of medicine. Any activity reasonably incidental to the object would not be ultra vires the objects. As explained by the Assessee, the modern investigation techniques are equally utilized for treatment under Ayurvedic system. AO and the Tribunal erred in concluding that the Assessee’s activities were in excess of its objects. Running an integrated hospital would clearly be conducive to the objects of the Assessee. The trustees have carried out the activities of the trust bonafide and in a manner, which according to them best subserved the charitable objects and the intent of the Settlor. Thus the activities of the Assessee cannot be held to be ultra vires its objects. The AO and the Tribunal were unduly influenced by the proportion of the receipts pertaining to the Ayurvedic Research Institute and the hospital. In our view, the fact that the proportion of receipts pertaining to the Ayurvedic Research Institute is significantly lower than that pertaining to the hospital would, in the facts of the present case, not be material. Undisputedly, significant activities are carried out by the Assessee for advancement and improvement of the Ayurvedic system of medicine in the institution established by the Assessee and though the receipts from the Allopathic treatment are larger, the same does not militate against the object for which the institution has been set up and run. - Decided in favor of assessee. Whether it was open for the AO to take a view different from the one that has been accepted by the Revenue for the past several decades? - Held that:- in cases - such as the present case - where the Assessee’s claim for exemption has been accepted for several decades, it would not be open for AO to think of new grounds, which at best raise contentious issues, to cast a wider net of tax. It is trite law, that if two views are possible, the one favoring the Assessee must be adopted. This rule would apply a fortiori in cases where the Assessee’s claim has been consistently accepted by the Revenue in the past. Thus, in cases where the claim of an Assessee has been accepted in earlier years, unless the claim of an Assessee is found to be devoid of any basis or plainly contrary to law, it would not be open for the AO to take a view contrary to the position which has been accepted by the Revenue in earlier years and has been permitted to sustain for a significant period of time.In the facts of the present case, it is not possible to accept that grant of exemption to the Assessee for the past several decades was palpably erroneous and successive AOs were wrong in accepting that the activities of the Assessee were in furtherance of its charitable objects, entitling the Assessee to escape the levy of income tax. Depreciation on assets used for providing Allopathic systems of medicine - Held that:- Revenue did not dispute that the depreciation would be allowable if the activities of the Assessee were considered to be within the scope of its objects. The Tribunal had denied the claim of depreciation, in respect of assets used for providing medical relief through Allopathic system of medicine, only on the basis that the Assessee’s activity for running the hospital was ultra vires its objects. Decided in favour of the Assessee.
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2015 (7) TMI 921
Application for settlement of pending proceedings rejected - application for settlement as filed is not valid for failure to pay taxes on the additional declared income as contended by the Commissioner of Income Tax(Central) (Commissioner) resulted in the pending proceeding of the Petitioner for Assessment Years 2007-08 to 20014-15 being restored to the Assessing officer - whether the dismissal of the Petitioner's application for settlement at the stage of Section 245(2D) of the Act merely on the ground of the Commissioner's report dated 5 may 2015 was justified particularly when on the face of it the assertion of the Commissioner required some investigation Held that:- Intimation dated 2nd. January 2014 served upon the petitioner on 7th. May 2015 on the face of it appears to be incorrect for the reason that after intimating the Petitioner that it is entitled to refund of ₹ 8.85crores has adjusted the entire refund to satisfy a demand on account of interest of an equivalent amount of ₹ 8.85crores. These facts when brought to notice of the Commission at the hearing should have led the Commission to make some enquiry into it and not accept the Commissioner's report as unimpeachable. This is particularly so as a rejection at a stage when the petitioner has made full and true disclosure in the spirit of settlement, without proper examination does cause prejudice to the petitioner. A rejection of the application on dubious/suspicious ground made out in the report should not be allowed by the Commission without some enquiry to satisfy itself about the stand of the Commissioner. The circumstances surrounding the Commissioner report viz. of equal amount of interest demand to refund granted by the Intimation, not annexing the Intimation to the report and the Intimation itself being served upon the petitioner after over one year of its purported issue and after the Commissioner's report also raise questions about its authenticity. Thus an unjustified rejection without proper enquiry into the stand of the Revenue would cause prejudice to the assessee as all the information made available during the settlement proceedings would be capable of use by the Assessing officer to the prejudice of the applicant in regular assessment proceedings. Therefore non enquiry into issues which were suspicious, by the Commission, before rejecting the application for settlement evidences a flaw in the decision making process. The Petition in substance questions the conduct of the Commissioner in filing a report indicating that the petitioner is not entitled to refund, even though according to Petitioner, it is entitled to the same. It is pertinent to note that the Commissioner has chosen not to file any reply. Non filing of reply, when such serious allegations are made, only lends credence to the stand of the Petitioner. At the very least this would warrant an enquiry by the Commission before deciding the application at the stage of Section 245(2C) of the Act. The Commissioner in its report dated 5th May, 2015 before the Commission, had categorically stated that there is no refund due to the Petitioner for Assessment Year 2012-13. However, the Assessing Officer on receipt of the Petitioner's application for rectification of Intimation, has by a letter dated 22nd June, 2015 informed the Petitioner that charging of interest under Section 234B, prima facie appears to be incorrect and the Petitioner would be entitled to the refund as claimed for the Assessment Year 2012-13. The aforesaid communication sets at naught the report of the Commissioner dated 5th May, 2015 that no refund is due to the Petitioner for the Assessment Year 2012-13.It is in these circumstances that we set aside the impugned order dated 12th May, 2015 and restore the application to the Commission at Section 245D(2) stage for fresh disposal after hearing the parties.
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2015 (7) TMI 920
Validity of reopening of assessment - Held that:- Firstly, there is no failure to make full and true disclosure of necessary facts which is the jurisdictional requirement for initiating reopening proceedings after period of four years as per the proviso to Section 147. Secondly, the reasons do not show that there was any failure to disclose. Mr. Malhotra, on behalf of the respondent-revenue contended that the Petitioner filed a return before a wrong authority and, therefore, that earlier return was not a return in the eyes of law. This is not the reason stated by the Assessing Officer and, therefore, it cannot be permitted to be taken at this stage. It is a settled position as held by this Court in Hindustan Lever Ltd. v/s R.B. Wadkar [2004 (2) TMI 41 - BOMBAY High Court ], that the reopening notice stands or falls by the reasons recorded at the time of reopening notice is issued. It is not permissible to add further reasons to those recorded while issuing of the reopening notice. - Decided in favour of assessee.
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2015 (7) TMI 919
Addition under section 69A - unaccounted jewellery - Held that:- Section 69A of the Act provides that where in any financial year, an assessee is found to be the owner of any jewellery which is not recorded in the books of account and the explanation offered by assessee about the nature and source of acquisition is not satisfactory, then value of such jewellery would be deemed to be income of the assessee in the year in which the assessee was found to be the owner of the jewellery. Admittedly, the locker key which was seized by the department during the course of the search on 20 March 1986, did not belong to the appellant. Thus on that date the quantum of jewellery in the locker of Mrs. Malani which belonged to the appellant could not be ascertained/forecast. The normal presumption would be the jewellery in the locker of Mrs. Malani would belong to her and not to another person. Therefore, it is only on opening of the locker of Mrs. Malani on 28 July 1986, did the revenue find the jewellery and also that some part thereof, belonged to the appellant as claimed by the appellant and as also declared by Mrs. Malani in her assessment proceedings as recorded in the order of her Assessing Officer at Kolkata on 25 November 1986. Thus it is only in the previous year relevant to the Assessment Year 1987-88 i.e. financial year 1 April 1986 to 31 March 1987 that the appellant was found to be the owner of the jewellery in the locker belonging to Mrs. Malani. Decisions relied upon by the appellant do not have any application to the present facts. The basic difference in all the cited cases to the present facts is that the locker key which was seized on 20 March 1986 did not belong to the appellant but to one Mrs. Malani and therefore it was only on the opening of her locker that the question of finding jewellery in the locker and if found, the ownership of such jewellery would arise for determination. In all the cited cases the offending goods/money etc was found in the possession of the party in whose hand Section 69A of the Act was applied. - Decided against assessee. Double taxation - whether Tribunal erred in confirming the addition of ₹ 2,01,100/- in the Assessment Year 1987-88 specially in view of the addition made in the assessee's own case for the Assessment Year 1986-87 which addition includes the alleged source of the jewellery valued at ₹ 2,02,100/-, thereby resulting in a double addition? - Held that:- Explanation is not acceptable for the reason that at no point of time, the jewellery found in the locker was sourced from the cash received by the appellant from M/s Industrial Meters Ltd. The case of the appellant has always been the jewellery found in the locker was a gift received by him on 27 January 1986 from his aunt. This theory of gift being received from his aunt was not accepted by the authorities under the Act including the Tribunal. Thus the deemed income being the cost of jewellery found in the locker of Mr. Malani being assessed to tax in Assessment Year 1987-88 cannot be found fault with. - Decided in favour of the revenue
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2015 (7) TMI 918
Unexplained credit under Section 68 - Penalty proceedings under Section 158BFA (2) initiated - Held that:- In order to undertake a proper exercise in terms of Section 158BB(1), the AO will have to come to a definite conclusion that what emerges during the enquiry' following the search in the form of information or material is 'relatable to such evidence' as has been unearthed during the search. That exercise will of course vary from case to case. There has to be an application of mind by the AO to the information gathered, and an effort has to be made to relate such information or material to the evidence unearthed during the search. In the instant case, nothing has been brought on record by AO to show that any information or material that he came across during the enquiry was in fact 'relatable' to the solitary accommodation entry which was unearthed during the search. In the circumstances the conclusion of the CIT (A) that there was no justification in the AO simply adding the credit entries which according to him were not explained by the Assessee cannot be faulted. - Decided in favour of assessee.
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2015 (7) TMI 917
Reopening of assessment - validity of notice - assessee has not offered any income arisen by way of transfer of capital asset on dissolution of Sant Trust for taxation - whether the sanction was not accorded by the Joint Commissioner but by officer superior in rank to the Joint Commissioner and therefore, the sanction is invalid? - Held that:- In the present case the Joint Commissioner who was promoted as a Commissioner and has granted the sanction, was directed by the Board to so discharge duties of Joint Commissioner in the communication dated 20 February 2014. Thus the CBDT has in terms of Section 120(2) of the Act authorised Commissioner to exercise / or perform functions of an Income Tax authority subordinate to him i.e. of Joint / Addl. Commissioner. Consequently, the impugned Notice cannot be said to be without jurisdiction on account of lack of sanction. So far as the reasons recorded by the Assessing Officer in support of the impugned Notice is concerned, we find that it clearly indicates that the information leading to the impugned notice was received from the Assessing Officer of the beneficiaries. However it is also recorded in the Notice itself that the same was issued after verification of the information. Thus, we do not accept Mr.Toprani's submission that the Assessing Officer failed to apply his mind independently before issuing the impugned Notice. As far as the issue with regard to the Intimation under Section 143(1) of the Act being beyond the period of time provided is concerned or that all material facts have been truly and fully disclosed would all require adjudication of factual dispute between the parties. Similarly, issue with regard to the applicability of the decision of this Court in L.R.Patel Family would also require debate. These all issues can be decided and adjudicated upon by Assessing Officer during reassessment proceedings. These are not issues which go to the root of the jurisdiction in view of the disputed position between the parties. - Decided against assessee.
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2015 (7) TMI 916
Liability to deduct tax at source - whether Tribunal is correct in holding that no contract has existed between assessee AOP and its members and there was no liability on the part of the assessee to deduct tax at source on payment to it members? - Held that:- The work was carried out and the same was handed over to the members to enable them to execute the contract. The association has neither kept any commission of its own nor any profit. The association comprising of these two members/ partners joined together for the purposes of executing the project. It is in such circumstances, that no interference of any sub-contractorship can be drawn. It is not correct to say that the Tribunal insisted on any written contract evidencing such relationship. The Tribunal noted the admitted facts and found that there is no sub-contract or relationship of a sub-contractor emerging from this undisputed factual position. It is in these circumstances, that it held that section 194C(2) of the Income Tax Act has no application to the facts of the assessee's case. See SMC Ambika case [2015 (7) TMI 931 - BOMBAY HIGH COURT]- Decided in favour of assessee.
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2015 (7) TMI 915
Transfer pricing adjustment - addition on account of alleged understatement of arm's length price in respect of commission income earned by the appellant from its AEs - according to the Ld DR, the TPO rightly rejected the Berry Ratio (PLI) adopted by the assessee and the TPO after rejecting the Berry ratio of the assessee, choose to follow OP/TC as the PLI for computing net profit margin in the support services segment - Held that:- As decided in Mitsubishi Corporation India Pvt. Ltd case [2014 (10) TMI 702 - ITAT DELHI] tribunal negated the contention of TPO and upheld the assessee’s action of use of berryratio, and we note that facts & circumstances of that case were identical & similar.We concur with the aforesaid view of the co-ordinate bench and so the adjustment for use of locational savings was unwarranted. We are of the view that use of intangibles cannot be inferred or assumed and needs to be demonstrated on the basis of cogent materials by the TPO/AO and adjustment for use of intangibles was unwarranted. the use of berry ratio as PLI is appropriate to the facts and circumstances of this case, the objections taken by the authorities below to the use of berry ratio are unsustainable in law, and the adjustments for use of intangibles and locational savings are unwarranted. With these observations, the computation of ALP so far as buy sell segment of assessee’s activities are concerned stands restored to the assessment stage. The matter will be examined afresh in the light of the above observations which we respectfully concur with that laid by the co-ordinate bench in Mitsubhishi Corporation India Pvt. Ltd. (supra) and the matter is remanded back to be examined afresh at the assessment stage. Service fee segment which the TPO treated as trading segment - Held that:- The same issue cropped in Mitsubishi Corporation India Pvt. Ltd. (supra) wherein held that it is impermissible to make notional additions in the cost base and thus take into account the costs which are not borne by the assessee – following the decision in LI And Fung India Pvt. Ltd. Versus Commissioner of Income Tax [2014 (1) TMI 501 - DELHI HIGH COURT] - It is no longer open to the revenue authorities to reconstruct the financial statements of the assessee by including the cost of products incurred by the AEs, in respect of which services are rendered, in its reconstructed financial statements, and then putting the hypothetical trading profits, so arrived at in these reconstructed financial statements, to the tests for determining arms' length price - the adjustments carried out in the cost base of ALP computation, in respect of service fee/commission segment, are indeed devoid of legally sustainable merits – the AO is directed to delete these adjustments.
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2015 (7) TMI 914
Transaction of shares - business income instead of short term capital gain - Held that:- In the immediately subsequent year, ld. Assessing Officer has treated the asssessee as an investor. Similarly, in Assessment Year 2010-11 again, ld. Assessing Officer has accepted the assessee as investor vide assessment order dated 28-01-2013 passed u/s. 143. According to the assessee, in earlier years also, her status was never changed by the Assessing Officer. On due consideration of these facts, we are of the view that ld. Assessing Officer was simply influenced by magnitude of transactions. To our mind, magnitude of transaction is one of other factor amongst others for deciding the nature of investment, whether it was a trading in shares or simplicitor investment. Therefore, looking to the facts and circumstances and the finding of the Commissioner of Income Tax (Appeals), we do not see any reason to interfere in the order of the Commissioner of Income Tax (Appeals) deleting the addition of ₹ 61,64,711/- out of ₹ 61,97,756/- treated by Assessing Officer as business income instead of short term capital gain shown by the assessee. - Decided against revenue. Addition on interest income - CIT(A) deleted the addition - Held that:- Without appreciating the fact that FD’s have not matured at the end of the year and, hence, the said interest figure cannot be adopted, the ld. Assessing Officer has erred in taking the figure of ₹ 2,63,748/- against the figure of ₹ 1,12,748/-. The assessee has produced TDS certificate from the bank for the period from 01-04-2007 to 31st March, 2008 showing the bank interest income on FD at ₹ 1,35,552/-. This income has been offered by the assessee for taxation.Commissioner of Income Tax (Appeals) has rightly deleted the addition because that income has not accrued to the assessee. Ld. Assessing Officer has erroneously adopted the higher figure, therefore, we do not find any merit in this ground of appeal also. It is rejected.- Decided against revenue.
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2015 (7) TMI 913
Profit resulted to the assessee on share transactions through IPOs, - whether is to be assessed as "business income" or under the head “Capital Gains”? - Held that:- From the findings of the SEBI, it is implicit clear that both the assessees have indulged in violation of SEBI regulations, while making investments in IPOs. Whatever amounts they have illegally earned, which could be assessed as their income, has been taken away from them. They have already disgorged the amount, though, the payment was made after the close of accounting year, and even after passing of the assessment order. But these payments related to same share transactions, which have given rise to the alleged income in the hands of the assessee. The appeal before the CIT(A) is a continuation of the original proceedings. Before the CIT(A), the assessee have already taken additional grounds of appeal on the strength of the SEBI order. Therefore, we find force in the contentions of the ld. Counsel for the assessee that ultimately no income has resulted to the assessees, out of these share transactions. The income of ₹ 30,98,785/- and ₹ 29,17,331/- is to be excluded from the hands of Smt.Reetaben R. Thakkar and Shri Monal Y. Thakkar respectively in the Asstt.Year 2006- 07. As far as the claim of the assessee with regard to settlement charges are concerned, we find that there is no corresponding income against this expenditure. The income, which we have already excluded, therefore, the assessees cannot claim the expenditure, because, the expenditure has to be incurred for earning some income. Once the income is not form part of the total income, then against that activity, how the assessee can claim that expenditure ? The SEBI has issued a scheme permitting such defaulters to make payment in order to overcome that default. Thus, the payments were not made in violation of certain penalty provisions. In the present case, no such payment was made by the assessees. The assessees have financed certain fictitious entities and benami persons to apply for IPOs. There modus operandi is against SEBI regulatons, particularly, Section 12A of the SEBI Act, and therefore, the payment was on account of violation of provisions of SEBI. The assessees cannot claim that these payments are compensatory in nature. For these reasons we do not find any force in the contentions of the assessees. As far as the appeal of the Revenue in the case of Smt.Reetaben R. Thakkar is concerned, the ld.First Appellate Authority has held that amount of ₹ 5,48,385/- is to be assessed as short term capital gain. We find that the ld.CIT(A) has recorded a specific finding that investment to this is a bona fide investment of the assessees, and it has no link with the other IPOs investments. An assessee could be trader and investor at the same time. For the investment in IPOs. through fictitious entities was considered by the CIT(A) as organized business activity, and rest was as a simple investment. The ld.CIT(A) has rightly treated the assessees as investor qua the surplus amount of ₹ 5,48,385/-. Therefore, we do not find force in the appeal of the Revenue.
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2015 (7) TMI 912
Eligibility of deductions allowable u/s 24 - Computation of income - AO assessed the contractual receipts of ₹ 11,50,000/- as income from other sources and not as income from house property as claimed by assessee - Held that:- There is marked change in the terms of agreement and, therefore, it cannot be held that the entire receipts were towards rent. In the original agreement as per clause 16, the maintenance charges were paid to the society of the building hired by lessee which was in full settlement of the lessee’s obligation towards any charges for common facilities running cost of lifts, lighting, common space, staircase, ground cleaning, maintenance of lawns or parking etc. Any enhancement of the same was to be borne by lessee. However, in the amended agreement the lessor took the responsibility for repair and renew, paint, whitewash and colour the building in the demised premises. Earlier also the maintenance and service charges paid to the society were not part of rent and, therefore, the submission of ld. Counsel cannot be accepted. CIT(A) assessed the contractual receipts of ₹ 11,50,000/- as income from other sources and not as income from house property as claimed by assessee - Decided in favour of revenue.
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2015 (7) TMI 911
Liability to deduct tax u/s 195 - AO had levied interest u/s 201(1A) in respect of capital gain accrued to assessee on 8-6-2005 till the date on which capital gain tax was deposited i.e. 28-9-2007 - CIT(A) upheld the assessee’s contention that in view of non-discriminating clause in Article 26 of the DTAA between India and USA, the assessee was not obliged to deduct tax at source u/s 195 - Held that:- CIT(A) rightly held that in view of Article 26 of DTAA between USA and India, since no TDS is required to be made in case of sale of immovable properties within India, therefore, an assessee could not be burdened while making the payment to a non-resident for deducting tax at source. Also there was no revenue loss to department as Jasbir Singh Sarkaria had paid taxes and the assessee was entitled to the benefit of Article 26 of DTAA between USA and India. - Decided in favour of assessee.
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2015 (7) TMI 910
Disallowance of provision made for a loss on account of a firm purchase contract - Held that:- Prudence only implies that even though the amount cannot be determined with certainty, and represents only a best estimate in light of the available information, the same must be provided for. It nowhere advocates or prescribes providing for loss/liability that has not arisen during the relevant year or, in any case, by the end of the relevant year. Events after the balance-sheet date can only be taken into account in so far as they inform about the conditions prevailing during the relevant year, so as to enable a correct assessment of the operating results for the year and the state of affairs as at its close. There is nothing to show that the market price of the raw-material or the finished products had declined, much less to any substantial extent, up to 31.03.2003, the relevant year end.The assessee’s claim, in view of foregoing, is without merit. The decisions relied upon would be of little moment, even as clarified during hearing, in view of our specific finding of no loss having in fact arisen to the assessee during the year and, further, the principle of prudence as not being applicable to losses which arise or have their genesis in events subsequent to the end of the relevant year. Thus confirming the disallowance of the impugned loss. - Decided against assessee. Disallowance of the provision for various expenses - non supported by any evidences - Held that:- During the hearing, the ld. AR, the assessee’s counsel, conceded to the assessee having no further details/material to support its claim, relying on its written submissions before the authorities below, and towards which reference was made to pages 18 and 19 of the assessee’s paper-book. Under the circumstances, we have no hesitation in confirming the impugned disallowance. The question is of the basis on which it could be said or concluded that expenditure to that extent had in fact accrued, and which we find as wanting. The burden to prove its return, as well as claims preferred thereby, is only on the assessee, and which we find as not discharged to that extent. It may also be clarified here that the assessee had been extended sufficient opportunity to present its case. Needless to add, the assessee is a liberty to make a fresh claim for the subsequent year/s, even as it shall have to be shown by it that expenditure as claimed had arisen for those years, i.e., of payment, each year being independent. We may though clarify that we are not making any observation with regard to the deduction of the said expenditure for those years/s.- Decided against assessee. Computation of the deduction u/s. 80HHC - Held that:- The issue is squarely covered against the assessee by the decision of the Apex Court in the case of Ipca Laboratories Ltd. v. Dy. CIT [2004 (3) TMI 9 - SUPREME Court] - Decided against assessee. Computation of book profit u/s. 115JB - Held that:- The matter in our view stands squarely covered by the decision by the Apex Court in the case of CIT vs. Ajanta Pharma Ltd. [2010 (9) TMI 8 - SUPREME COURT]. We, accordingly, set-aside the matter back to the file of the AO for working the book profit u/s. 115JB in terms of the said decision. We decide accordingly. Addition qua unutilized MODVAT credit - Held that:- no infirmity in his direction for including the unutilized MODVAT credit and, thus, apply the condition of section 145A on all factors of production, i.e. opening stock, purchases, sales and closing stock. This also represents the consistent view of the tribunal, and for which we refer to the decision in the case of Hercules Pigment Industry vs. ITO [2013 (10) TMI 606 - ITAT MUMBAI], rendered considering all the relevant decisions, including in the case of Mahalakshmi Glass Works Pvt. Ltd. (2009 (4) TMI 182 - BOMBAY HIGH COURT ). We accordingly confirm the impugned order on this ground. Deletion of addition made on account of premium payable on premium notes (SPN) - Held that:- The matter was during hearing fairly conceded by the ld. DR to be covered against the Revenue by the order by the tribunal in the assessee’s own case for AY 1996-97 - Decided in favour of assessee.
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2015 (7) TMI 909
Disallowance of speculation loss by invoking the provisions of Explanation to Sec. 73 - CIT(A) deleting the addition - Held that:- Assessee filed complete details of deployment of fund during last three years including the position of income and turnover of the assessee in different business. At this stage it is not possible to verify these details because this is being filed now for the first time before us. We find that the AO has only verified the deployment of funds for last three years and has not gone into the profits earned from various sources and also the turnover of the assessee from various sources. However, CIT(A) has only examined increase in loans and advances and not compared it with investment in shares. As the authorities below have lacked in their investigation into the correct facts, we feel that this issue needs re-examination. In term of the above, we set aside this issue to the file of the AO for fresh examination of this issue in terms of the Explanation to section 73 of the Act, wherein the AO will first determine the principal business of the assessee. For this, the AO will find out the deployment of funds in shares and in other business. The AO will also find out the profit or loss from shares and also in other business. The AO will also find out the turnover of the assessee in all the business and then compare the same on comparative basis. He has to give a finding qua the principal business of the assessee and then decide the issue - Decided in favor of assessee for statistical purposes. Disallowance u/s 14A - CIT(A) deleting the addition - Held that:- The assessee has earned dividend income of ₹ 58,311/- and the same is exempt income inviting the provisions of section 14A of the Act read with Rule 8D of the Rules. We find from the assessment order that there is no satisfaction recorded for application of Rule 8D of the IT Rules 1962 and simply formula prescribed under the said Rule is applied without giving any finding qua the nexus of expenditure with exempted income. Hence, we confirm the order of the CIT(A) and this issue of appeal of Revenue is dismissed. - Decided against revenue.
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2015 (7) TMI 908
Default under section 206C(6A) - short collection of tax at source (TCS) - goods for use in manufacturing, processing or producing articles or things. - Held that:- Section 206C(1A) mandates that any person responsible for collecting tax under section 206C(1) need not do so if he obtains a declaration from the buyer that he is purchasing the goods for use in manufacturing, processing or producing articles or things. It does not say that such declaration has to be obtained at the very same moment when a sale is affected. A reading of sub section (1B) clearly brings out this since obligation of the assessee to file a copy of the declaration arises only when the declaration is furnished to him by the buyer. The point of reference is furnishing of declaration by the buyer and not the month or date on which sale is affected by the assessee. Even if we consider that there is a breach on the part of the assessee in not obtaining the declaration from the buyer the moment a sale was affected, and in filing it before the CCIT or CIT, as the case may be, a similar breach was considered to be only technical and one that could be condoned by Hon'ble Madras High Court in the case of Adisankar Spinning Mills (P) Ltd., (2010 (12) TMI 1084 - MADRAS HIGH COURT ). In the said case, assessee had filed Form 27C subsequent to the proceedings, through a rectification petition under section 154, but still considered to be sufficient compliance, which view of the Tribunal was confirmed by Hon'ble Madras High Court. Proceedings on the assessee for the alleged default here were initiated on 10/10/2011 and assessee had before 31/10/2012 filed the Forms. Assessment years involved were assessment year 2009-10 to 2011-12 and there was much time left with the Revenue to verify whether the buyers were indeed using the wood pulp for manufacturing, processing or producing article or thing and not for trading and to proceed against them if they had furnished false declaration. We are therefore of the opinion assessee could not have been deemed as one in default under section 206C (6D) of the Act or liable for interest under section 206(7). - Decided in favour of assessee.
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2015 (7) TMI 907
Disallowance for excess remuneration paid to the Directors - A.O. made the disallowance simply relying on the erroneous Remark in Auditors' Report - Held that:- The assessee had made excessive payment of remuneration to the Director. but same was approved by the central government, as required by the Companies Act.1n these circumstances, we are of the opinion that there was no contravention of the provisions of the Act - Decided in favour of assessee. Disallowance ul/s.40(a)(ia) - non deduction of TDS - Held that:- The assessee had filed additional evidences, that same were not admitted by the F AA, that the assessee had filed composite certificate of deducting taxes. It is found that Hon'ble Delhi High Court has in the matter of Naresh Kumar(2013 (9) TMI 275 - DELHI HIGH COURT ) has held that the proviso was applicable with retrospective effect.Section 40(a)(ia) of the Income-tax Act, 1961is a provision incorporated with that objective and purpose in mind. It is not basically a penal provision as when the tax deducted at source is deposited, the amount on which deduction was made is allowed as an expenditure incurred in the previous year in which the payment of tax deducted at source is made. Thus, it results in shifting of the year in which the expenditure can be claimed, even if payment has been made to the recipient and is to be allowed as expenditure in another year. The principle of matching, i.e., matching of receipts with expenditure to the extent indicated in section 40(a)(ia), therefore, gets affected. The provision can work harshly and may be very stringent in some cases. The legislative purpose and the object is to ensure payment and deposit of tax deducted at source with the Government. Tax deducted at source results in collection of tax.The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support the expression “said due date” used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. The matter needs further verification. Therefore, in the interest of justice, we are remitting the matter to the file of the AO for fresh adjudication - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 906
Disallowance of provision made for doubtful advance paid for advancement of existing soft ware - Capital expenditure or revenue expenditure - assessee had made a claim u/s.37 stating that expenditure incurred by it on account of upgradation of ERP software was revenue expenditure, that it had advanced a sum of ₹ 15.91 lakhs to BT but the work was not executed to the satisfaction of the assessee - Held that:- The expenditure incurred by the assessee for up-gradation of system was allowable as revenue expenditure. Here we would like to follow the judgment of Hon’ble Bombay High Court of IVM World Trade Corporation (1988 (12) TMI 23 - BOMBAY High Court ) wherein the assessee had made advance payment for an expenditure that was revenue in nature. As the receiver of the advance payment became insolvent, so, the entire amount inclusive of the interest and the principal amount advanced by the assessee was written off by the assessee. The assessee claimed it as a business loss. The AO disallowed it and the Tribunal held that the loss was not deductible under sections 36 and 37 of the Act. On a reference, the Hon’ble Court held that the amounts were advanced by the assessee was allowable as revenue expenditure, that the amounts advanced were for business purposes,that the advances made proved irrecoverable, that the consequent loss was a business loss and not a capital loss. Respectfully, following the above judgment, we decide ground no.1 in favour of the assessee. Excess remuneration paid to Director - AO found that the auditor in form no.3CB, vide note no.3,had reported that the assesee had paid ₹ 36,40,038/- in excess of limits prescribed under the Companies Act - Held that:- The assessee had made excessive payment of remuneration to the Director, but same was approved by the central government, as required by the Companies Act. In these circumstances, we are of the opinion that there was no contravention of the provisions of the Act. Therefore, reversing the order of the FAA, we decide ground in favour of the assessee. Depreciation on expenditure treated as revenue expenditure by the assessee but held as capital expenditure in earlier years - Held that:- If the AO capitalised certain revenue expenditure and allowed depreciation in that year then there is no justification for not allowing the same in subsequent AY.s. In the interest of justice we are remitting back the issue to the file of the AO for fresh adjudication. We want to clarify that file being sent back to the AO to verify the claim made by the assessee of capitalization of revenue expenses in earlier years. If the AO has already allowed depreciation in those years and denied the benefit to the assessee, then he should allow depreciation to the assessee as per the provisions of the Act. He is directed to afford a reasonable opportunity of hearing to the assessee. Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 905
Disallowance u/s.14A(1) - applicability of rule 8D - Held that:- The reference to the turnover ratio, which it says would easily be at 4 to 5, stands made by it only toward assigning a weight to this predominant intent for acquiring shares, and no other purpose, itself stating that it cannot be said to be scientific in the sense that it is not amenable to measurement. The said reference has been clearly misconstrued in pleading for lowering the ratio (than 1/5) on the basis of a high turnover ratio. The assessee in the present case has, in fact, rather than earning income, suffered a loss, defeating the assessee's argument. In fact, we observe the entire borrowing in the present case to be toward funding the assessee's current assets. We are, therefore, not moved in any manner to disturb the said ratio from 1/5, which shall apply. It needs to be emphasized that the prescription under r.8D(2)(iii) is not based on the volume or quantum of expenditure incurred by the assessee, but, as tribunal clarifies, only on one variable, i.e., investment in the relevant assets (on an average). As such, raising a claim for a lower disallowance, i.e., than that as statutorily prescribed per r.8D(2)(iii), a constitutionally valid provision, would not obtain. The only exception, which would in fact be in terms of r. 8D itself, would be where the expenditure incurred is below that arrived at per the prescribed formula, so that following the same would lead to an absurdity, as observed by the tribunal in the case of disallowance of total interest attributable to shares held as stock-in-trade. In the facts of the present case, excluding the security transaction tax (STT), would yet leave indirect expenditure at ₹ 131.6 lacs, as against the disallowance of ₹ 18.57 lacs. There is, in our view, no scope for excluding the legal and professional expenses, details of which are absent, incurred as it is in the course of regular business, which gives rise to both taxable income as well as the tax free dividend income. In view of the foregoing, a ratio (1/5 or lower), i.e., as in the case of interest expenditure for indirect expenditure, thus, is not feasible for being prescribed or laid down on facts or in law.
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2015 (7) TMI 904
Revision u/s 263 - claim of the assessee on account of lease rental to be disallowed as per CIT(A) - Held that:- Considering the facts of the present case, it is noticed that the AO before allowing the claim of the assessee on account of lease rental issued a questionnaire along with notice u/s. 142(1) of the Act. The assessee furnished the requisite details and evidences to the AO, who on being satisfied allowed the claim of the assessee. It is also noticed that for AY 2006-07 the similar issue was before the DRP, who also directed the AO to delete the similar disallowance. In the present case, the Ld. CIT(A) on the similar issue for AYs 2004-05 and 2005-06 has deleted the additions made by AO. Therefore, it can be said that the view taken by AO was one of the possible view so it cannot be said that the assessment order passed by him was erroneous or prejudicial to the interest of revenue. The view taken by the AO was one of the possible view, therefore, the assessment order passed by him for the year under consideration i.e. AY 2007-08 was neither erroneous nor prejudicial to the interest of revenue. Moreover, the Ld. CIT in the impugned order has simply stated that the assessee furnished the written reply. However, he has not discussed the contents of the said reply and also did not bring on record how and in what manner the assessment order passed by AO was erroneous or prejudicial to the interest of revenue, he simply directed the AO to reexamine the issue after calling the lease documents and examining the same, which the AO had already considered and examined while passing the assessment order. - Decided in favour of assessee.
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2015 (7) TMI 903
Eligibility for deduction u/s. 80 IC - whether milk is an item of production eligible for deduction? - CIT(A) allowed claim - Held that:- The word 'production' includes within its purview the word 'manufacture' and also other activities. In view of above decision of Hon'ble Supreme Court in the case of Tara Agencies (2007 (7) TMI 4 - SUPREME COURT OF INDIA ), we hold that "Milk" is an article or thing which can be produced by the assessee and, therefore, we fully concur with the views taken by the Commissioner of Income Tax (Appeals) in holding that "Milk" is an article or thing mentioned in Part-A of Fourteenth Schedule of the Act, and that the profit derived from production of milk is eligible for deduction u/s. 80IC of the Act. - Decided in favour of assessee.
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2015 (7) TMI 902
Extension of stay order - Delay in disposal of appeal - Held that:- Delay in hearing and disposal of appeal is not attributable to the assessee since the stay was last extended vide order dated 18.07.2014. Further, we do not agree with the contention of the Ld. Counsel for the revenue that the stay should not be extended withut further deposit because the Hon'ble High Court vide order dated 23.06.2014 has set aside the directions given by the Tribunal for further deposit at the time of granting the extension of stay. Accordingly, in view of the facts and circumstances of the case when the delay in disposal of appeal is not attributable to the assessee and in the light of the order of Hon'ble High Court [2014 (7) TMI 177 - BOMBAY HIGH COURT], the assessee has made out a case for further extension of stay. Accordingly we extent the stay against the recovery of balance demand of ₹ 267.26 crore for a further period of six months or till disposal of the appeal whichever comes earlier. - Stay granted.
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2015 (7) TMI 901
Disallowance made under sec.40(a)(ia) - amounts payable and not already paid at the end of year - payments made to Central Warehousing Corporation, Concor and Continental Warehousing Corporation - Freight charges - Non deduction of TDS - held that:- definition of 'rent' makes it unambiguously clear that rent is a payment for the use of land or/and building under any lease, tenancy or other arrangement/agreement. In the instant case, undisputedly, the assessee is using the building premises of CFS against payment. In our considered view, the said payment is nothing but a rent for the use of premises. As soon as goods are moved into the CFS premises for inspection, the assessee is liable for payment for use of premises. - So far as the contention of the assessee that the assessee makes the payments to the agencies and gets reimbursement of same from exporters, we are of the view that it is an inter-se arrangement between the assessee and the exporter. It does not in any way change the character of payment made for the use of CFS premises. The assessee has to comply with the provisions of the Act, as applicable at that point of time. Thus, the amount paid by assessee for use of premises to Central Warehousing Corporation, Concor and Continental Warehousing Corporation is in the nature of rent. The assessee ought to have complied with the provisions of Section 194-I of the Act. Allahabad High Court in the case of CIT v. M/s. Vector Sipping Services (P) Ltd., in [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] has upheld the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ). The Hon'ble Calcutta High Court in the case of CIT v. Crescent Export Syndicates (2013 (5) TMI 510 - CALCUTTA HIGH COURT) and the Hon'ble Gujarat High Court in the case of CIT v. Sikandarkhan N. Tunvar (2013 (5) TMI 457 - GUJARAT HIGH COURT) on the other hand, have struck down the decision of the Special Bench. - Supreme Court of India in the case of CIT v. Vegetable Products Ltd. reported as [1973 (1) TMI 1 - SUPREME Court], has held that where two views are possible, the view in favour of the assessee has to be preferred. Respectfully following the same, we follow the judgment of Hon'ble Allahabad High Court in the case of Vector Shipping Services (P) Ltd. (supra) and hold that the disallowance under sec.40(a)(ia) applies only to the amounts payable and not already paid. - Decided partly in favour of assessee.
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2015 (7) TMI 900
Addition u/s 69 - assessee submitted before the Assessing Officer that he had three vehicles and the cash deposited represented the receipts from running of the vehicles on hire in a business of tour and travel - Held that:- CIT(A) further observed that as per the provisions of Section 44AE, the income from plying, hiring or leasing of vehicles, other than heavy goods vehicles, is deemed to be ₹ 3500/- for every month or part of a month during which the vehicle is owned by an assessee. Thus the computation of income from the plying of the 4 vehicles works out ot ₹ 42000/- for each of the cars purchased in the FH 2005-06, and ₹ 38500/- and ₹ 31500/- for the cars purchased in May and July, 2006 respectively. The total income to be added in the hands of the assessee u/s. 44AE works out to ₹ 1,54,000/-. We find that Ld. CIT(A) further observed that assessee cannot claim lower profits, having failed to maintain books of account and get them audited under section 44AB, as laid down in section 44AE(7). The amount of ₹ 1,42,078/- is to be separately assessed as the investment of the assessee in purchasing the two vehicles, being the down payments for obtaining the loans. As the income from running of the vehicles on hire is computed u/s. 44AE, the addition of ₹ 11,53,350/-, presumed to be the gross receipts of hire, cannot be sustained. We further find that Ld. CIT(A) against the addition of ₹ 12,79,350/- (Rs. 11,53,350 + ₹ 1,26,000) confirmed the addition of ₹ 2,96,078/-. In view of the above, we find that Ld. CIT(A) has rightly restricted the addition from ₹ 12,79,350/- (Rs. 11,53,350/- + ₹ 1,26,000/-) to ₹ 2,96,078/- (Rs. 1,42,078 + ₹ 1,54,000). We are of the view that that the order of the Ld. CIT(A) is a well reasoned order which does not require any interference - Decided against Revenue.
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2015 (7) TMI 899
Transfer Pricing matter - determination of arm’s length price - management Support Services - Held that:- order of the D.R.P. is not a speaking order in so far as no reason has been given by D.R.P. for rejecting the claims of the assessee. In these ci rcumstances, we are of the view that the issues in this appeal be restored to the file of the D.R.P. for re-adjudication and for passing a speaking order after granting the assesese adequate opportunity to be heard - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 898
Disallowance of loss relating to 'Talcher Transmission Line' - Held that:- project could not be said to have ceased to exist and the expenses claimed by the assessee was of such nature that would not result into any revenue for the assessee and therefore the same could not be booked as work in progress. Accordingly, we note that the AO was not correct to deny the amount of loss as claimed by the assessee on Talcher Transmission Line project. Hence, we are of the considered view that the CIT(A) was right in deleting the addition which was made by the AO without any logical reasoning and thus we are unable to see any infirmity, perversity or any other valid reason to interfere with the impugned order and we uphold the same. Accordingly, sole ground of the revenue being devoid of merits is dismissed. - Decided against Revenue.
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Customs
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2015 (7) TMI 925
Penalty under Section 112(a) of the Customs Act, 1962 - Evasion of duty - Undervaluation of goods - Held that:- from a plain reading of provisions of sub-section (n) and (o), it is clear that these provisions are not applicable to the case. In fact Section 111(n) deals with transit/transhipment of goods. Section 111(o) deals with a situation where certain claim is claimed subject to some condition and subsequently the said condition is not followed. In the present case, it is not a situation. In fact, the impugned goods were never cleared from Customs therefore claiming exemption does not arise. Consequently, the provisions of Section 111(n) and (o) are not applicable to the facts of this case. - Any Bill of Entry was yet to be filed by the appellants to clear the subject import. The first occasion for an importer to declare or misdeclare particulars of the goods imported by him is at the stage of filing Bill of Entry. He cannot be held liable for any misstatement of particulars in Bill of Lading or Import manifest. Hence, as rightly contended by the appellants, the finding of misdeclaration against them is untenable. In this case, the investigating agency (DRI) also ventured into an inquiry as to what should be the assessable value of the goods and as to whether the importer had misdeclared the value of the goods. The importer never filed any Bill of Entry declaring the value and other particulars of the goods. Hence it is absurd for the DRI to have ventured to such an exercise. Surprisingly, this absurdity was sustained by learned Commissioner in the impugned order. As the appellant has not filed any Bill of Entry neither placed order for supply of the impugned goods to the supplier/exporter, the penalty under Section 112(a) of the Customs Act is not imposable on the appellant. - Impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 924
Revocation of CHA License - forfeiture of the security deposit - contravention of Regulation 13(a) - held that:- There is no allegation made by the appellant as urged before us that proper procedure of inquiry was not followed or there has been any violation of the principles of natural justice either by the Inquiry Officer or by the adjudicating authority. The only contention is that the evidence adduced by the appellant has not been properly appreciated and the punishment of revocation for the contravention of the CHALR, if any, is grossly disproportionate to the offence committed. - As regards the charge of contravention of Regulation 13(n) of non-discharge of their obligations with utmost speed and efficiency, Shri C.H. Menon in his confessional statement has admitted to non-verification of the correctness of the classification declared in the bills of entry handled by Mr. Ashley. Later on it was found that M/s. J.M. Traders and M/s. Kirmi Expo had misdeclared the classification of laminated sheets imported by them and this position has been admitted by the importers themselves before the Settlement Commission. If that be so, the appellant CHA could not be said to have discharged his duties and obligations with any efficiency at all. It is thus evident that the appellant has been grossly negligent in the discharge of his statutory functions. As regards the charge of contravention of Regulation 13(k), it is an admitted fact on record that the charged CHA did not maintain any import or export register showing details of the consignments handled by them and the dockets maintained by them were incomplete and they did not have the authority letters in many cases and the CHA delivery challans for having delivered the goods to the importers after clearance by the Customs. A case of sub-letting of licence by CHA, obtaining Customs pass for non-employees, removal of goods without obtaining authorisation from importers was considered by the Hon’ble High Court of Gujarat in OTA Kandla Pvt. Ltd. [2011 (3) TMI 801 - GUJARAT HIGH COURT]. The Hon’ble High Court upheld the contention of the Revenue that sub-letting amounted to transfer of CHA licence and refused to interfere with the punishment of revocation of CHA licence awarded by the Commissioner of Customs, the Licensing authority. - Further decision in the case of Commissioner of Customs v. Worldwide Cargo Movers [2006 (11) TMI 281 - BOMBAY HIGH COURT] followed - no reason to interfere with the decision of the Adjudicating authority - Decided against the appellant.
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2015 (7) TMI 923
Evasion of duty - Import of used photocopier components of foreign origin - High Court dismissed the petition filed by Revenue for non prosecution against the decision of Tribunal [2008 (12) TMI 451 - CESTAT, CHENNAI], wherein Tribunal held that The Notification No. 19/90-Cus. (N.T.), dated 26-4-1990 issued by the Central Government had conferred the powers of Commissioner of Customs on the ADG, DRI and his jurisdiction was specified as “whole of India”. Though the Additional Director General, DGCEI was invested with the powers exercisable by a Commissioner of Customs, Notification No. 31/2000-Cus. (N.T.) did not indicate the territorial jurisdiction of ADG, DGCEI, Chennai.
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Service Tax
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2015 (7) TMI 930
CENVAT Credit - input services - inclusion part - Credit availed on Civil Construction service - inadmissible services or not - Held that:- If, the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment. It is clear, therefore, that prior to the amendment the setting up of a factory premises of a provider for output service relating to such a factory fell within the definition of ‘input service’. The amendment of 2011 is not retrospective and is not applicable to the respondents’ case. - Each limb of the definition of input service can be considered as an independent benefit or concession exemption. If an assessee can satisfy any one of the limbs of the above benefit, exemption or concession, then credit of the input service would be available. This would be so even if the assessee does not satisfy other limb/limbs of the above definition. To illustrate, input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal. The Tribunal rightly did not agree with the Commissioner’s findings that the services in question had been used for brining into existence an immovable property and not for the manufacture of the final product. The said services cannot be said to be remotely connected to the final product as observed by the Commissioner. - Decided against assessee.
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2015 (7) TMI 929
Denial of CENVAT Credit - Imposition of penalty - They also contended that excess utilized credit was paid back in cash and that even before the issue of shown cause notice. So no extended period was invokable nor was rule 15(2) of Cenvat Credit Rules 2004 or Section 11AC consequently no penalty was imposable. - Held that:- Commissioner (Appeals) has examined the issue in detail and concluded the issue in favour of revenue. Fraud has clearly manifested and has also been admitted. Extended period has rightly been involved. Penalty is also imposable as intent to defraud the revenue is very clear. Since both dutiable and exempted products were being manufactured, credit availment was to be restricted to 20% of ₹ 372126.69/-. - Decided against the assessee. Appellant has also raised the issue of refund of excess amount. There is no such issue discussed in Commissioner (Appeals)'s Order. In present grounds of appeal also, no specific calculation is pointed out fortifying their claim for refund. This issue has also not been vehemently taken up in earlier stage. There are no indications on record whether these calculations were provided and specifically elaborated. In absence of these factors being reflected, I am unable to appreciate the quantifications in this regards. Further no evidence is coming on record whether refund claim was specifically pleaded with Commissioner (Appeals). Accordingly no order is warranted on this issue at the stage of appeal before tribunal. - Decided against assessee.
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2015 (7) TMI 928
Waiver of pre deposit - Classification of service - whether the activity of re-rubberizing of print rollers would attract service tax under the category of ‘management, maintenance and repair service' or under ‘business auxiliary service' - Held that:- Decision in the case of Zenith Rollers Ltd. Vs CCE Noida [2013 (12) TMI 620 - CESTAT NEW DELHI] followed wherein it was held that, the service to be falling under the category of ‘business auxiliary services'. If that be so, there would be exemption to the said activity in terms of Notification No 14/2004-ST. Appellants have also approached the Authority for Advance Ruling (AAR) who vide their decision as reported in [2009 (3) TMI 57 - AUTHORITY FOR ADVANCE RULINGS] has held against the appellant. The Tribunal's decisions shall be applicable to the disputed issue which is for the period not covered by the A.A.R. judgment. - stay granted
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2015 (7) TMI 927
Waiver of pre deposit - construction service - whether service tax has to be paid for different types of services rendered to TTD - Held that:- no evidence has been produced by the appellant to show that the activities undertaken relate to agriculture. The show-cause notice was issued in this case on 31.05.2012, whereas the demand for reworking of agricultural land relates to the year 2008-09. Therefore, it becomes necessary to examine whether appellants have sufficient grounds to consider it as agricultural work or not, which would require the details of agreement, the kind of work undertaken etc. to be considered, which in our opinion may not be necessary at this stage since it would consume a lot of time. Having regard to the overall facts and circumstances, we waive the requirement of pre-deposit and grant stay against recovery of dues during the pendency of appeal. - Stay granted.
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2015 (7) TMI 926
Waiver pre deposit - GTA Service - appellants provide transportation services for the iron ore to their customers - Held that:- Appellant cannot be considered either as a consignor or consignee. Therefore the Notification No. 32/2004 which requires the receiver of service to pay the tax in respect of GTA service is not applicable to them. Moreover the only observation of the Commissioner is that there is no evidence and there is no correlation between each consignment note raised by the transporter, amount received by the appellant and the tax paid by the consignee namely the service receiver. In our opinion in view of the above observations, such a requirement does not arise. Therefore prima facie appellants have made out a case for complete waiver of pre-deposit. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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