TMI Tax Updates - e-Newsletter
July 3, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Adjustment of Refund with the demand without proper information to assessee - One cannot brush aside a primordial fact that ingredients of Section 245 of the Income Tax Act cannot be pressed into service either as a Lever or Premium in favour of the Revenue - HC
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Income Tax:
Competence of valuer - In fact this valuer should never be appointed as a valuer. He do not know ABC of the valuation at all. There ought to be a Cost Accountant along with efficient Engineer. - Valuation report was rightly rejected - No addition - HC
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Income Tax:
Liability to deduction of TDS under Section 194(A) - whether the chit dividend paid by the assessee to its customers would not amount to interest as defined under Section 2(28A)? - Section 194(A) of the Act has no application to such dividends - HC
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Income Tax:
Undisclosed income - addition based on information found on the computer during search - presumption u/s 292C - the law is well settled that the presumption is rebuttable. - AT
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Income Tax:
TDS as per provisions of section 194I (Rent) or S. 194C (Payment to Contractors) - payments on the basis of sharing of revenue would not come under the purview of section 194 I - AT
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Income Tax:
Revision u/s 263 - The order passed by CIT is illegal without jurisdiction on these issues. - if such type of order is sustained then this will permit the illegality to continue and the subsequent actions carried out on the illegal order are also illegal. - AT
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Income Tax:
Income received after dissolution of firm - the amount was assessable in the hands of the assessee-firm in the year of receipt despite dissolution and discontinuance of its business by virtue of sub- s. (3A) of s. 176 r/w s. 189 - Nowhere it is the case of AO that the said sum belong to the period during which the assessee firm was in existence and carried out its business. - AT
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Income Tax:
Amount received by the assessee as a consideration for transfer/assignment of trade mark to the assignee is in the nature of capital receipt and to be taxed as capital gain and not as business income. - AT
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Income Tax:
Transfer pricing adjustment - primary responsibility to bench mark the transactions with comparable cases - the certificate issued by the auditors only spell out the percentage of overheads over the revenue and hence it is only a factual aspect of internal figures. In Transfer pricing study, what is required to be done is to validate the said claim with an external comparable. - AT
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Income Tax:
Deduction u/s 80HHBA - the direction for allowing the deduction u/s 80HHBA of the Act on the interest received by the assessee on the claims settled by the DRB during the year under consideration, is upheld. - AT
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Income Tax:
Accrual of interest income - the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assessee as it is applicable to the companies registered under the Companies Act - interest on NPA assets cannot be said to have accrued to the assessee - AT
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Customs:
Extension of warehousing period - In view of the specific provisions in the Section 72, once extension of time sought for storing goods in the warehouse is refused, the duty and interest and other liabilities automatically arise - AT
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Service Tax:
Interest of delayed refund claim - liability of the Revenue to pay interest under Section 11BB of the Central Excise Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Central Excise Act and not on the expiry of the said period from the date on which order of refund is made - AT
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Service Tax:
Refund of Service tax on vehicle registration charges - any refund claim arises as a consequence to the application of the provisions of Finance Act,1994 ought to be in accordance with the provisions prescribed for refund under the Central Excise Act,1944 as applicable to service tax matters - AT
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Service Tax:
Services of Manpower on cost sharing basis to group companies - Service Tax liability for import of Intellectual Property Rights - matter requires reconsideration - remanded back - AT
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Central Excise:
Denial of SSI Exemption - Valuation u/s 4A - Admittedly an automobile or a taxi can operate without even fixing the fair meters. In such a scenario, they cannot be termed as parts, components or assembly of taxies - prima facie case is in favor of assessee - AT
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Central Excise:
Cenvat credit - failure to maintain separate accounts - Since the appellants have reversed the entire amount of credit attributable to exempted goods and the omissions seem to only procedural in nature - stay granted - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (7) TMI 71
Non deduction of TDS - Payments made to the truck owners temporarily employed - No agreement or contract exists - Held that:- The issue was squarely covered by the decision of the Kolkata Bench of this Tribunal in the case of Shri Kajal Das in [2012 (1) TMI 167 - ITAT KOLKATA] , dated January 3, 2012. In this case it was held that it is not disputed that the assessee had not assigned any of its contractual obligations to the transporters. It was a mere case of hiring the trucks from the market as per the requirements and not as per any contract. Consequently respectfully following the decision of the Kolkata Bench of this Tribunal in the case of Kajal Das, the addition as made by the Assessing Officer and as confirmed by the learned Commissioner of Income-tax (Appeals) by invoking the provisions of section 40(a)(ia) of the Act stands deleted. Even otherwise, the payments have been made before the due date of, filing of the return and no amount remaining unpaid to the truck owners. In this context the decision of the co-ordinate Bench of this Tribunal in the case of Tybas Projects Pvt. Ltd. [2015 (7) TMI 70 - ITAT CUTTACK] dated October 16, 2014 . By respectfully following the order of the Coordinate Bench of this Tribunal, the addition is liable to be deleted and we do so. - Decided in favour of assessee.
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2015 (7) TMI 70
Business of works contract implementation - Addition on account of mismatch of Unsecured loan - Addition on account of Non-accounting of hire charges payable- Addition on account of Non-accounting of TDS - Addition on account of low rate of TDS on sub-contracts - Held that:- In view of the findings of the Assessing Officer in the remand report, inter alia, that on verification of the same, it was found that the total figure of ₹ 41,71,000/- shown under the head ‘advance from customers’ in the balance sheet as at 31.3.2008 includes the sum of ₹ 28,60,000/-, now it can be concluded that instead of showing this amount under ‘unsecured loan’ the assessee has included it in ‘advance from customers’ under the major head of ‘current liabilities’ and provisions, and in regard to the amount of ₹ 10,00,000/-, it is, inter alia, stated that it is concluded that the unsecured loan of ₹ 10,00,000/- was received by the assessee from Sri Bijay Kumar Behera during financial year 2006-07 relevant to the assessment year 2007-08 which still remains ‘advance from customers’ instead of unsecured loan included in the liabilities of the balance sheet’, we do not find any infirmity in the order of ld CIT(A) to interfere as the AO has clearly accepted the assessee’s contention after due verification. Ld CIT(A) deleted the addition relying on the findings of the Assessing Officer in the remand report, wherein, he has clearly stated that all payments were made on different dates and to different persons, which are below ₹ 20,000/- and, therefore, provisions of section 194C were not attracted. We do not find any reason to interfere with the order of ld CIT(A). Hence, Ground No.3 is rejected. Scope of section 194C - We find that ITAT Delhi Bench in the case of Mrs Kanak Singh in [2015 (7) TMI 69 - ITAT DELHI] order dated 19.9.2014 held that it is to be noted that for disallowing expenses from business and profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year. We do not find that the Tribunal has committed any error in recording the finding on the facts, which were not controverted by the department and thus the question of law as framed does not arise for consideration in the appeal. The income tax appeal is dismissed. We restore this issue to the file of the AO to verify the assessee’s contention and if it is found that a sum of ₹ 10 lakhs represented the opening balance in the accounts of S.S.Builders, then the contention of the assessee that provisions of section 194C are not attracted, has to be accepted. The contention of ld counsel for the assessee that provisions of section 194C are not attracted, is not acceptable because on one hand, assessee is pleading that section 194C is not attracted as the amount represented opening balance but on the other hand, he is claiming that disallowance cannot be made under section 40(a)(ia) of the Act because payment had been made. Thus, the assessee is taking contradictory stand. Hence, Ground No.4 is allowed for statistical purposes. - Appeal filed by the revenue dismissed and assessee's appeal is partly allowed.
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2015 (7) TMI 69
Addition on account of non-deduction of TDS - Payment made to sub-contractors for erecting telecommunication towers - No payment outstanding at the year end - Held that:- The facts are not disputed. Admittedly assessee did not deduct the tax as required under the provisions of section 194C. However, it is also not disputed that no amount was payable at the end of the year to sub-contractors. Under such circumstances, the majority view decision of Special Bench in the case Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM ], is squarely applicable to the facts of the case. However, the Special Bench decision was examined by various High Court. Since no decision of Hon’ble Jurisdictional High Court directly on the issue has been brought to our notice, therefore, considering the conflict of opinion between various High Court and the decision of Special Bench of the ITAT, we do not find any infirmity in the order of CIT(A) on the issue in question. A perusal of CIT(A)’s order reveals that issues raised by the assessee related to disallowance of various expenses were not contested before the CIT(A). Since the issues raised in cross objection do not arise out of the order of CIT(A), therefore, we decline to admit the cross-objection filed by the assessee. - Appeal filed by the revenue as well as the cross objection preferred by the assessee stand dismissed.
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2015 (7) TMI 56
Transaction in the nature of hire-purchase - whether hire charges received under a hire purchase agreement amounts to interest liable to tax under the provisions of the Interest Tax Act? - Held that:- In the case before us there is nothing to show that assessee lent money to the hirer for purchasing the vehicle. Nor is there anything to show that the vehicle originally belonged to the assessee and the assessee in consideration of the hirer promising to pay the price in installments delivered possession thereof to the hirer. In a hire purchase agreement the hirer is under no obligation to buy the vehicle. He has an option either to buy the vehicle or to return the same. The transaction entered into by the assessee does not also disclose that the hirer was the owner of the vehicle and he entered into the hire purchase agreement only for the purpose of raising a loan. The hirer is a bailee as already indicated. In a bailment the bailor does not divest himself of ownership. He merely curtails his right of enjoyment of the thing bailed in favour of the bailee. Further, the rights which the bailee being a hirer acquires may be enjoyed by him in terms of the hire purchase agreement and not otherwise.The nomenclature given by the assessee is not decisive. It is the substance of the matter which has to be looked into. Mere fact that the assessee has treated the vehicle for the purpose of accounting as its current assets does not derogate from the concept of hire purchase. If the object of the Interest Tax Act is kept at the back of the mind, it would be clear that unlike loans and advances the hire purchase transactions resulting in sale of various household goods including cars and automobiles was not intended to be curbed by the Interest Tax Act. As a matter of fact, the sale of household goods including cars and automobiles through the hire purchase transactions provides a boost to the industry and is, therefore, to be encouraged rather than discouraged. We may reiterate that it is not possible to presume that the legislature was not aware of the distinction between hire purchase transaction and transaction in the nature of loans and advances. Therefore, if the legislature wanted to apply the provisions of the Interest Tax Act to the hire purchase transaction, a specific reference to that effect would have been made. We reiterate our view taken in the case of Pilani Investment & Industries [2015 (7) TMI 53 - CALCUTTA HIGH COURT] that in pith and substance, a completed hire purchase transaction may have some similarity with a purchase effected by obtaining a loan, but that similarity cannot obliterate the identity of a real hire purchase transaction which is a more complex transaction in contradistinction of a loan simplicitor as discussed in the case of Sundaram Finance (1965 (11) TMI 123 - SUPREME COURT OF INDIA) wherein held that the intention of the appellants in obtaining the hire- purchase and the allied agreements was to secure the return of loans advanced to their customers, and no real sale of the vehicle was intended by the customer to the appellants. The transactions were merely financing transactions. - Decided in favour of the assessee.
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2015 (7) TMI 55
Adjustment of Refund with the demand without proper information to assessee - Stay under Section 220(6) - Held that:- On a careful consideration of respective contentions and this Court taking note of the entire gamut of the attended facts and circumstances of the instant case in an integral manner comes to an inevitable conclusion that Section 245 of the Income Tax Act, 1961 makes it crystalline clear that the Income Tax Officer might, in lieu of payment of refund set-off the amount to be refunded against the sum payable by an individual, but only after furnishing information in writing to him of the proposed action. Admittedly, the 1st Appellant/Department had confirmed and sanctioned the refund due to the Respondent as per Refund Order, but, had not issued the cheque in this regard. One cannot brush aside a primordial fact that ingredients of Section 245 of the Income Tax Act cannot be pressed into service either as a Lever or Premium in favour of the Revenue, in the considered opinion of this Court. As such, this Court to prevent an aberration of justice and to promote substantial cause of justice, quashes the intimation dated 24.03.2014 under Section 245 of the Income Tax Act in respect of Assessment Year 2008-2009 (Against dues of Assessment year 2011-2012) the intimation dated 22.04.2014 for Adjustment of Refund in respect of Assessment Years 2009-2010 and 2010-2011 (Against dues of Assessment Year 2011-2012); the intimation dated 24.03.2014 for adjustment of Refund for Assessment Year 2012-2013 (Against dues of Assessment Year 2011-2012). At this stage, this Court makes it abundantly clear that it has not dealt with the merits of the matter pertaining to the Stay Application against recovery of taxes etc. Therefore, this Court disposes of the Writ Appeals only by quashing the Intimation Notices issued under Section 245 of the Income Tax Act for Adjustment of Refund in respect of Assessment Years mentioned supra and leaving it open to the respective parties to raise all factual and legal issues in respect of the subject matter in issue, i.e., aspect of payment / Retention of 'Refund etc.,' and it is open to the Concerned Authority / Department to take into consideration of the same, in a fair, just, dispassionate, practical, pragmatic, purposeful and meaningful manner and to pass a fresh speaking orders on merits by outlining the process of reasoning in an objective, qualitative and quantitative fashion in the interest of justice.
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2015 (7) TMI 54
Validity of reopening of assessment - Held that:- When the Assessing Officer had failed to record anywhere his satisfaction or belief that the income chargeable to tax had escaped assessment on account of the failure of the assessee to disclose truly and fully all material facts necessary for assessment. On the contrary, it was the Assessing Officer, who failed to consider the materials placed before him at the time of regular assessment for which the assessee cannot be found fault with. Therefore, the notice issued under Section 147 of the Income Tax Act beyond the period of four years was wholly without jurisdiction and cannot be sustained. - Decided in favour of assessee.
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2015 (7) TMI 53
Interest tax on interest on bonds and debentures - Whether Tribunal was right in holding that interest tax is not leviable on interest on bonds and debentures? - Held that:- Investment made by an assessee either in bonds or in debentures was not contemplated. What has been contemplated is loans and advances. The investment made in bonds and debentures can by no stretch of imagination be considered to be either a loan or an advance. In pith and substance, it may have some affinity with the concept of loan and advance, but it is not possible to presume that the legislature was unaware of the distinction between an investment in bonds and debentures and loans and advances. The legislature has not provided for inclusion of interest earned from bonds and debentures within the purview of the Interest Tax Act. If we look at the object sought to be achieved by the Act as discussed by the Bombay High Court in the case of Discount and Finance House of India Ltd.(2002 (12) TMI 72 - BOMBAY High Court ), the object cannot be achieved by roping in interest earned from debentures and bonds. The view taken by the learned Tribunal is a perfectly justified view and no interference is called for. The question no.1 is answered in the affirmative.
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2015 (7) TMI 52
Calculation of cost of ongoing construction of Panchwati Plaza - Whether ITAT was correct in not relying on the Valuation Report in spite of the fact that the Valuation arrived was not challenged by the assessee? - Held that:- The Engineer, who has given the valuation report, is simply nothing, but, whimsical approach of the said Engineer and he knows only multiplication. In the whole valuation report there is nothing, but, multiplication of some amount with the floor area, whether it is basement area or ground floor area etc. In fact, the valuer should have estimated the quantity of sand, cement, the work put by the labourers in hours, the cost of supervision etc. Nothing is mentioned about sand, cement, rod, cost of the labourers etc. More we read this valuation report more absurd appears to be and therefore, rightly Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal has decided the matter in favour of the respondent and no reliance was placed upon the said so called valuation report. If this type of attitude of the department is allowed then for every building any type of report can be given by the such valuer. In fact this valuer should never be appointed as a valuer. He do not know ABC of the valuation at all. There ought to be a Cost Accountant along with efficient Engineer. Hence, both the Authorities below viz. CIT and ITAT has rightly quashed and set aside the order passed by the Assessing Officer and the addition of the income of ₹ 68 lakhs has been quashed and set aside. - Decided against revenue.
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2015 (7) TMI 51
Liability to deduction of TDS under Section 194(A) - whether the chit dividend paid by the assessee to its customers would not amount to interest as defined under Section 2(28A)? - Held that:- The Delhi High Court had an occasion to consider the same substantial question of law in the case of CIT v. Sahib Chits (Delhi) (P.) Ltd. [2009 (7) TMI 75 - DELHI HIGH COURT] wherein after setting out the statutory provisions namely, Section 2(28A), the provisions of the Interest Act, 1974 and noticing various judgments held, in the first place the amount paid by way of dividend cannot be treated as interest. Further, Section 194(A) of the Act has no application to such dividends and therefore it held there is no obligation on the part of the assessee to make any deductions under Section 194(A) of the Act before such dividend is paid to its subscribers of the chit. The aforesaid judgment squarely applies to the facts of these appeals. Hence, we do not see any merit in these appeals. Decided in favour of the assessee.
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2015 (7) TMI 50
Rejection of books of accounts - addition being estimated profit @ ₹ 4000/- per motor cycle sold - CIT(A) held the rejection of the books of account of the assessee to be not correct and deleted the addition - Held that:- Alleged difference in the quantity shown in Form No.3CEB and the quantitative details furnished by the assessee, as per the Assessing Officer, during the quarter April-June, 2005, as per the 3 CEB report, the figure was of 3138 motorcycles, whereas the quantitative details of 07.12.2009 showed a figure of ₹ 1025 motorcycles, giving a discrepancy of 2113 motorcycles and there was a similar discrepancy for July-December, 2005 and January-March, 2006. The assessee, in its letter dated 17.12.2009, had stated that the details contained in Form 3 CEB were with reference to the royalty paid/payable by the assessee company and they were not the details of production, i.e., not the number of motorcycles produced by the assessee company. A reconciliation had been filed by the assessee regarding the sale on which royalty had been paid and the sales during the year. The Assessing Officer did not meet this explanation of the assessee and rather concluded, without any basis, that the assessee was maintaining different sets of books of account. Before the Ld. CIT (A), Annexure V to the Form 3CEB was pointed out to show that in the Form 3CEB, the number of motorcycles produced had nowhere been stated. In its written submissions filed before the Ld. CIT (A), the assessee requested for calling for a specific comment by the Assessing Officer in this regard. The CIT (A) called for a remand report from the Assessing Officer. The Assessing Officer submitted not one, but two remand reports. However, the contention of the assessee was nowhere rebutted in either of these remand reports. In the first remand report the assessee's contention was not even dealt with and even in the second one, it was not rebutted. In response thereof, the Ld. CIT (A) found the stand taken by the assessee to be correct. The Form 3CEB filed before the Assessing Officer was found to be not about the number of motorcycles produced by the assessee during the period, rather, it was found to be concerning the royalty paid by the assessee company during the relevant quarter. The Ld. CIT (A) noted that besides, the assessee had furnished a complete reconciliation before the Assessing Officer, as also incorporated in the assessment order. This reconciliation had, however, been arbitrarily rejected by the Assessing Officer. It was in these circumstances, that the Ld. CIT (A) held and, in our considered opinion, for the aforegoing discussion, correctly so, that the Assessing Officer had erred in concluding that there had been a difference in the sales and quantitative details of the assessee. AO observed that the average sales of motorcycles by the assessee during the year was low, as compared to the preceding assessment year - Held that:- Assessee had maintained that there had been a change in the product mix during the year; that in the preceding year, the motorcycle 'Enticer' had been sold, which was not so in the year under consideration; that there had been a decrease in the sale price to meet the competition in the market; that the figures were based on the books of account, in which, no discrepancy had been found; that the assessee had not been shown to have charged from its dealers any price more than that stated in the sale invoice and the books of account; and that the Assessing Officer had not pointed out any error in respect of any sale. It was on the basis of this, that the Ld. CIT (A) observed that there was no justification for the Assessing Officer to make an assumption that the sale price charged by the assessee during the year was lower than that in the preceding year. Now, When the Assessing Officer has, neither in the assessment order, nor in either of the remand reports, been able to rebut the categorical assertions of the assessee in this regard, as to how the Ld. CIT (A) has erred in accepting the assessee's contention, has not been made out before us. Obviously, merely since the realization per motor cycle for the year under consideration was low as compared to that in the preceding year, this by itself cannot lead the Assessing Officer to assume that the sale price charged by the assessee company was under-stated and the Assessing Officer evidently erred in making such assumption. As correctly noted by the Ld. CIT (A), unless there is material evidence to disprove the contention of the assessee, the sale stated in the books of account needs must be accepted. Therefore, the Ld. CIT (A) has rightly held that on this score, the books were rejected by the Assessing Officer merely by indulging in surmises. Assessee's explanation regarding the losses incurred by it as compared to the profits earned by other competitors was not acceptable - Held that:- Before us, nothing has been brought to support this action of the Assessing Officer. Obviously, profit can only be made when there is ability to do so. The factors pointed out by the assessee for not being able to make sales, have not been refuted. Therefore, in the presence of the said factors, without doubt, the losses suffered by the assessee cannot be said to be either bogus, or inflated. The Assessing Officer did not prove otherwise. No discrepancy was pointed out in the books of account of the assessee company concerning the expenditure incurred and claimed by the assessee. Nothing was brought to establish that the assessee had been charging as sale price higher than that noted in the books of account. Rather, the Assessing Officer arbitrarily compared the case of the assessee with other successful companies, which can never lead to appropriate estimation of profit of a loss bearing company like the assessee.In view of the above, on this issue also, the Ld. CIT (A) has correctly held the rejection of the books of the assessee by the Assessing Officer to be incorrect. Assessee had been selling motorcycles at a lower price to its holding and subsidiary companies as compared to its domestic sales - Held that:- The assessee had stated that it was entitled to DEPB benefits in respect of its export sales and if the total DEPB benefits were added to the export sale price, the effective export price would be substantially higher in comparison to the domestic sale price. The TPO's order dated 13.11.2009 was also brought forth, wherein, on considering the export sales made by the assessee company to its holding company and subsidiary companies, the TPO had accepted the price of export shown by the assessee as being at arm's length. These contentions of the assessee as well as the TPO's order were found by the Ld. CIT (A) to have been ignored by the Assessing Officer. The comparative chart submitted by the assessee had also not been found by the Assessing Officer to contain any discrepancy. In the remand report dated 22.09.2010 also, the Assessing Officer was not found to have entered any rebuttal to the assessee's contentions. After rejoinder to the remand report even in the second remand report, the Assessing Officer was found to have passed only peripheral orders of estimation of profit without answering the assessee's submission. It was on this that the Ld. CIT (A) correctly held that in absence of material, the Assessing Officer could not tinker with the price determined by the TPO. - Decided against revenue. Estimation of the average profit per bike sold - whether the Assessing Officer has given due allowance for the change in product mix, competition and the assessee's smaller scale of operation? - Held that:- As regards the estimation of profit at ₹ 4000 per motor bike, we are of the view that estimation of profit can be resorted to only when there is a discrepancy in the books of account which makes the determination of the profit or loss difficult. Since there is no discrepancy in the books of account and the books of account having been accepted, the profit or loss has to be determined as per the books of account and not on estimation basis. We further notice that the assessee has given reasons for the losses being incurred by it. The assessee's explanation about the losses being low market share, low capacity utilization, higher inventory ratio, high personnel cost, etc. had been rejected by the AO arbitrarily. In this regard the CIT(A) correctly appreciated the facts - - Decided against revenue. Disallowance of royalty payments by the assessee company to its 100% holding company - CIT(A) deleted the disalowance - Held that:- It cannot be gainsaid that any expenditure incurred wholly and exclusively for the purposes of business is an allowable expenditure, even though, as in the present case, the payment is made to a 100% shareholding company of the payer. That apart, u/s 40A (2) of the Act, it is only the fair value of such expenditure, which is allowable. Besides, the arm's length price provisions take care of the payment in such transactions being at arm's length, as has been done in the present case by the TPO. The Assessing Officer proceeded merely on assumptions, surmises and conjectures which, undeniably, can never substitute hard evidence, which is entirely absent here. Neither Section 40(a)(i) nor Section 2 (22)(e) of the Act are applicable, as observed. Therefore, finding no merit therein - Decided against revenue. Carry forward and set off of brought forward business losses and unabsorbed depreciation - CIT(A) deleted the disalowance - Held that:- in accordance with the provisions of Section 79 of the IT Act, if on the last day of the previous year, the shares of the company carrying not less than 51% of the voting power were not beneficially held by persons beneficially holding shares of the company carrying not less than 51% of the voting power on the last day of the year or years in which the loss was incurred, any loss incurred in any year prior to the previous year shall not be carried forward and set off against the income of the previous year. There is no dispute to the requirement of Section 79, as above, of the Act. Now, herein, the previous year relevant to Assessment 2001-02 ended on 31.03.2001. On that date, Yamaha Japan was having a shareholding of 74%, which is obviously more than the requisite 51% voting power, as envisaged under Section 79 of the Act. This position undisputedly continued upto the last date of the previous year relevant to the year, under consideration (Assessment Year 2006-07). In other words, Yamaha Motor Company Japan, continued to hold 74% share as on 31.03.2006. This being the position, it has not been shown as to how the assessee company was not eligible to set off its losses from Assessment Year 2001-02 onwards, as correctly noted by the Ld. CIT (A). Apropos the unabsorbed depreciation, however, the Ld. CIT (A) correctly notes the provisions of Section 79 of the Act to be inapplicable. The correct position, as observed, is that the unabsorbed depreciation becomes the depreciation of the subsequent year and in case of change in shareholding pattern also, there is no bar on the unabsorbed depreciation, as laid down by the provisions of Section 32 (2) of the Act. Thus, it is seen that the Ld. CIT (A) has correctly held the assessee company to be entitled to carry forward its losses only from Assessment Year 2001-02, while the losses for earlier years are not entitled. The unabsorbed depreciation has also been correctly allowed to be carried forward by the Ld. CIT (A) holding the provisions of Section 32 (2) of the Act, rather than those of Section 79, to be applicable on this score. Nothing has been brought before us by the department so as to persuade us to differ from the perfectly legal and justified reasoning adopted by the Ld. CIT (A) - Decided against revenue. Disallowance of expenses incurred by the Appellant under Voluntary Retirement Scheme - Held that:- Consequential impact of the VRS expenditure incurred by the assessee in the earlier years: That such incurrence of expenditure is not in accordance with the mandate of the provisions of Section 35BDA of the Act, has not been shown before us by the department. The Assessing Officer did not accord any reason for the disallowance, even in the remand report. Too, even though the difference, as pointed out by the Assessing Officer in the assessment order, was only of ₹ 4.84 crores, the CIT (A) sustained a disallowance of ₹ 10 crores and that too, without any basis. The CIT (A), we find, was not correct in holding that the VRS expenditure shown in the computation had not been properly explained by the assessee. The Ld. CIT (A) confirmed the disallowance oblivious of the aforediscussed provisions of Section 35BDA of the Act, as squarely applicable to the case of the assessee. Therefore, we are not at one with the Ld. CIT (A) on this aspect and the grievance of the assessee is found to be justified and is accepted. The Assessing Officer is, thus, directed to delete the addition. - Decided in favour of assessee. Disallowance of spares, stores and tools consumed by the assessee - Held that:- There exists nothing on record to show that the expenditure under spares, stores and tools is the same as that debited under the head of purchases. To reiterate, no discrepancy whatsoever has been shown or pointed out in the books of account of the assessee, particularly on this account, even though the assessee's books of account, undisputedly, were subjected to audit and the auditors had certified the Profit Loss Account of the assessee to be giving a true and fair view of the profit/loss earned by the assessee during the year under consideration. It is only by way of a bald assumption that the claim of the assessee has been dubbed to be a double claim, without proving it to be so. It has not been disputed before us that there were two different accounts of expenditure, both being allowable under the Act and both having been incurred by the assessee wholly and exclusively for its business purposes.- Decided in favour of assessee. Computation of capital gain - difference in the computation arose for the reason that the Assessing Officer had disallowed indexation of the land, holding that land is a depreciable asset, had zero rate of depreciation - Held that:- The basic observation made concurrently by the taxing authorities, to the effect that land is a depreciable asset, is ipso facto erroneous. The position is quite to the contrary. Land, it is trite law, is not a depreciable asset. This position stands duly supported, as rightly contended on behalf of the assessee, by the provisions of Section 32 (1) of the Act, wherein, depreciation is allowed, inter alia, in respect of building, machinery, plant or furniture. It is to be stressed that in this connection there is no mention of 'land'. Were the situation otherwise, that is to say, land was a depreciable asset, it would definitely have found mention in Section 32 (1). Then, in Appendix I to the Income-tax Rules, depreciation rates have been provided. These rates, again, are with reference to building, furniture, machinery and plant only. Again, 'land' does not find mention therein. It cannot be gainsaid that Rules are to supplement and make workable the provisions of the Act and, therefore, the absence of 'land' in the said Appendix to the Rules is also indicated of the fact that it was never the intention of the legislature to bring and within the definition of depreciable assets. Otherwise two, in today's worlds it would be difficult to imagine land to be a depreciable asset. Rather, quite to the countrary. Nothing opposed to this has been brought before us. Thus the assessee is entiled to indexation in respect of the value of its land and the Assessing Officer erred in making disallowance in this regard. - Decided in favour of assessee.
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2015 (7) TMI 49
Disallowance u/s. 14A r.w. Rule 8D - Held that:- Though the expenditure incurred by the assessee got the benefit to the assessee for more than one year that expenditure itself cannot be called/treated as capital expenditure on the simple reason that it does not bring into existence any new asset in the field of capital or in other words no new asset was developed by incurring that expenditure and even the accounting treatment given by the assessee cannot be conclusive to treat expenditure as capital. In this case, expenditure for the purposes of access to data relating to business of the assessee so as to increase the ‘Business’ of the assessee. This expenditure stands incurred for the purpose of running the business. It is not per se capital in nature. By incurring this expenditure, it cannot be said that any capital asset stands acquired by the assessee and it was incurred for the purpose of running the business and such nature of expenditure cannot be said that resulted in enduring benefit. As the expenditure has not resulted in capital asset, so has to be recorded as expenditure in capital field. It should be noted that the assessee had to incur this kind of expenditure year after year so as to be in business subsequently even the advantage secured from earlier expenditure would get dissipated. Further, we place reliance on the judgment of Supreme Court in the case of Alembic Chemical Works vs. CIT (1989 (3) TMI 5 - SUPREME Court ) wherein held that just because an expenditure is debited in books towards the business being competitive and prudence and conservatism being fundamental accounting assumptions, capitalization of such expenses or ascribing lasting abiding value to such expenses, could only be done on sound footing and cogent basis. Thus, in our opinion the expenditure cannot be attributed to capital expenditure.Being so, taking consistent view, we are of the opinion that expenditure is to be allowed as revenue expenditure only. - Decided in favour of assessee. Addition relating to expenditure incurred for exempt income while computing the book profit u/s.115JB - Held that:- Disallowance made u/s.14A r.w. Rule 8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing taxable income of the assessee in the normal course. There is no provision in the Act to add these kind of disallowance while computing book profit u/s.115JB and it cannot change the book profit on this count. Therefore even if there is an addition in view of provision u/s.14A r.w.Rule 8D, that cannot be added back to compute the book profit u/s.115JB.- Decided in favour of assessee.
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2015 (7) TMI 48
Capital gain accrued to the assessee on transfer of land - Land initially held as capital asset into stock-in-trade and later on flats constructed thereon under project development agreement were sold to different buyers - Held that:- As per project development agreement, the possession was given for construction/development of project with certain conditions stipulated in the agreement. Whatever amount was received, it was simply interest free advance to meet certain expenses to be borne by the assessee in order to discharge certain responsibilities conferred upon it through the agreement. The said advance would be refundable at different phases stipulated in the agreement. Therefore, in the light of judgment Chaturbhuj Dwarkadas Kapadia vs. CIT [2003 (2) TMI 62 - BOMBAY High Court] we are of the view that there was no transfer of possession of the land in favour of the developer, M/s Arif Industries Ltd. to attract provisions of section 2(47)(v) of the Act. Therefore, capital gain would only be chargeable in the years in which stock-in-trade would be sold. Therefore, we find ourselves in agreement with the order of the ld. CIT(A) who has rightly dealt with the issue. Accordingly we confirm the same. Cost of land as on 1.4.1981 adopted by the Assessing Officer for computing the capital gain accrued to the assessee on account of conversion of capital asset into stock-in-trade - Held that:- The fair market value determined by the registered valuer is not correct. On the other hand, the Assessing Officer has adopted the circle rate as on 1.4.1981 without looking to the fact that the assessee has filed the registered valuer’s report to determine the fair market value of the land as on 1.4.1981. We find force in the contention of the assessee that the Assessing Officer is not expert in the field of determining the value of land, therefore, he should have made reference to the DVO to determine the value of land as on 1.4.1981, but he did not do so. He adopted the circle rate as fair market value of land as on 1.4.1981 ignoring the registered valuer’s report submitted by the assessee and computed the long term capital gain. The approach adopted by the Assessing Officer does not appear to be correct. Since the market value of the land as on 1.4.1981 was not determined correctly either by the assessee or the Assessing Officer, this issue requires a fresh adjudication by the Assessing Officer. Accordingly, we set aside the order of the ld. CIT(A) in this regard and restore the matter to the file of the Assessing Officer with a direction to readjudicate the issue afresh after determining the fair market value of the land as on 1.4.1981. Since the assessee has filed the registered valuer’s report and disputed the circle rate, the Assessing Officer may make reference to the DVO in order to determine the fair market value of the land for the purpose of long term capital gain. - Decided in favour of assessee for statistical purposes. Disallowance made under section 14A - Held that:- Undisputedly, in the instant case, the Assessing Officer has not recorded any objective satisfaction with regard to the correctness of the accounts relating to dividend income of the assessee. He straightaway computed the disallowance as per provisions of section 14A of the Act read with per ruled 8D of the rules. Therefore, we are of the view that invocation of provisions of section 14A of the Act without recording an objective satisfaction is not proper, therefore, we set aside the order of the ld. CIT(A) in this regard and delete the addition of the disallowance made under section 14A of the Act. - Decided in favour of assessee.
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2015 (7) TMI 47
Undisclosed income - addition based on information found on the computer during search - presumption u/s 292C - Apart from the fact that the specific unrelated documents were found it was vehemently argued there is no other evidence with the department to insist that the assessee had transactions with the said concern. - The assessee denied having any transaction with M/s Smridhi Sponge Ltd. and made a claim that it may have belonged to someone who may have visited the assessee’s office. - Held that:- The present case is not only a case of simple denial but the denial is on affidavit. The assessee as per record is also found to have made efforts to trace the said concern. The internet search conducted admittedly as per record has made a mention of specific Kolkata’s address as per ROC site on a specific date. Admittedly one notice was sent to it that too after a lapse of almost a year which came back unserved. It is also seen that apart from that the assessee has also made efforts to give PAN details and also the jurisdiction of the AO where M/s Smridhi Sponge was being assessed. The record demonstrates that the AO chooses to rely more on postal authorities and makes no effort to cross check the information from the AO of M/s Smridhi Sponge who admittedly had many transactions in cash with some parties. M/s Smridhi Sponge as per record was not a dummy entity but a functional thriving entity. What repeatedly emerges from the above-mentioned facts and evidences is that the assessee during the assessment proceedings and in the appellate proceedings makes an all out mammoth exercise to give the details of M/s Smridhi Sponge Ltd. and also traces the two specific cheque numbers mentioned in the seized documents which were paid by the bankers of M/s Galaxy found mentioned as “Galaxy” in the seized documents however surprisingly for unstated reasons the department sits back after issuing notices to the address provided of M/s Smridhi Sponge relying blindly on section 292C of the Act only on the rationale that the print outs had been founded from assessee’s premises and thus they necessarily disclosed the assessee’s undisclosed transactions with the said concern. The said conclusion of the tax authorities is completely misplaced on facts. A perusal of section 292C shows that a statutory presumption can be drawn where any documents is found in possession of a person in the course of a search or survey that it belongs to “such a person”. A presumption is also drawn that the contents of such a document are true. The presumption having been drawn as per law is required to be confronted and the documents as per record have been confronted. Whether the onus placed upon the assessee in a given set of facts is discharged or not has to be seen from the replies of the assessee based on facts. However, the law is well settled that the presumption is rebuttable. In the facts of the present case, the assessee has denied having any transactions with M/s Smridhi Sponge and has also denied consequently the contents of the seized document as relatable to it; the denial as per the assessment order is also on an affidavit; the particulars available in the public domain procured through the internet searches from the ROC and the official income tax sites as per print outs of the downloads are relied upon. The fact that these were unimpeachable third party evidences that too from the official government sites goes without saying. In these facts, merely sending notices to the addresses provided on the ROC site cannot be said to be rebutting the evidence on record namely that M/s Smridhi Sponge, assessed to tax in a specific jurisdiction in Kolkata manufacturing M.S.Ingot and Sponge Iron, having specific address as per ROC site receiving payments in cash and cheque as per the seized documents qua which presumption u/s 292C operates towards their correctness; wherein two specific cheques were honoured by Punjab National Bank at Jamshedpur whose account number was “1021”; , branch code and factum of the payments made on behalf of the M/s Galaxy Exports as the same “Galaxy” found mentioned at Paper Book page 47 (Seized documents) also dealing in “Iron Ore” were provided; where the names and addresses of the Directors of both the companies; their authorized share capital; details of their balance sheets as per ROC site; Auditor’s, Reporters etc. are all given. The fact that these were relevant unimpeachable evidence has not been doubted. In these facts the reluctance of the tax authorities to address this issue and to carry the enquiries to the logical conclusion is a glaring fact of deliberate inaction. The repeated inactions speak louder then the half hearted actions undertaken. The evidences remains unrebutted on record. No effort to co-relate the assessee’s alleged undisclosed transactions with M/s Smridhi Sponge appear to have been addressed so as to demolish the consistent claim on record that it had no dealings with the said concern. In such a background the departmental stand that the level of information available with the assessee proved that the assessee had interactions with the said concern is adding insult to injury. The silence of inaction speaks much louder than the frenzy of the misdirected actions necessitating a pro-active department to address the fest spreading malaise lest the tools of search and seizure are reduced to a farce. The repeated inactions speak louder than the half-hearted actions taken. We are of the view that as far as the assessee is concerned the onus to address the seized documents qua which a statutory presumption has been drawn stands fully discharged. - Decided in favour of assessee.
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2015 (7) TMI 46
Transfer pricing adjustment - selection of comparable challenged - Held that:- Respectivly folllowing the judgment of Trilogy E-Business Software India (P.) Ltd. Versus Deputy Commissioner of Income-tax. Circle 12(4). Bangalore [2013 (1) TMI 672 - ITAT BANGALORE] Flextronics Software Systems Ltd.,iGate Global Solutions Ltd.,Mindtree Ltd., Persistent Systems Ltd.,Sasken Communication Technologies Ltd.,Tata Elxsi Ltd.,Wipro Ltd. and Infosys Technologies Ltd. should be excluded from the list of comparable companies as held to be software product companies and therefore not comparable with software development service provider such as the Assessee. The AO is directed to compute the Arithmetic mean by excluding the aforesaid companies from the list of comparable. The AO/TPO is directed to compute the arithmetic mean of the profit margins of the remaining comparable companies after excluding the companies from the final list of 26 comparable companies chosen by the TPO and compare the same with the profit margin of the Assessee in accordance with the provisions of Sec.92C of the Act. Computing deduction u/s.10A - Held that:- As taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude telecommunication charges, internet charges etc., both from export turnover and total turnover, as has been prayed for by the assessee
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2015 (7) TMI 45
Disallowance u/s 40(a)(ia) - TDS as per provisions of section 194 I (Rent) or S. 194C (Payment to Contractors) - assessee submitted that the assessee was having Revenue Sharing Arrangements with other parties, so TDS was not required to be deducted u/s 194 I of the Act, since it was a business transaction and the assessee itself deducted the TDS u/s 194C because the assessee was required to pay portion of the Gross Operating Profit to the various parties - CIT(A) allowed part claim - Held that:- In the present case, it appears that the assessee entered into agreement with the various parties who were having various properties and were involved in all aspects of management and day to day running of business affairs of the property as a hotel. The assessee entered into agreement with those parties for different Revenue Sharing dependent on location potential etc. and the payments were made by the assessee on the basis of revenue sharing method. The assessee also agreed for minimum guaranteed amount. The ld. CIT(A) also accepted after making a detailed verification from the various agreements in between the assessee and the other parties that the payments on the basis of sharing of revenue would not come under the purview of section 194 I of the Act. However, in respect of SRK Travels & Tours Pvt. Ltd., the ld. CIT(A) categorically stated that as per the agreement dated 23.06.2005, it was evident that there was no involvement of the said party in the management and day to day running of the business affairs of the hotel in that property. Therefore, the payment made by the assessee was in the nature of rent and the assessee was liable to deduct TDS u/s 194 I. The ld. CIT(A) held that as the assessee short deducted the TDS, the disallowance u/s 40(a)(ia) of the Act amounting to ₹ 21,60,000/- was justified. In the present case, the maximum amount payable to M/s SRK Travels & Tours Pvt. Ltd. was ₹ 18,00,000/-, therefore, the disallowance could have been made to that extent only. It is also noticed from the details of the licence fees paid as mentioned by the AO that the assessee paid a sum of ₹ 18,00,000/- to M/s SRK Travels & Tours Pvt. Ltd. during the financial year relevant to the assessment year under consideration. We, therefore, considering the totality of the facts modify the order of the ld. CIT(A) and uphold the disallowance of ₹ 18,00,000/- instead of ₹ 21,60,000/- sustained by the ld. CIT(A). - Decided partly in favour of assessee, Addition made on account of Short Term Capital Gains - CIT(A) deleted part addition - Held that:- In the present case, it appears that the AO while working out the capital gain considered the purchase value at ₹ 2 crores and ignored the other expenses of ₹ 19,47,720/- incurred by the assessee which included stamp duty of ₹ 10 lakhs, corporation tax of ₹ 6 lakhs and other expenses amounting to ₹ 3,47,720/- on account of brokerage expenses, legal expenses etc. Those expenses were incurred by the assessee in accordance with Clause 16 of the purchase agreement wherein it was mentioned that the aforesaid expenses were to be borne by the vendee/purchaser. Therefore, the ld. CIT(A) was justified in considering the purchase cost at ₹ 2,19,47,720/-. In the present case, it also appears that the ld. CIT(A) accepted the bifurcation of the cost of the property into land and building because the same was shown by the assessee in its balance sheet of the preceding year which was not doubted by the department because nothing is brought on record that the valuation shown by the assessee in the preceding year was wrong. In the present case, the ld. CIT(A) adopted the value of building on the basis of circle rate. In the instant case, the total lump sum amount of ₹ 2.70 crores was received by the assessee and expenditure of ₹ 6,744,000/- was incurred towards cost of transfer, however, no bifurcation of the sale price relating to land and building was done out of lump sum sale price of ₹ 2.70 crores, therefore, the ld. CIT(A) had no other option except to adopt the sale value of the building on the basis of circle rate which was at ₹ 11,870/- per sq mts at the relevant time. In our opinion the ld. CIT(A) rightly worked the Short Term Capital Gain, therefore, we confirm the addition of ₹ 4,73,881/- sustained by the ld. CIT(A). - Decided against assessee.
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2015 (7) TMI 44
Revision u/s 263 - proceeding under section 263 has been invoked against the order passed by the Assessing Officer under sect ion 147 read with sect ion 143(3) - Held that:- A perusal of the order of the CIT indicates that the assessment order passed by the Assessing Officer under section 147 read with section 143(3) was set aside on various grounds and Items No. 1 & 2 relating to the share of assessee in the property as well as the nature of the receipt of the compensation. As has been discussed these issues have duly been examined and considered by the Assessing Officer in framing the assessment under section 147 read with sect ion 143(3). Thus, in our considered opinion, these issues cannot be sufficient ground for setting aside assessment. While making assessment order, it is the satisfaction of the Assessing Officer who made the enquiry and it should be a touchstone of the assessment order passed by him, the CIT cannot substitute his view in place of finding of the Assessing Officer until and unless the view taken by the Assessing Officer is unsustainable in law. No cogent material or evidence was brought to our knowledge by the ld. D.R., which may prove that the decision taken by the Assessing Officer is not sustainable in law on these two issues. The order passed by CIT is illegal without jurisdiction on these issues. So far as these issues are concerned, the order passed by the CIT cannot be sustained if such type of order is sustained then this will permit the illegality to continue and the subsequent actions carried out on the illegal order are also illegal. We, therefore, set aside the order of CIT to the extent it relates to these two issues. In other appeals also, we set aside the orders of CIT to the extent it relate to these two issues as the facts involved in those cases are similar except that these issues have been duly examined and considered by Assessing Officer in making assessment s under section 143(3). As coming to the other issues taken in show-cause notice on the basis of which the CIT has invoked the jurisdiction under section 263, ld. A.R. did not advance any argument in all these issues. We also noted that the Assessing Officer has not made any enquiry whatsoever in respect of the other issues as has been taken by the CIT in the show-cause notice and in respect of which order under section 263 has been passed. Even no query has been raised in the notice issued under section 142. Ld. A.R. has also not pointed out to us whether any enquiry has been raised by the Assessing Officer while framing assessment in all these cases. In view of these facts, we confirm the order of CIT under section 263 in respect of the other issues taken by the assessee in the appeal except Grounds No. 5, 6 & 7 in all the appeals. - Decided partly in favour of assessee.
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2015 (7) TMI 43
Income received after dissolution of firm - Whether Sec. 189(1) empowers the Assessing Officer to bring to tax any income arising out of any transaction when the firm was not in existence and no business was carried out? - Legality and validity of the proceedings initiated u/s. 147 - Held that:- The only objection to its chargeability to tax in the hands of the firm is on the ground that at the time of receipt, the firm had discontinued its business. This objection, however, is no more valid after incorporation of sub-s. (3A) in s. 176 of the Act which is intended specifically to meet such objections. Sub-s. (3A) clearly provides that any sum received after the discontinuance of the business shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if the same would have been chargeable as income had it been received before such discontinuance. This sub-section constitutes an exception to the rule that business receipts are chargeable only if the business or profession is carried on in the year of receipt. - the amount of ₹ 9,80,000 was assessable in the hands of the assessee-firm in the year of receipt despite dissolution and discontinuance of its business by virtue of sub- s. (3A) of s. 176 r/w s. 189 of the Act. Nowhere it is the case of Assessing Officer that the said sum belong to the period during which the assessee firm was in existence and carried out its business. We are of the opinion that as there is no evidence to suggest that the transaction allegedly noted on loose paper with name analogous to the name of the assessee firm pertains to the year, in which the assessee firm was in existence. Admittedly the assessee firm has been dissolved on 31-03-2002 and alleged transaction is found in December, 2003, no income can be brought to tax treating unexplained income of the assessee in the A.Y. 2004-05. We, accordingly, allow the contention of the assessee on this specific plea and quash the proceedings initiated u/s. 147 and cancel the assessment framed by the Assessing Officer and upheld by the CIT(A). - Decided in favour of assessee.
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2015 (7) TMI 42
Transfer pricing adjustment on account of provision of support service provided by the assessee to its AE - selection of comparable challenged - Held that:- Having regard to the nature of functions and activities performed by the Rites Ltd., we find that this company cannot be regarded as a good comparable for determining the arms length price in respect of the services rendered by the assessee to its AE. Vapi Waste & Effluent Mgmt. Co. Ltd. is undisputedly is a non equity company as the capital is contributed by its members and Government of India. The major portion of the income of this comes from its members, therefore the price of this company cannot be treated as an independent and uncontrol price when the majority of the Revenue is earned from the members who have contributed to the capital of the company. In view of the findings of this Tribunal in the case of “Actis Advisors Pvt. Ltd.” [2013 (8) TMI 753 - ITAT DELHI] as well as the nature of functions performed by this company, we find that this company cannot be considered as a good comparable of the assessee. WAPCOS Limited company provides consultancy in the domestic and international water and power sector. WAPCOS Limited is a government company with a Mini Ratna-I status and the primary function of the company is to provide consultancy in the field of water, power and infrastructure development for a total project solution. This company is not functionally comparable with the service providing companies in the other fields. As it is apparent from the nature of functions and activities performed by this company that the functions of the company are not comparable with the services provided by the assessee to its AE. Thus we direct the TPO/AO to recompute/determine the arms length price after exclusion of three companies as discussed above. Addition made under section 41(1) on account of creditors outstanding for more than three years - Held that:- The Ld. A.R. of the assessee has pointed out that out of these four creditors the amount of ₹ 7,32,698/- in respect of M/s. Wander Pvt. Ltd. is involved in the dispute and a legal case is going on with the said party. Since this aspect has not been properly examined and verified by the authorities below, therefore if the said amount is part of a dispute between the parties, then till the dispute is settled it cannot be said that any part of the liability in respect of the said amount ceased to exist. The Ld. A.R. has further pointed out that a sum of ₹ 25,340/- is payable to an employee of the assessee and the settlement is pending. We are of the view that the relevant record in this respect is required to be examined before arriving to a decision whether the said amount is no more payable to the employee and therefore can be treated as ceased liability of the assessee. As regards the remaining two parties namely Scientico Instruments and Electrolab, the assessee has claimed that the outstanding amount has already been paid on 08.10.09 and the assessee has produced before the AO the relevant ledger extract to show the said payment made to the parties. Since all these facts as well as the relevant record has not been properly examined by the authorities below, therefore we are of the considered view that the AO shall verify and examine the relevant record and details to be filed by the assessee and then decide the issue in the light of the various decisions as relied upon by the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of annual license fee/computer software expenditure - revenue v/s capital expenditure - Held that:- It is not in dispute that the expenditure has been incurred on application software. The Hon'ble Delhi High Court in the case of Asahi Safety Glass ltd [2011 (11) TMI 2 - DELHI HIGH COURT] has held that application software are of revenue in nature as the AO has not doubted that the expenses were on application software therefore respectfully following the decision of the Hon'ble Delhi High Court, findings of the CIT(A) are confirmed. - Decided in favour of assessee. Assessment of the amount received from sale of brand - business income OR long term capital gain - Held that:- In the case in hand, the amount in question has been received as consideration for transfer of trade mark/brand and not in lieu of restricting the assessee from selling the said trade mark for any other purpose and with some other person. Further, the proviso to clause (va) makes it clear that this clause shall not apply to any sum received or receivable on account of transfer of right to manufacture, produce or process any article or things or right to carry on any business which is chargeable under the head “Capital gain”. Therefore, in our view, the AO as well as the DRP has committed an error by misinterpreting the provisions of section 28(va) as well as the clauses of the deed of assignment dated 01.07.07 whereby the assessee has transferred the trade mark “SPERT” to the assignee. It is a simple case of transfer of trade mark and not the case of receipt of any non compete fee. As following the judgment of CIT vs. Mediworld Publications Pvt. Ltd [2011 (4) TMI 503 - DELHI HIGH COURT ] we hold that the amount in question received by the assessee as a consideration for transfer/assignment of trade mark to the assignee is in the nature of capital receipt and to be taxed as capital gain and not as business income. - Decided in favour of assessee. Non granting of TDS credit - Held that:- Objection was raised by the assessee before the DRP seeking directions for grant of TDS credit of ₹ 13,44,25,277. The DRP has directed the AO to allow the TDS claim after due verification. Before us the assessee has further pleaded the TDS credit amounting to ₹ 9,86,392/- and submitted that the AO has not granted the TDS credit to the extent of this amount without giving any reason for the same. Since the authorities below have not discussed anything about the claim of the assessee, therefore we direct the AO to consider the claim of the assessee of granting TDS credit amounting to ₹ 9,86,392/-. Non grant of MAT credit - Held that:- We find that vide letter dated 08.11.12 the assessee is seeking rectification under section 154 of the Act inter-alia in respect of MAT credit amount to ₹ 60,72,371/-. Accordingly, the AO is directed to consider the claim of the assessee in the light of the MAT tax liability revised by the AO in the A.Y. 2007-08.
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2015 (7) TMI 41
Transfer pricing adjustment - CIT(A) confirming the ALP adjustment made by determining the ALP of Head office overheads at NIL - Held that:- With regard to the comment of the TPO that there was no necessity for the AEs to charge Head office overheads to the assessee, we agree with the contentions of Ld A.R that the TPO is not entitled to comment upon the prudence of the assessee or the necessity to incur the expenses. The said view is also supported by the various decisions relied upon by the assessee. We further notice that the Hon’ble Delhi High Court has also expressed the same view in the case of CIT V/s Cushman and Wakefield (India) (P.) Ltd. (2014 (5) TMI 897 - DELHI HIGH COURT ), which was relied upon by Ld D.R. Each of the members of JV would be charging ₹ 17.00 lakhs upon the Joint Venture. If we examine the first table given in the example, we may notice that “E” has not provided any service to the JV, but still it would be charging ₹ 17.00 lakhs upon the JV. The value of services provided by A are ten times of D, five times of C and two times of B, but still all the four persons would be charging ₹ 17.00 lakhs each. Thus it is seen that the quantum of ‘Head officer overheads’ charged by each of the members is disproportionate to the value of services rendered by each of them. This example highlights the fallacy in the approach adopted by the assessee and its members. Hence charging of Head office overheads as a percentage of their respective turnover, in our view, may give misleading result. A perusal of the above said example would also show that the indirect expenses charged should depend upon value of services (value of assets & spares + value of indirect expenses incurred) that is provided. In the instant case the assessee has not conducted any Transfer pricing study with regard to the Head officer over heads. The contention of the Ld A.R that the assessee has bench marked the transaction with the certificates issued by the auditors, in our view, is not acceptable for reasons pointed by Ld D.R as well as discussed below. In the T.P study, what is required to be seen is whether any other independent entity would have charged or the independent entity receiving the services would have paid to the extent that were charged by the AEs. Admittedly, this kind of study has not been carried out by the assessee. In our view, the Ld D.R has correctly submitted that the primary responsibility to bench mark the transactions with comparable cases in order to validate its international transactions lies upon the assessee. In this case, the assessee was under the impression that the certificate issued by the auditors would satisfy the tests of Transfer Pricing study. We have earlier noticed that the certificate issued by the auditors cannot be taken support of for the reasons that they pertain to different accounting periods, there is no standardization of types of overheads that is required to be considered and they have given certificates with qualifications. In any case, the certificate issued by the auditors only spell out the percentage of overheads over the revenue and hence it is only a factual aspect of internal figures. In Transfer pricing study, what is required to be done is to validate the said claim with an external comparable. TPO has disallowed the entire claim and accordingly held the ALP as NIL, i.e., he has also not determined the ALP of the transactions in accordance with the Transfer pricing provisions. Hence we are of the view that the issue under consideration requires fresh examination. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of AO/TPO for fresh consideration by taking into account the discussions made - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 40
Deduction u/s 80HHBA - interest income from bank’s fixed deposit, kept as margin money for guarantees - Held that:- In the present case, it is noticed that the AO while disallowing the claim of the assessee categorically stated that the assessee had not furnished the details of FDR at the opening of the year i.e. on 01.04.2001, made during the year and encahsed during the year. He also stated that the assessee had not reconciled against which FDRs, the guarantees were provided to the Principal Contractee. At the same time, it is nowhere stated that the assessee had not made the FDRs for issuing bank guarantee in favour of principal client viz., NJPC, for the award and execution of the contract. The ld. CIT(A) also held in para 7.1 of the impugned order that the interest income earned on FDR was the business income and once it is held that it was the business income, the assessee becomes eligible for deduction u/s 80HHBA of the Act. However, the ld. CIT(A) in para 7.4 of the impugned order has given a contradictory finding by stating that the aforesaid interest income cannot be said to be derived from execution of housing project. Therefore, the facts are not clearly brought on the record by the AO and contradictory findings have been given by the ld. CIT(A). In that view of the matter, we deem it appropriate to remand this matter relating to the deduction u/s 80HHBA of the Act, on account of the interest, back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. As regards to the observations of the ld. CIT(A) that the interest earned on claims settled by Dispute Review Board, was related to the claims on account of work done by the assessee for the housing project is concerned, nothing contrary was brought on record to rebut the same. We, therefore, do not see any infirmity on this issue in the order of the ld. CIT(A). Accordingly, the direction for allowing the deduction u/s 80HHBA of the Act on the interest received by the assessee on the claims settled by the DRB during the year under consideration, is upheld. As regards to the issue relating to the bank guarantee commission paid to the bank, we are of the view that it was directly related with the FDRs made for giving guarantee for getting contract, therefore, the ld. CIT(A) rightly directed the AO to allow the deduction of these expenses from the interest earned on the FDR. - Decided in favour of assessee for statistical purposes
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2015 (7) TMI 39
Restricting the deduction for Head Office Expenses (HOE) - DTAA with U.A.E. - AO denied the treaty benefit to the assessee for the reason that it had not paid tax in UAE - Held that:- Firstly,in the assessment year involved, limitation clause of applicability of incometax Act will not apply in Article 7(3) and consequently provisions of sections 44C will not be applicable; secondly, the amendment brought by way of Protocol by which article 7(3) has been amended and limitation clause has been brought in, will apply from 1st April, 2008 and will not have any retrospective effect. It is held that computation of income and disallowance of expenses relating to head office cannot be made by invoking the provisions of Section 44C of IT Act. Thus, in view of the above conclusions, we hold that income of the PE of the assessee should be computed as business income after allowing all the expenses attributable to its business in India including the head office expenses. We have gone through the amendment to the treaty but same is applicable w.e.f. 01.04.2008. Therefore,considering the facts of the case and the decisions delivered in Sumitomo Mitsui Banking Corporation [2012 (4) TMI 80 - ITAT MUMBAI], Abu Dhabi Commercial Bank [2012 (7) TMI 703 - ITAT MUMBAI ] and Dalma Energy LLC (2012 (5) TMI 10 - ITAT, Ahmedabad ) we are deciding ground no.1 in favour of the assessee. Disallowance of loss on foreign exchange contract which were un-matured on the last date of the previous year - Held that:- When the market price of stock is lower than the purchase price, the market price is taken into account, and, accordingly, anticipated loss is taken into account. These dual standards in recognizing anticipated losses and anticipated profits are accepted accounting norms. In the case of Chainrup Sampatram Vs CIT (1953 (10) TMI 2 - SUPREME Court), Hon'ble Supreme Court took note of this position and observed that "while anticipated loss is taken into account, anticipated profit is not brought into account as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock is to be valued at cost or market price whichever is lower, and it is now generally accepted as an established rule of commercial practice and accountancy". No doubt these observations were made in the context of valuation of stock but what is material is the theory underlying the principle of valuing closing stock at cost or market price whichever is lower and the fact that such a theory has tile acceptance of the Hon'ble Supreme Court. Just because anticipated profits are not assessed to tax, it would not follow, as a corollary thereto, that anticipated losses cannot be allowed as deduction in computation of business income. In the light of these discussions, we are of the considered view that the very basis of the action of the Assessing Officer was vitiated in law and on facts. We, therefore, deem it fit and proper to direct the Assessing to delete the impugned disallowance. The assessee gets the relief accordingly. - Decided in favour of assessee. Restricting the exemption in respect of interest on tax free bonds - Held that:- The gross amount of interest payable to the assessee would qualify for exemption under subsections (c) (f) and (h) of section 10(15)(iv). The facts beingsame,respectfully following the predecessor we decide this ground in favour of the assessee. Arrangers’ fees with regard to mobilizing the deposits under IMD Programme - applicability of the provisions of section 40(a)(i) and 195 - Held that:- The amount paid by the assessee to the nonresidents sub-arrangers is not a fees for managerial or technical or consultancy services. Hence, the same cannot be brought within the ambit of ‘fees for technical services’ as per section 9(1)(vii) of the Act. If this payment is not fees for technical services but only commission, the provisions of section 195 requiring the assessee to make deduction of tax at source before remitting or crediting the amount to the accounts of sub-arrangers, cannot apply. If no deduction of tax at source is required, obviously the provisions of section 40(a)(i) do not come into play. Once it is held that the said commission/brokerage is not chargeable to tax in the hands of non-resident sub-arrangers under the provisions of the Act, there remains no need to examine the taxability or otherwise of this amount in their hands under the respective Double taxation avoidance agreements. In that view of the matter, we are of the considered opinion that the learned CIT(A) was justified in reversing the AO’s order insofar as the applicability of section 40(a)(i) is concerned. Consequently, the ground raised by the Revenue fails - Decided against revenue.
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2015 (7) TMI 38
Addition of interest receivable on NPAs/sticky loans / advances - CIT(A) deleted the addition - Held that:- The issue in the present appeal against the recognition of interest receivable on sticky loans/advances is identical to the issue in assessee's own case relating to assessment year 2010-11 [2015 (7) TMI 37 - ITAT PUNE] wherein find no reasons to interfere with the ultimate conclusion of the CIT(A) in deleting the impugned addition relating to interest income in respect of NPAs. The assessee herein is a cooperative bank and it is not in dispute that it is also governed by the Reserve Bank of India. Hence the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assessee as it is applicable to the companies registered under the Companies Act. The Hon'ble Supreme Court has held in the case of Southern Technologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-à-vis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks also. Hence the Assessing Officer has to follow the Reserve Bank of India directions 1998, as held by the Hon'ble Supreme Court.Based on the prudential norms, the assessee herein did not admit the interest relatable to NPA advances in its total income. The Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd (2010 (11) TMI 88 - Delhi High Court ) has held that the interest on NPA assets cannot be said to have accrued to the assessee. Thus we hold that the interest on NPAs is not taxable in the hands of the assessee for the captioned assessment year. Consequently, the grounds of appeal raised by the Revenue are dismissed. - Decided in favour of assessee.
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2015 (7) TMI 37
Accrual of interest income - Addition on account of interest receivables on sticky loans/advances - whether the provisions of section 43D are applicable to the assessee-bank? - CIT(A) deleted the addition - Held that:- Hon’ble High Court of Delhi in the case of Vashist Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] in which the Hon’ble Delhi High Court has considered the decision in the case of Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT OF INDIA]. The Tribunal in ACIT, Circle-3, Nanded Vs. Osmanabad Janta Sahakari Bank Ltd. [2015 (3) TMI 886 - ITAT PUNE] finally held that the interest income relatable to NPA advances did not accrue to the assessee. Turning to the facts of the case before us, the assessee herein is a cooperative bank and it is not in dispute that it is also governed by the Reserve Bank of India. Hence the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assessee as it is applicable to the companies registered under the Companies Act. The Hon'ble Supreme Court has held in the case of Southern Technologies Ltd (Supra), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-àvis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks also. Hence the Assessing Officer has to follow the Reserve Bank of India directions 1998, as held by the Hon'ble Supreme Court. Based on the prudential norms, the assessee herein did not admit the interest relatable to NPA advances in its total income. The Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd (Supra) has held that the interest on NPA assets cannot be said to have accrued to the assessee - Decided in favour of assessee.
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Customs
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2015 (7) TMI 61
Extension of warehousing period - Clandestine removal of goods - Held that:- According to Section 72 of Customs Act, 1962, if any warehoused goods are not removed from a warehouse on the expiration of period during which such goods are permitted under Section 61 to remain in the warehouse. The proper officer may demand duty and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods. In view of the specific provisions in the Section 72, once extension of time sought for storing goods in the warehouse is refused, the duty and interest and other liabilities automatically arise. - Therefore the impugned order cannot be found fault with - Decided against assessee.
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2015 (7) TMI 60
Determination of assessable value of export goods - Method of calculation of duty - determination of assessable value adopting the transaction value or on the basis of Bench-Marked Price - Held that:- Decision in the assessee's own previous case [2014 (8) TMI 213 - CESTAT KOLKATA] followed - Appeal disposed of.
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2015 (7) TMI 59
Revocation of CHA License - Held that:- Revenue is not diligently pursuing their appeal as it is apparently seen that the appeal has not been numbered and probably lying in the defects. Such casual attitude of the respondent-Commissioner is not appreciated. The learned Commissioner has also relied on the order of the Hon'ble Bombay High Court in Customs Appeal No. 19/2014 dated 5.1.2015 in the case of ‘The West End Shipping Agency', where in the case of Revenue's appeal, the Hon'ble High Court have observed that where the Revenue have filed the appeal before the higher Court along with application for stay, the Tribunal should not pass drastic orders, contempt of court proceedings, etc. We find that the Hon'ble High Court in the same order have also observed that they are not inclined to grant the stay of the order of the Tribunal and have further directed the respondent-Commissioner to give effect to the order of the Tribunal subject to result of pending appeal before the Hon'ble High Court. - Commissioner to implement the order of the Tribunal with immediate effect within 3 days of service of a copy of this order subject to the final outcome of the appeal of the Revenue before Hon'ble High Court. - Decided in favour of appellant.
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Corporate Laws
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2015 (7) TMI 58
Penalty under Section 15HA and 15HB of SEBI Act, 1992 - Wide fluctuations in price of script on and around listing day - Notice served for violation of Section 12(A)(a), (b) and (c) of SEBI Act read with Regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (d) and (e) of PFUTP Regulations - Held that:- Tribunal cannot consider the submissions of Appellant nor look at the documents produced before this Tribunal, since these were not made available or produced before Ld. A.O., despite being provided ample opportunities and since fresh submissions and documents cannot be accepted in Appeal as these were not made or produced before Ld. A.O. Tribunal accepts the conclusions drawn by Ld.A.O., since these are based on material, evidence before him which has been considered logically and conclusions drawn, in which no infirmity is evident. Accordingly, this Tribunal upholds the decision of Ld. A.O. that IPO money was routed by RDB, through a web of inter-connected entities to make the transactions look complex and hide the actual sources of money, in order to enable Appellant to make payment to its stock-broker, as per T+2 settlement mechanism. - Decided against the appellants.
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2015 (7) TMI 57
Proposed scheme of amalgamation - Dispensation of meetings - Sections 391 to 394 of the Companies Act, 1956 - Share exchange ratio not mentioned in scheme - Improper Board resolution - Held that:- It is pertinent to mention here that in the affidavits filed by the transferor and transferee companies in support of summons, there is no mention of share exchange ratio. The only reference in para 14 of the affidavit is that the transferee company shall issue and allot shares to the shareholders of the transferor company. Also there is a contradiction of the share exchange ratio as mentioned in the valuation report and in the Scheme of Amalgamation. It is further noticed from the list of shareholders of the transferor and transferee companies that IVM Intersurer B.V. is the holding company of the said companies, which are proposed to be amalgamated. The consents given on behalf of IVM Intersurer B.V. approving the Scheme of Amalgamation and seeking dispensation of the meeting of the shareholders of the transferor and transferee companies are not supported by any Board Resolution of IVM Intersurer B.V. authorizing the persons who have given the aforesaid consents. - Applicants are directed to file an affidavit clarifying the aforesaid discrepancies.
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Service Tax
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2015 (7) TMI 68
Interest of delayed refund claim - Held that:- Appellant had filed the refund claim on 25.03.2008 and he draws my attention to the copy of the refund claim filed by them with the appeal memorandum. In fact there is no dispute on this fact also since this was what started more than one round of litigation in this case. Therefore in my opinion this was the date that should have been considered for the purpose of claim for interest by the appellant by the learned Commissioner (Appeals). - liability of the Revenue to pay interest under Section 11BB of the Central Excise Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Central Excise Act and not on the expiry of the said period from the date on which order of refund is made. In this case the refund claim was filed in 2008 and interest also has to be considered on the basis of that date. - Decision in the case of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. [2011 (10) TMI 16 - Supreme Court of India] followed. - Decided in favour of assessee.
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2015 (7) TMI 67
Service tax on vehicle registration charges - Refund rejected as time barred - Unjust enrichment - Held that:- The present refund relates to the period thereafter i.e. from September, 2004 to August, 2007 on the amount of Service Tax paid on vehicle Registration charges for which no demand notice was pending nor it was in dispute before the authority concerned about the payment of service tax. The Appellant had paid Service Tax voluntarily during the said period. Therefore, the present refund claim is a separate proceedings and in my opinion cannot be construed as a refund arising out of the said order. I also find that there is not an iota doubt that the present refund claim arises out of applicability of provisions of Finance Act to the services rendered by the appellant. Therefore, any refund claim arises as a consequence to the application of the provisions of Finance Act,1994 ought to be in accordance with the provisions prescribed for refund under the Central Excise Act,1944 as applicable to service tax matters by virtue of Sec.83 of the Finance Act, 1994, in view of the observation of the Hon'ble Supreme Court in Mafatlal Industries' case [1996 (12) TMI 50 - SUPREME COURT OF INDIA]. - Decided against the assessee.
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2015 (7) TMI 65
Services of Manpower on cost sharing basis to group companies - Service Tax liability for import of Intellectual Property Rights - Held that:- We find that in the similar facts and circumstances of the case in another group company of the appellant, K. Raheja Real Estate Services Pvt. Ltd. [2013 (6) TMI 564 - CESTAT MUMBAI ], wherein similar services were given to other group companies, on cost sharing basis, this Tribunal have set aside the impugned order. In view of similar facts and circumstances of service/activity in this appeal, requiring proper verification we remand this matter also back to the Commissioner, on the issue of taxability of disputed amount under 'business auxiliary service' in terms of the direction of the Tribunal as given in the earlier order, quoted hereinabove. So far the other demand of ₹ 87,536/ - for import of service is concerned, the same is not contested and accordingly stands confirmed. As regards the penalties imposed, we find that the issue relates to interpretation and there is no case of any fraud or deliberate defiance of law. Thus, the penalty of ₹ 87,566/- is deleted under Section 78 and balance penalty in respect of Service Tax liability for 'business auxiliary service' is set aside for reconsideration in accordance with law. - Decided partly in favour of assessee.
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Central Excise
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2015 (7) TMI 66
Waiver of predeposit - Penalty u/s 11AC - SSI Exemption Notification No.08/2003-CE dated 01.03.2003 - Clubbing of clearances - Held that:- On the issue of clubbing of clearances of both these Units, prima facie, we do not find that sufficient reasons had been recorded by the ld. Commissioner in the impugned Order, except following the earlier decision pertaining to the period prior to the present demand notice. Thus, the allegation of clubbing of clearances needs to be examined in detail in the light of evidences produced by both sides, which would be possible only at the time of disposal of the Appeals. In these circumstances, the Applicants could able to make out a prima facie case for waiver of predeposit of the dues adjudged. Accordingly, predeposit of all dues adjudged against the Applicants, are waived and its recovery stayed, during the pendency of the Appeals. - Stay granted.
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2015 (7) TMI 64
Denial of SSI Exemption - Valuation u/s 4A - Held that:- Goods which would be falling under Section 4A would be parts, components and assemblies of automobiles. The meaning of the said extraction as understood by an ordinary human being would be relatable to such goods without which an automobile or taxi cannot run. Admittedly an automobile or a taxi can operate without even fixing the fair meters. In such a scenario, they cannot be termed as parts, components or assembly of taxies. Accordingly we are of the view that appellant has a good prima facie case in its favour so as to allow the stay petition unconditionally. - As the appellant has deposited the entire amount of service tax along with interest and 35% of the penalty - stay granted.
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2015 (7) TMI 63
Denial of CENVAT Credit - Capital goods - Held that:- Cenvat Credit is available to the assessee if the item is used in manufacturing of capital goods or used in manufacturing of their final product. - Commissioner (A) in the impugned order that these items have been used by the respondent in manufacturing of capital goods. - No infirmity in impugned order - Decided against Revenue.
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2015 (7) TMI 62
Waiver of pre dpeosit - Cenvat credit - failure to maintain separate accounts - appellant should have paid 10%/5% of the value of the exempted goods - Held that:- There is no dispute that the appellants are reversed the entire cenvat credit attributable to the exempted goods. The only omission is non-exercise of option before doing so after the introduction of Rule 6(3A) and non-maintenance of separate accounts earlier to that. Since the appellants have reversed the entire amount of credit attributable to exempted goods and the omissions seem to only procedural in nature, we consider that appeal can be heard without insisting on any 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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